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Mike Otis
Mike Otis, Legal Advisor
Category: South Africa Law
Satisfied Customers: 2161
Experience:  B.Comm; LL.B; LL.M.
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I want to retrench my domestic worker as we are under debt

Customer Question

I want to retrench my domestic worker as we are under debt review and can no longer afford to employ her.
What steps do I need to take?
Submitted: 6 years ago.
Category: South Africa Law
Expert:  Mike Otis replied 6 years ago.
Welcome, and thank you for your question.

From your explanation above, it appears that you contemplate retrenchment based on "operational requirements", which is a lawful ground for retrenchment. The procedure that needs to be followed for a dismissal based on "operational requirements" (retrenchments) is regulated in terms of section 189 of the Labour Relations Act. The required procedure is as follows:


1. Consultation:


Unless the employees request collective meetings or are unionized, meetings should be held individually with all employees that could be affected by the proposed retrenchment,.

It is a requirement that this should take place as soon as the employer contemplates retrenchment.

With whom?

Consultation must take place (in order of precedence):

in terms of a collective agreement,

with a workplace forum,

with a registered trade union whose members are likely to be affected, or

with employee who is likely to be affected

About what?

The parties are obliged to enter into meaningful interaction or joint consensus seeking process and to attempt to reach consensus on the following:

avoiding the dismissal [examples could include adjusting working hours, eliminating temporary labour, eliminating overtime, offering early retirement,

minimizing the number of dismissals,

the timing of the dismissals,

ways to lessen the effects of the retrenchment for those being retrenched,

the method for selecting the employees to be dismissed,

the payment of severance pay. ( Where employees are offered alternative employment on substantially similar terms and conditions of employment, the Company is not obligated to pay severance pay.)

Employees are entitled to the minutes of all meetings.

CCMA may be asked to intervene on request from employer.

2. Retrenchment: Disclosing of information in writing:

When contemplating retrenchments, the employer must issue letters to all employees in the affected unit, advising them of the pending retrenchment and the date when consultations will commence. Decisions concerning retrenchment cannot/ should not be made prior to the consultative process taking place.

An employer has to disclose relevant information in writing, including -

  • the reasons (eg economic, technical or structural) for retrenchment,
  • alternatives considered to retrenchment and why those alternatives were rejected,
  • the number of employees likely to be affected and their various job categories,
  • proposed method of selection criteria,
  • timing of the retrenchment ie the time when, or the period during which, the dismissals are likely to take effect,
  • severance pay proposed, (the statutory requirement for severance pay is one week for every year of completed unbroken service. The amount of severance pay is however subject to consultation and can be increased by agreement between the parties.)
  • assistance that the employer will be offering (examples could include offering employees time off to attend interviews, early release should a new job be found, issuing letters of reference, psychological counseling etc),
  • possibility of future re-employment and issues around re-employment.

Should there be a dispute about information provided, it will be up to the employer to show why information is not relevant. Disclosure of information disputes can be decided by either the Labour Court or the CCMA.

3. Opportunity for Feedback

The employer must give the other consulting party an opportunity to make presentations. Representations must be considered and be responded to by the organisation.

4. Criteria for selection

If no agreement is reached on the criteria for selection, criteria must be fair and objective. (The LIFO [last in first out] principle is often applied at the time of retrenchment, but is not the only consideration. Employees with key established skills or who occupy a specific specialized position may be retained, and a poor performance record may be taken into consideration.)

Offers of alternative employment should be made known and offered to all employees. Voluntary retrenchment offers must be considered initially during consultation before being offered to employees. The terms must be clearly defined to ensure that there is no dispute thereafter.

Statutory notices of termination of services are handed to those employees who are to be retrenched once the consultation process has been completed and all employees' counter proposals, questions and concerns have been addressed in writing.

If the above appears too cumbersome, bear in mind that the Act was drafted not only for situations where domestic workers are retrenched, but also for large organisations that need to do mass retrenchments.

The basics that you need to comply with is to consult with your domestic worker so that she is fully informed of the situations. In your situation, there will probably not be any alternative position, but you could consider reducing her working hours instead of terminating her position entirely. If this has been considered and ruled out, you can proceed with the retrenchment. Minimum retrenchment pay is an amount equal to one week's salary for every completed year of service.

I trust you find the above in order.

Yours faithfully,
Expert:  Mike Otis replied 6 years ago.
Dear Sir / Madam,

May I be of any further assistance? If you found my answer to be of use to you, kindly click on the accept button in order to release payment. Alternatively, I would be happy to address any outstanding issues.

Yours faithfully,