LLexiSA

Labour Law

Retrenchment and Section 189

Retrenchment (dismissal for operational requirements) is only fair if the employer follows the consultation process in section 189 of the LRA and has a genuine economic, technological or structural rationale. Employees are entitled to severance pay of at least one week's remuneration per completed year of service.

Key facts

  • The employer must issue a written section 189(3) notice inviting consultation before any final decision.
  • Consultation must cover alternatives to retrenchment, selection criteria, timing, and severance.
  • Minimum severance: one week's pay per completed year of service (s 41 BCEA).
  • Large-scale retrenchments (s 189A) trigger facilitation rights and a 60-day moratorium.
  • Selection criteria must be fair and objective — LIFO (last in, first out) is the default norm.

The law that applies

  • Labour Relations Act 66 of 1995 — ss 189, 189A
  • Basic Conditions of Employment Act 75 of 1997 — s 41 (severance pay)

Leading cases

SA Clothing & Textile Workers Union v Discreto (1998) 19 ILJ 1451 (LAC)

Courts assess whether the retrenchment decision was genuine and properly consulted, not whether it was the best business decision.

Steenkamp v Edcon Ltd [2016] ZACC 1

Non-compliance with s 189A timelines does not render a dismissal void, but sounds in unfairness remedies.

Practical steps

  1. Check that you received a written s 189(3) notice with reasons and proposed criteria.
  2. Participate in consultation and propose alternatives in writing.
  3. If dismissed, verify severance, notice pay and leave payout calculations.
  4. Refer procedural or substantive unfairness disputes within 30 days.

Frequently asked questions

Can I be retrenched without consultation?

No. A retrenchment without proper section 189 consultation is procedurally unfair, and you can refer a dispute to the CCMA or Labour Court within 30 days.

How much severance pay am I entitled to?

At least one week's remuneration per completed year of continuous service, unless you unreasonably refuse an offer of alternative employment.

How does this apply to your situation?

Ask LexiSA. It will gather your facts, apply the law above, and give you a cited assessment of your position — free.

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This guide is legal information, not legal advice, and may not reflect amendments after its last review. For advice on your specific circumstances, consult a practising attorney.