Author: Nicky Hardwick
In South Africa, retrenchment due to poor performance is not legally valid. Retrenchment is specifically regulated under the Labour Relations Act (LRA), Section 189, and it applies to dismissals for operational requirements such as economic, technological, structural, or similar needs of the employer.
Valid reasons for retrenchment include economic downturn or financial constraints, organisational restructuring, introduction of new technology, and closure of a department or business unit.
An invalid reason for retrenchment is poor performance. This must be dealt with through a performance management process, including warnings, coaching or training, performance reviews, and a fair disciplinary or incapacity process.
If an employer uses retrenchment as a cover for dismissing someone based on poor performance, the dismissal can be deemed procedurally and substantively unfair, and the employee may have grounds to refer the matter to the CCMA (Commission for Conciliation, Mediation, and Arbitration), or a Labour Court.
Instead, follow the poor work performance process under Schedule 8 of the Code of Good Practice (Dismissal), which includes:
- Clear performance standards
- Evaluation and guidance
- A chance to improve
- A formal incapacity inquiry if there is no improvement
An important reminder for employers
If you are navigating poor performance issues in your workplace, don’t confuse this with grounds for retrenchment. The legal and procedural risks of getting it wrong are high and costly. Luckily, that is where we come in. At HRTorQue, we offer:
- Performance management support, assisting with structured performance improvement processes including coaching, formal reviews, and incapacity procedures where necessary.
- Retrenchment and restructuring guidance, walking you through every step of a fair and compliant Section 189 process.
- HR hearings and disciplinary services – from disciplinary hearings to incapacity inquiries, our consultants can chair or support proceedings to ensure fairness and legal compliance.
- CCMA dispute preparation, helping employers prepare and respond effectively should a matter escalate, minimising your risk and protecting your business.
Unsure which process applies to your situation? Let’s talk. Email us at [email protected] or visit www.hrtorque.co.za