Retrenchment is nothing but a dismissal for operational reasons, which can include a variety of reasons such as the financial decline of a business, an employer deciding to increase profits of his business or a part thereof, the introduction of new technology that results in a decline in positions or structural changes such as the transfer of a part of the business of the employer.
The Labour Relations Act 66 of 1995, as amended codifies the requirements for retrenchments by way of section 189 and 189A. Employers cannot achieve a fair retrenchment process without following the requirements of the LRA as it underlines the constitutional right to fairness. Section 189 therefore regulates the exercise of the competing fundamental rights of an employee not to be unfairly dismissed and that of an employer to dismiss for operational reasons.
The Mediation and Dispute Settlement Centre provides an all-encompassing process for retrenchments.