Labour Court judgment on retrenchment: must I issue a written notice?

The court held that a written notice was not strictly required because the employer had substantially complied with section 189(3) through communication with the union, which was involved in the consultation process and did not demand the formal written notice.

Facts and court’s assessment

The employer failed to issue a section 189(3) notice on the basis that (1) the employee’s trade union was involved in the consultation process and was aware of the details of the proposed restructuring, and (2) the employee did not challenge employer’s failure to issue a section 189(3) notice.

The court found that the arbitrator’s determination was reasonable, in that the employer substantially complied with sections 189(1), 189(2) and 189(3)(a) of the LRA despite not issuing a section 189(3) notice. This conclusion was supported by the court’s finding that there was a genuine consensus seeking process and the employer’s failure to issue a 189(3) notice was acceded to by the trade union. Furthermore, the court found that the employer substantially complied with section 189 of the LRA and accordingly there was adequate compliance, and a mechanical process or tick box exercise is not required.

Important considerations and key takeaways

Section 189(3) of the LRA mandates that an employer must issue a written notice to the employee or their representative inviting them to consult and disclose all relevant information regarding the contemplated retrenchment. Historically, the Labour Court has viewed this notice as the formal start of the retrenchment process, emphasising strict adherence to these requirements. In SASBO The Finance Union obo Fourie v Nedbank Limited (2020) 41 ILJ 500 (LC), the court indicated that the “requirement to issue a notice in terms of s 189(3) is peremptory” and “it is a significant statutory trigger for a number of events and options.”

In Padayachee, the court was careful to state that its decision to permit a departure from the mandatory issuing of a section 189(3) notice was specific to the context of this case and does not set a general precedent. Each case must be evaluated on its own facts to determine whether there has been substantial compliance with section 189 and section 189(3) in particular.

The prevailing view is that an employer is obliged to issue a 189(3) notice to potentially affected employees as soon as it contemplates retrenchments, and our recommendation is that employers comply with this procedural step.