Carry out a retrenchment in South Africa, the right way.
Answer a few questions and the toolkit builds your s.189 evidence pack — a genuine good-faith consultation, fair selection, severance and notice. In the LRA it is a dismissal for operational requirements.
South Africa — a substantively and procedurally fair retrenchment under the LRA (s.189/189A) and the BCEA. The consultation is what protects you.
The exact numbers and rules that apply — worked out for your situation and jurisdiction.
The letters, records and decision — drafted for your situation, ready to send. Not a checklist.
Save your plan, tick off each step with dates and evidence — proof you ran a proper process.
AI is reshaping who works — we track it daily
Retrenchment, done right — for South African employers
In the Labour Relations Act a retrenchment is a “dismissal based on the employer’s operational requirements”, and it must be both substantively and procedurally fair — above all, a genuine, good-faith consultation before any decision. This free AI toolkit walks you through a fair retrenchment and builds the s.189 evidence pack.
The retrenchment process, step by step
- Business case — record the genuine operational reason (economic, technological, structural).
- Written invitation to consult (s.189(3)) — issue the prescribed written notice with the reasons, numbers, selection method, severance and timing.
- Consult in good faith — consult the union/works council/affected employees on ways to avoid, minimise and mitigate the dismissals, and on selection criteria and severance.
- Selection — apply fair and objective criteria (commonly LIFO, skills, attendance) agreed or fair in the circumstances.
- Notice & severance — give notice and pay severance of at least 1 week per completed year of service, plus notice and accrued leave.
Severance pay
Statutory severance is at least 1 week’s remuneration for each completed year of continuous service (Basic Conditions of Employment Act s.41). An employee who unreasonably refuses an offer of alternative employment may lose the entitlement. A contract, policy or collective agreement can provide more.
Notice periods
| 6 months or less | 1 week |
| 6 months to 1 year | 2 weeks |
| 1 year or more | 4 weeks |
BCEA s.37 minimums, unless the contract/agreement provides more. Farm and domestic workers with 6+ months get 4 weeks.
Large-scale retrenchment (s.189A)
Employers with 50+ employees retrenching above set thresholds fall under s.189A: either facilitated consultation through the CCMA or a 60-day consultation period before notice, and enhanced remedies. Below that, the ordinary s.189 process applies.
Common questions
How much severance pay is due?
At least one week’s remuneration for each completed year of continuous service (BCEA s.41). More may be due under a contract or collective agreement. An employee who unreasonably refuses suitable alternative work may forfeit it.
What makes a retrenchment fair?
It must be substantively fair (a genuine operational reason and fair selection) and procedurally fair (a proper s.189 consultation in good faith, before any decision). Skipping or rushing consultation is the most common reason retrenchments are found unfair at the CCMA or Labour Court.
When must I consult?
As soon as you contemplate retrenchment, and before deciding — via the written s.189(3) notice, then genuine consultation on avoiding/minimising the dismissals and on selection and severance.
Reference: Labour Relations Act ss.189 & 189A; Basic Conditions of Employment Act ss.37 & 41. General information for employers, not legal advice.