Labour Help Desk: Retrenchment

Send us a simple labour query and we’ll answer it within 72 hours!


When you subscribe to the Labour Law for Managers Loose Leaf Service, you will also have access to our Labour Helpdesk, where we answer your labour questions by email.


Here is the advice our panel of experts gave about retrenchment to a subscriber:

Question: How must we work out retrenchment payouts?

We are a wholesale builders merchants company. For financial reasons we are considering closing the business as we are running at a loss each month.

We have six employees who have been with us for various lengths of time. We need guidance on what to pay them in retrenchment payouts.

We want to ensure that we comply with all Labour Regulations in this regard and not risk any CCMA action.

Answer:
The minimum you must pay the employees as severance pay is one week's remuneration for each completed year of service with you. You must, however, follow a consultation process as required in terms of Section 189 of the LRA before embarking on retrenchments and paying severance pay.
 
In addition to severance pay, you may have to pay them for any untaken leave and notice pay if they don’t work out their notice periods.

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