human resources

Alternatives to Retrenchment Every Employer Should Consider

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Alternatives to Retrenchment Every Employer Should Consider
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A large number of companies are experiencing financial difficulties amid the South African economic climate. This has resulted in job losses, which impacts businesses negatively as they have to function with reduced staff. Employers do not willingly want to let their staff go and many are left wondering if there are alternatives to retrenchment, especially in South Africa where a series of events, from the pandemic to load-shedding and riots, have impacted the economy. The good news is that there are options.

Negotiate a reduction in salaries

One alternative to retrenchment is to reduce employees’ salaries. This will allow your business to still retain staff while also decreasing your salary bills. Keep in mind though, that this will have to be discussed with employees, and if there is a union representing them, the union would have to be a part of the negotiation process.

Short time

Shot-time involves reducing the hours or number of days employees work per week. Again, they will have to be consulted, and they will have to be notified within a reasonable time frame.

Transferring employees to other departments

Another alternative to retrenchment is to move employees to other departments or branches that may require additional support. Employers can utilise in-house training measures to provide them with the skills needed for their new roles. Alternatively, you could utilise employees to do work that would normally be outsourced.


A lay-off is a temporary suspension of the work of an employee for a period of time, which will provide your business with temporary relief. During this period, the employee can receive benefits from the Unemployment Insurance Fund.

Future re-employment

Sometimes retrenchment cannot be avoided but an employer may agree with an employee to apply for a position in the future should a vacancy arrive. This benefits you as it means you will be re-employing someone who already has the skill set and knowledge of the job. Again, employees can claim UIF benefits following retrenchment.

Relief via TERS

The good news is that employers and employees in companies facing distress do have some form of relief via TERS, which is a 12 month (maximum) solution that ensures employees continue to receive an income at little cost to the employer, according to the CCMA. It also gives companies an opportunity to recover during the temporary relief from distress and, at the end of TERS, re-absorb employees into ordinary work again.

“Companies can implement a turnaround strategy on their own or through Productivity SA during the period of participation,” the CCMA states. “Under the TERS, employees affected by short-time, layoffs, or possible retrenchment may be placed on SETA-funded training for up-skilling or re-skilling for a maximum of 12 months and during this period their wage cost is covered by the UIF and not by the employer.” The employer is only required to cover contributions such as provident funds, death benefits, medical aid, etc. Employers are also urged to top-up on the amount paid to employees by the UIF.

The TERS is flexible. If it is used for a layoff, employees will be on the TERS every working day of a 12-month period, or period approved for by the Single Adjudication Committee (SAC), according to the CCMA. If it is combined with short-time though, employees will only be on the TERS during the days when there is no work in the company over a 12-month period. It is important to note that participation in the TERS is voluntary and by agreement between the company and the employees.