Was Your Retrenchment Actually Fair?

Your role was cut, and the company called it business necessity. That label does not automatically make the retrenchment fair, and it is worth checking before you sign anything.

What counts as retrenchment or redundancy?

Retrenchment happens when your employer removes your role because the position itself is no longer needed, not because of anything you did. Redundancy is the same idea: fewer people are needed for the work that remains.

This differs from misconduct or performance-based dismissal, where the reason is about you personally. Retrenchment should be about the job, not the person doing it.

Is retrenchment always fair just because it is labelled that way?

No. The reason must be a genuine redundancy, not a convenient label for removing a particular employee. Guidance under the Code of Conduct for Industrial Harmony 1975 sets out how a responsible retrenchment should be carried out.¹

If your employer cannot show the role genuinely disappeared, or that selection was fair, the retrenchment can still be challenged as unfair dismissal.

What is LIFO, and when can an employer depart from it?

Last In First Out is the conventional starting point: the most junior employee in the affected category is let go first. An employer may depart from LIFO, but must have sound, justifiable reasons for doing so.¹

Being retrenched out of turn, with no explanation for why you were chosen over someone more junior, is worth raising early.

What if the company keeps hiring after your role is cut?

Continued hiring in the same department, or for a similar role under a different title, undercuts the claim that the position disappeared. It does not prove bad faith on its own, but it is a pattern worth documenting.

Screenshots of job listings, posts about new hires, or a colleague still working there can matter later.

What about the package you were offered?

Employers sometimes attach a tight deadline to a severance offer, hoping you sign before you check your options. Once your employer has to prove just cause at the Industrial Court, the burden is theirs, not yours.³

Reading the offer carefully, and asking what you are being asked to give up, costs you very little time.

Do not forget the EIS payment

Retrenchment can also unlock help under the Employment Insurance System, a separate government scheme from your unfair-dismissal claim. It includes a Job Search Allowance, and you should apply within 60 days of losing your job.²

Pursuing EIS does not stop you from also questioning whether the retrenchment itself was fair.

What to do this week

Save your termination letter, the reason given, and anything about how you were selected. Note whether anyone junior to you in the same role was kept on.

Then check your exact 60-day deadline for a Section 20 representation, since it runs alongside any EIS claim.⁴ A short conversation early costs little and clarifies a lot.