What the LRA and the 2025 Dismissal Code require before you retrench, and where employers go wrong.
A retrenchment is a dismissal for operational requirements: economic, technological, structural or similar needs of the business. It is lawful only if the reason is genuine and the process is fair. Since 4 September 2025, the Code of Good Practice: Dismissal sets out the guidelines.
1. Issue a section 189(3) notice. Before any decision is final, invite the right parties to consult in writing. The notice must disclose the reasons, the alternatives you considered, the number of employees and the jobs likely to be affected, the proposed selection criteria, timing, severance pay and other assistance, and the possibility of future re-employment.
2. Consult the right people. Consult the parties named in a collective agreement, or a workplace forum, or the registered union whose members are affected. If none exists, consult the affected employees or their nominated representatives.
3. Consult meaningfully. Consultation is a joint consensus-seeking process on ways to avoid or minimise dismissals, timing, selection criteria and severance. Respond to every proposal in writing. A decision that was made before consultation began is the most common reason retrenchments are found unfair.
4. Use fair selection criteria. Use agreed criteria, or criteria that are fair and objective, such as length of service (LIFO), skills and qualifications.
5. Pay at least the minimum severance. The BCEA requires at least one week's remuneration for each completed year of continuous service, plus notice pay and accrued leave.
Large-scale retrenchments: employers with more than 50 employees who plan to dismiss a larger number (the threshold depends on the size of the workforce and includes dismissals in the previous 12 months) must follow section 189A, which allows for a CCMA facilitator and sets longer minimum timelines.
Keep a complete record: the notice, attendance registers, minutes, proposals and responses. If the matter goes to the CCMA or Labour Court, the paper trail is your case.
This article is general information, not legal advice for your specific situation. Speak to a MetaCo consultant about your organisation.