Retrenchment is only lawful if the employer follows a fair procedure — consultation, selection criteria, and severance pay. The LRA gives you the right to challenge an unfair retrenchment at the CCMA.
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Direct Answer
Your employer must consult with you before retrenching, use fair selection criteria, pay you at least one week's remuneration per year of service, and give you proper notice. If any of these steps are skipped, the retrenchment is procedurally unfair and you can refer to the CCMA within 30 days.
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“An employer who contemplates dismissing one or more employees for operational requirements must consult any person whom the employer is required to consult in terms of a collective agreement, or if there is no such agreement, any person who the employer is required to consult.”
Labour Relations Act 66 of 1995
Section 189A
“Applies to large-scale retrenchments (10+ employees). Requires facilitation and a minimum 60-day process before any dismissals.”
Basic Conditions of Employment Act 75 of 1997
Section 41
“An employer must pay an employee who is dismissed for operational requirements severance pay equal to at least one week's remuneration for each completed year of continuous service.”
What to Do
Step-by-Step Guide
1Demand written notice of the proposed retrenchment and a Section 189 consultation letter. This is a legal requirement — not optional.
2Engage in the consultation process. You have the right to propose alternatives to retrenchment: reduced hours, pay cuts, redeployment. The employer must consider your proposals genuinely.
3Challenge the selection criteria if you believe you were selected unfairly (e.g., based on union membership, pregnancy, or discrimination). LIFO (Last In, First Out) is the most common fair criterion.
4Claim your severance pay — minimum one week per completed year of service. This is in addition to notice pay and any accrued leave pay.
5If the process was unfair, refer to the CCMA within 30 days using form LRA 7.11. State that the retrenchment was procedurally or substantively unfair.
6Apply for UIF immediately after retrenchment at your nearest Labour Centre or online at uif.labour.gov.za.
What to Say
Exact Words to Use
“"I have the right to consultation under Section 189 of the LRA before any retrenchment decision is made. I require written disclosure of the reasons for the proposed retrenchment, the number of employees affected, and the proposed selection criteria."”
Tone: In writing to your employer or HR
Now practise saying it. The Advocate has a scenario that walks you through exactly this situation — phrase by phrase, with audio playback and a practice drill. Free to try.
The LRA does not prescribe the method, but it requires a genuine consultation process — which means meaningful engagement, not a one-sided announcement. An email telling you that you are retrenched without prior consultation is procedurally unfair. Refer to the CCMA.
Is severance pay taxable?
The first R500,000 of a retrenchment severance package is exempt from tax (as at 2024, using the retirement lump sum tax table). Amounts above this threshold are taxed at progressive rates. Your employer should withhold PAYE accordingly — request an IRP5 document.
Can I be rehired after retrenchment?
Yes. Section 189(7) of the LRA gives you the right of first refusal if the employer hires for a similar position within 12 months of the retrenchment. If the employer ignores this, you can refer a dispute to the CCMA.
Get Help Now
Resources & Helplines
CCMA
0861 16 2616
Refer an unfair retrenchment dispute. Free. 30-day deadline.
Knowing the law is step one. The Advocate has scenarios on Workplace — practise the exact words to use, with audio, law references, and Scripture. Free to start.