When you retrench, you have to pay any accrued annual leave, notice periods and severance (one week for every completed year of service). And you cannot arrange for payment plans. So, it won’t solve your cashflow problems.
Retrenchment processes take a lot of time – and you have to continue paying your employees while you do it. So, it won’t solve your immediate problems. Here are the time periods:
- Section 189A of the Labour Relations Act apply to large scale retrenchments. You will have to consult for at least 60 days, unless your employees waive their rights – which they might not do.
- If you employ less than 50 people, there isn’t a specific timeline, but you have to make sure that it is procedurally fair, otherwise you may have to reinstate your employees. You should not give them less than 2 weeks to consult regarding your intention to retrench.
Also keep in mind that for 12 months after retrenchment, employers are legally obliged to reach out to employees who have been made redundant in the event that suitable positions become available and reasonably accommodate them. So, you might have to rehire the same people you retrench now.