Retrenchment is the no-fault termination of an employee’s services and is governed by Section 189 of the Labour Relations Act, Act 66 of 1995 as amended (LRA) and the Code of Good Practice: Dismissal (the Code).  Retrenchment becomes necessary when there are operational requirements to reduce the workforce.  Operational requirements are defined as requirements based on economic, technological, structural or similar needs of the employer.

The retrenchment process

The retrenchment process is clearly set out in Section 189 and 189A of the LRA and must be followed to ensure that such process is both substantively and procedurally fair.

It is important for employers to take note that the retrenchment process must be instituted as soon as it is contemplated. The process of retrenchment can take a considerable amount of time as it depends on various factors such as the number of employees involved and the scale of the intended retrenchment. Employers are therefore warned not to leave it to the last minute to commence with the retrenchment process.

All reasonable alternatives

Employers are encouraged to commence with the process well in advance to establish if there are any actions that can be taken to avoid retrenching any employees.  The retrenchment process entails that all reasonable alternatives must be exhausted in order to try and prevent any retrenchments, and the courts have stated that retrenching any employee must be the last resort.

Examples of reasonable alternatives can include short time, reduction in salaries, transferring employees to other departments, reducing overtime, bumping and voluntary separations just to mention a few.  It is important for employers to discuss the alternatives with employees in order to obtain their consent before it can be implemented.

Follow the procedure

The below procedure must be followed when the employer contemplates the possibility of retrenchment (for the purpose of this article we’ll only look at retrenchments under Section 189 and not Section 189A-large scale retrenchments).

1. Issue a notice of possible retrenchment consultation in terms of Section 189 of the LRA

This notice must contain the date, place and time of the meeting and other specific details, which include:

• Number of employees and job categories that will most likely be affected
• Reason for possible retrenchments
• Alternatives that have been considered by the employer (including whether those alternatives have been pursued by the employer and if not, the reasons why; also whether any alternatives are offered and what they entail)
• Selection criteria/Proposed method of selecting employees to retrench
• When the proposed retrenchment will most likely take place
• Proposed severance pay
• Assistance that can be offered by the employer to the affected employee(s)
• Possibility of future re-employment and who it will be offered to first, as well as the arrangements for keeping in contact
• Number of employees employed
• Number of employees dismissed for operational requirements in the past 12 months

This notice must be issued to the following persons:

• All employees that are most likely to be affected by the retrenchment
• Any person whom the employer must consult with in terms of a collective agreement, if none the notice must be issued to the workplace forum
• The trade union representative if the employees are represented by a trade union

2. Proper consultation process

Proper consultation must be held with employees that will most likely be affected by the retrenchment, or with their trade union representative.  During the consultation, all aspects as contained in the notice must be discussed in full.  The employees, or representative, must be granted the opportunity to provide their feedback on all aspects, as well as alternatives that can be considered in order to prevent retrenchment.  This could entail that further consultations must be scheduled to continue discussing possible alternatives or any other aspect that must be clarified.

The retrenchment process is a consensus seeking process during which the parties must try and reach an agreement on how the retrenchments (and its effects) can be avoided and mitigated as far as possible.

If there are no reasonable alternatives that can be implemented and retrenchments cannot be avoided, notice of retrenchment must be issued to the affected employees. Employers that are regulated by bargaining councils should also ascertain whether there are council/collective agreements that regulate retrenchment processes.

In conclusion it should be noted that dealing with retrenchments contain a lot of pitfalls and employers should contact the LWO to obtain proper advice before beginning with the process.

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When an employee is arrested and held while awaiting trial, employers must balance operational needs with fair labour practices. The key questions are: how to classify the absence (desertion, absence without permission or incapacity), whether pay is due, what steps to take procedurally, and when/if dismissal is appropriate.

“No work, no pay”

Under South African labour law, the “no work, no pay” principle applies. If an employee cannot render services because they are detained, there is generally no obligation to pay. The Basic Conditions of Employment Act, 1997, does not create a leave category for arrest or detention, and the employee is not performing contracted duties. Communicate this position in writing, record the dates of absence, and keep payroll aligned accordingly.

To maintain continuity, employers may appoint a temporary replacement on a fixed term contract. The contract should clearly state the temporary nature of the role and link it to the original employee’s absence, so expectations are managed and the arrangement remains compliant.

Desertion vs incapacity

Throughout, the employee retains the right to fair labour practices and not to be unfairly dismissed. Depending on circumstances, it is more accurate to view the absence as a potential incapacity issue—i.e. the employee is temporarily unable to perform their job due to external constraints. Desertion implies an intent not to return, which is unlikely in cases of detention where the employee is involuntarily absent.

Process: investigate, communicate, document

Before any disciplinary or incapacity action, take reasonable steps to establish facts and intent:

• Investigate the reason and likely duration of absence.
• Attempt contact with the employee directly. Where impossible, reach out to family members or use written correspondence (including via the prison system, where feasible).
• Invite representations: provide the employee with a concise summary of material facts and request a written statement explaining their position and why discipline should not follow.
• Keep records of all attempts, communications, and responses.

Dismissing for desertion while aware of the detention—and without allowing representations—often risks an unfair dismissal finding. Where the employee is released quickly or is on bail, schedule proceedings promptly; the employee would ordinarily be expected to report for duty, unless bail conditions prevent it.

For extended imprisonment, use whatever communication channels are reasonably available (official prison contact, written exchanges) to secure the employee’s input. Maintain a clear paper trail showing that you sought their version and considered it before taking decisions.

Considering dismissal on incapacity

If detention renders the employee incapable of performing duties, termination may be contemplated on incapacity grounds (see Section 188 of the Labour Relations Act, 1995). In line with the new Code of Good Practice: Dismissal (Gazetted 4 September 2025), the employer must:

• Assess the extent and likely duration of the incapacity.
• Investigate alternatives short of dismissal (e.g., temporary redistribution of duties, extended unpaid leave, temporary replacement).
• Weigh role requirements (safety-critical roles, operational impact) and the feasibility of resuming duties after release.
• Follow a fair procedure, affording the employee a chance to make representations on both guilt/grounds and sanction, even if only in writing.

A fair incapacity process demands engagement with the employee and assessment of alternatives to dismissal. Substantive fairness (good reason) and procedural fairness (fair process) must both be present.

Bottom line

Each case turns on its facts. Proceed methodically, communicate transparently and document every step to safeguard both operational continuity and legal compliance.  Employers are strongly advised to consult legal professionals to ensure compliance with current labour laws and to minimise legal risks.

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Constructive dismissal is a term that often appears in labour law, but still causes confusion for many employers. Constructive dismissal refers to a situation where an employee resigns on their own, but the resignation is directly linked to the employer’s action or failure to act. The employee feels that he/she had no other choice but to resign due to the work environment being made intolerable or unreasonable.

Where is it found in the law?

In South Africa, constructive dismissal is clearly defined in section 186(1)(e) of the Labour Relations Act 1996. It is described as the termination of employment by the employee, with or without notice, because the employer’s actions (or inaction) have made it intolerable for the employee to continue with the employment.

It is important to remember that the burden of proof lies with the employee. If a dispute is referred to the Commission for Conciliation, Mediation and Arbitration (CCMA) or Labour court, the employee will therefore have to prove that the employer’s actions were objectively unreasonable and that there was no other reasonable option available to the employee than to resign.

What is constructive dismissal?

The essence of constructive dismissal lies in the relationship between employer and employee. An employer has a duty to maintain a fair, safe and respectful working environment. If the employer fails to do so through intimidation, discrimination, unfair labour practices or failure to respond to complaints, this may give rise to a constructive dismissal claim.

It is important to understand that not every resignation qualifies as constructive dismissal. It is not enough for an employee to simply be dissatisfied. Conflicts over performance management or minor disagreements over trivial matters with colleagues do not automatically qualify as constructive dismissal.

A successful claim for constructive dismissal

To be successful with a claim for constructive dismissal, the employee must be able to prove that:

• the resignation can be directly attributed to the employer’s action and/or failure to act;
• all reasonable steps were taken to report and address the problem internally;
• the employer was made fully aware of the intolerable situation;
• the employer failed to take any steps to remedy the situation; and
• the work situation deteriorated to such an extent and became intolerable that no reasonable alternative other than termination of employment was available to the employee.

Practical examples for employers

• Unfair disciplinary action, such as when an employee is repeatedly punished without just cause or an opportunity to present his/her case.
• Intimidation and bullying by a manager which is never corrected can create a hostile work environment.
• Drastic changes to terms of employment without proper consultation, such as a reduction in salary or change in working hours, which are exacerbated by threats such as that the employee will be dismissed if he/she does not comply with the request.
• Failure to act on harassment in the workplace, such as when an employee reports sexual harassment and nothing is done, can be a strong basis for a constructive dismissal claim.

Tips for employers

The best way to prevent constructive dismissal is to consistently apply the principles of fairness and implement policies that address misconduct and harassment in the workplace. Employers should encourage open communication, take complaints seriously and follow up appropriately. Be transparent about any changes to conditions of employment and obtain the employee’s input and consent before implementing decisions.

It also helps to train managers in human resource practices, disciplinary processes and conflict management. Ultimately, it’s about respect and consistency. When employees feel they are treated fairly and their concerns are taken seriously, the risk of constructive dismissal is significantly reduced.

Although it is the employee’s responsibility to prove constructive dismissal, it is often the employer’s actions or negligence that cause the problem. By creating a fair and respectful work environment, maintaining open communication, and following procedures correctly, employers can protect themselves from disputes and arbitrations.

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Moonlighting is common in South Africa and refers to where an employee holds a secondary job or runs a personal business while employed full-time elsewhere. Especially during financial strain, it offers workers extra income, but poses risks like conflicts of interest and reduced productivity for employers aiming to maintain a fair workplace.

Case law

Under common law, employees have a fiduciary duty to act in good faith, protecting and promoting their employer’s interests. South Africa’s Constitution (section 23) ensures fair labour practices, supported by laws like the Labour Relations Act of 1995. The Labour Court recently clarified moonlighting’s legal standing in Dr Sibongile Vilakazi v Commission for Conciliation, Mediation and Arbitration and Others (2023).

In 2017 Dr Vilakazi took a position as a part-time lecturer at Wits Business School while employed at Alexander Forbes. In 2018 Dr Vilakazi, after resigning from Alexander Forbes signed a contract for full-time employment as a lecturer at the university effective 1 July 2018. On 4 July 2018 Dr Vilakazi, whilst remaining in the employment of the university, also took a full-time accounts director role at Kantar South Africa, which interestingly also paid more than the university. Both employment contracts required her to disclose external work and obtain approval from the respective employers to engage in outside work, which she did not do.  In this specific case before the Labour Court, the employee was mandated/required to obtain the Vice-Chancellor’s approval for external work, including moonlighting, as required in terms of the university’s “Declaration of Interest Policy”, which the employee had failed to do.

The university charged Vilakazi with gross misconduct for her undisclosed Kantar job. After a disciplinary hearing, she was dismissed. She contested this at the Commission for Conciliation, Mediation and Arbitration (CCMA), which upheld the dismissal as fair. Thereafter she referred it the matter to the Labour Court for review of the commissioner’s decision. Vilakazi’s Labour Court review was dismissed, with the court stressing employees’ duty to act honestly and avoid conflicts of interest. Her undisclosed Kantar role risked harming the university, violating its policy. Her claim that she could manage both jobs was deemed irrelevant.

The court held that the commissioner’s findings on the misconduct were justified, and that the conclusion of dismissal was a fair sanction in that case and in the circumstances. The court noted that the employee was a highly educated person and should have known better, and that it is common knowledge that moonlighting during the course of permanent employment is not acceptable behaviour.

Moonlighting

Employers can manage moonlighting by:

• Adding contract clauses requiring permission for secondary work and disclosure of conflicts.
• Setting policies that secondary jobs must not:
  – Contradict the employment contract
  – Harm the employer’s business
  – Impair primary job performance
• Investigating moonlighting during sick leave to assess compatibility with the employee’s condition.

Balancing employees’ rights to earn extra income with business protection is key. For example, if an employee diverts clients to their secondary job, this breaches good faith and may in some instances warrant dismissal. Employers should list such acts as serious misconduct in disciplinary codes.

Without clear contractual provisions or policies, employers may struggle to discipline employees for moonlighting unless it directly affects performance or creates conflicts.

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Employers are often confused when the chairperson in a disciplinary hearing finds an employee not guilty of being under the influence of alcohol, despite the employee having tested positive for alcohol on a breathalyser.  Intoxication is defined as when a person is “affected by alcohol or drugs especially to the point where physical and mental control is markedly diminished.”

Case law

One of the first judgements determining the meaning of intoxication in South African labour law is found in Tanker Services (Pty) Ltd v Magudulela [1997] 12 BLLR 1552, where the Labour Appeal Court held that an employee will only be regarded as being “under the influence of alcohol” if they are no longer able to perform the tasks entrusted to them with the required competence. In this case, the employee was responsible for operating a 32-ton truck, and the court found that he would not have been able to perform this task with the same degree of skill, care, and concentration as a sober person. The court confirmed that the appropriate test is whether the employee’s competence to perform their duties has been impaired.

In the years following the judgment, many employers have relied on positive breathalyser results to substantiate charges of intoxication in the workplace. Breathalysers function by analysing an exhaled breath sample to determine the Breath Alcohol Concentration (BrAC)—reflecting the level of alcohol present in the individual’s breath. While this method has often been accepted as indicative of alcohol consumption, recent case law has clarified that breathalyser results alone are not sufficient to prove intoxication or that an employee was “under the influence.”

Case law

In Tosca Labs (Pty) Ltd v CCMA and Others [2012] 5 BLLR 529 (LC), the employee tested positive on a breathalyser. However, the employer was unable to prove that the employee was under the influence of alcohol to the extent that his ability to perform his duties was impaired. The employee had been performing his tasks without incident, and there was no evidence that his competence or conduct had been affected. The Commissioner accordingly found the dismissal to be substantively unfair, and the Labour Court upheld this decision on review.

Case law places a greater evidentiary burden on employers seeking to prove intoxication, as opposed to merely establishing that an employee tested positive for alcohol. These two charges are distinct in both their meaning and their legal requirements. A positive breathalyser result may be sufficient to substantiate a charge of “testing positive,” particularly where a clear (and valid) zero-tolerance policy is in place and no contradictory evidence is presented. However, in cases where an employee is charged with intoxication or being under the influence, a breathalyser alone will generally be insufficient. At a hearing the employer must lead additional evidence, such as behavioural indicators and witness testimony, to demonstrate that the employee’s ability to perform their duties was impaired.

A recent example of a challenge to the charge of “testing positive” arose in Samancor Chrome Ltd v Willemse and Others (JR312/2020) [2023] ZALCJHB 150 (29 May 2023), where the Labour Court held that breathalyser results do not constitute conclusive proof of intoxication. In this case, the employee, who had tested positive twice on breathalysers, which the employee disputed and then had a blood sample taken by a medical professional which was sent  to a laboratory. The result was negative. The employee was dismissed in terms of a zero-tolerance policy despite producing the negative blood test at the disciplinary hearing. The Court found the dismissal substantively unfair, emphasising that breathalyser tests are permissible as evidence in disciplinary hearings and arbitration proceedings, but their evidentiary value depends on corroborative evidence (e.g. blood test, or physical observation) to prove that someone is under the influence of alcohol.

It is therefore critical that employers carefully consider the nature of the charge before initiating disciplinary action. It’s best to obtain advice from the beginning with implementation of the relevant workplace policies and procedures to the classification of charges when dealing with disciplinary hearings.

Contact the LWO for any advice or assistance!

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The South African labour market is rightly considered one of the most regulated in the world. Labour law sets strict requirements that employers must comply with. The most common laws that employers encounter on a daily basis include the following:

Labour Relations Act, Act 66 of 1995 as amended (LRA)

The LRA is one of the most important labour laws in South Africa. It regulates collective bargaining and provides protection against labour malpractices. This act also regulates trade unions and employers’ organisations and establishes key dispute resolution agencies such as the Commission for Conciliation, Mediation and Arbitration (CCMA), bargaining councils and labour courts.

This act further regulates all labour law processes that employers must comply with when it comes to the employer-employee relationship which, among other things, outlines the processes to bring the employment relationship to an end in a procedurally and substantively fair manner.

Basic Conditions of Employment Act, Act 75 of 1997 as amended (BCEA)

The minimum statutory requirements on which employers and employees may contract that are not regulated by other sectoral determinations or collective agreements, are determined and enforced by the BCEA. Any contractual stipulations that are inconsistent with this legislation are invalid.

National Minimum Wage Act, Act 9 of 2018 as amended (NMWA)

With effect from 1 January 2019, employers are required to pay at least the national minimum wage. This wage amount is promulgated from time to time by the Minister of Employment and Labour. Strict compliance with this legislation is enforced through regular labour inspections of employers. In certain industries, the minimum wage is regulated by the applicable collective agreement for that industry and the employer must comply with it.

Bargaining Council Main Collective Agreement (CA)

A CA concluded in a bargaining council binds the parties to the bargaining council who are also parties to the CA. The CA sets the minimum conditions of employment for those employers and employees. A bargaining council may request the Minister of Employment and Labour in writing to extend a CA to any outside parties that fall within its registered scope. Once a CA has been extended by the Minister to non-parties, such an employer who is not a party to the CA will be obliged to comply with the provisions of the CA and to register with the relevant bargaining council.

Sectoral Determinations (SD)

A SD regulates the terms and conditions of employment in a particular sector where there is no centralised collective bargaining and which requires detailed and specific regulations.  Conditions in a SD may differ from those in the BCEA, but will rank superior.

Employment Equity Act, Act 55 of 1998 as amended (EEA)

The primary goal of this Act is to eliminate unfair discrimination in all workplaces. This act also places additional obligations on designated employers (employers with 50 or more employees) to ensure that affirmative action measures are implemented.

Occupational Health and Safety Act, Act 85 of 1993 as amended (OHSA)

This act requires the employer to create a healthy and safe workplace for all persons in the workplace. The act also regulates the health and safety of persons in connection with the use of plant and machinery.

Compensation for Occupational Injuries and Diseases Act, Act 130 of 1993 as amended (COIDA)

COIDA provides for compensation for disability caused by occupational injuries or diseases sustained by employees in the course of their employment. Provision is further made for death resulting from such injuries or diseases, as well as for matters connected therewith.

Skills Development Act, Act 97 of 1998 as amended

The act aims to develop skills for the South African workforce by encouraging employers to promote skills development by using the workplace as an active learning environment and encouraging employees to participate in apprenticeships and other training programs. The act regulates standards for training and development by requiring employers (with an annual salary expenditure of more than R500 000.00) to contribute 1% of their payroll to the National Skills Fund.

Unemployment Insurance Act, Act 63 of 2001 as amended

The Unemployment Insurance Fund (“UIF”) provides relief to employees when they become unemployed as a result of dismissal or retrenchment, or are unable to work due to maternity leave, parental, adoption and commissioning parental leave, or prolonged illness. It also provides relief in some cases to the dependants of a deceased contributing employee. It is the employer’s responsibility to pay the contributions (2% of the employee’s salary), although both the employer and employee contribute 1%.

The obligations that labour law places on employers are non-negotiable and employers can be subject to serious fines, and even imprisonment, in cases of non-compliance. It is important that the employer is familiar with labour law and consistently follows the correct procedures with the necessary administrative support.

For more information on this and other labour laws that employers must comply with, contact our legal team for assistance.

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