Retrenchment is an unfortunate aspect of modern day life and business. The fundamental definition of what retrenchment is is when a company or organization determines that it needs to reduce the number of people in its employ in order to match or meet operational requirements.
Reasons for Retrenchment
There are a number of different reasons why a particular company or other type of organization would retrench staff.
- One of the main reasons is when a particular company has too much staff, surplus to operational requirements. A company will usually retrench staff members perceived as being redundant.
- Another determining factor is modern technology, as we advance technologically we replace people with machinery, it is more cost effective and easier to maintain.
- The restructuring of a company can sometimes make a position redundant.
- A company may need to reduce costs in oredr to survive. This may be due to an economic recession simply because the company is losing money.
What is Employment Redundancy?
The most common form of retrenchment is redundancy. The best way to describe redundancy is as follows;
a job that was being done by a worker or employee has suddenly become either no longer necessary or has possibly been automated. When this happens the employees job description is no longer relevant, then it is said that the employees position has become redundant.
However having said that, it is in fact not so straight forward and easy to declare an individual or members of a specific work force as redundant. It is unlawful for the employee to unfairly dismiss an employee without due reason. If an employee feels they have been unfairly selected they can take legal recourse by challenging the redundancy order.
What is Severance Pay?
Severance occurs when an employer no longer requires the services of an employee, in this case the employee is paid out a certain amount of money known as a severance or severance package.
Company Downsizing or Resizing
Another form is called downsizing or resizing, this is very similar to the act of retrenching. In the case of downsizing or resizing the business or company in question simply cannot afford to keep all of its existing compliment of staff.
Legal Recourse In Regards To Retrenchment
There are many laws today that have been established in most advanced countries that have been specifically designed to protect the worker. If a worker or in fact, a group of workers, feel that they have been unfairly dismissed or retrenched they are in fact entitled to seek legal recourse.
This legal recourse will be held under review by the South African labour court and the case will be thoroughly reviewed by all parties concerned. If the outcome of the hearing is in favour of the worker, that is, if the worker was found to be unfairly dismissed or fired by the employer then the worker will be awarded, usually in the form of money.