Since the 2009 recession, thousands of South Africans have found themselves retrenched by businesses that are struggling to survive in the current economic conditions. Although the recession is considered old news by some, companies continue to retrench people on a regular basis. If you’re concerned that you may be in line for retrenchment in the future, this short guide will assist you in planning for your financial future.
Section 189 of the Labour Relations Act allows companies to retrench workers under certain conditions. Usually, the company needs to prove that it can’t afford to keep its staff employed on a full-time basis before the retrenchment can go ahead.
If your company takes the unfortunate decision to retrench you, they will need to inform you well in advance that they are considering this option. You will have an opportunity to appeal their decision, and if you can demonstrate good reasons why you shouldn’t be retrenched you may be able to keep your job, although this is not guaranteed.
If you are retrenched, the company is required by law to offer you a severance package. The minimum amount payable is usually one week’s salary for every year you’ve worked for the company, though many employers tend to offer more than this amount. From a taxation point of view, the first R30 000 of the severance package should be tax-free.
Dealing with Retrenchment
Being retrenched is never easy, and if you find yourself in this unpleasant situation remember that you were retrenched, not fired. Retrenchment is not a bad reflection on you as a member of staff – it can happen to anyone, regardless of educational background or seniority.
If you’ve been retrenched, the following tips should help you to get back on track:
- Monitor your expenses – While you’re job-hunting, try to keep your costs as low as possible so that you don’t end up dipping into your retirement savings or other investments.
- Get out there – Circulate your updated CV and reconnect with people you’ve worked with in the past. You’ll feel less isolated and soon enough, new opportunities will come your way.
Learn a new skill – If you have the opportunity to take a course or complete a diploma while you’re looking for a new job, this may be a great career booster. New skills will enable you to enter the workplace again and further your career.