What Section 189 Actually Is
Section 189 of the Labour Relations Act governs dismissal for the employer's operational requirements: what everyone calls retrenchment. It does not ask whether the business decision was a good one. Commissioners are reluctant to second-guess a commercial judgement. What section 189 does is impose a duty to consult before deciding, and it is that duty that gets tested.
Retrenchment is a no-fault dismissal. Nobody did anything wrong; the role becomes redundant because of what the business needs. Because no misconduct is alleged, there is no disciplinary hearing to point at. The entire fairness test rests on whether a real consultation happened and whether selection was objective. Both are proved on paper or not at all.
The one question the whole process turns on
At the end, could you show a commissioner something an employee said that changed what you did? If nothing in your plan moved between the first meeting and the last, the record says you consulted about a decision you had already taken, and that is procedurally unfair however many meetings you held.
Consultation is judged on the record it leaves behind, not on how the meeting felt.
Download the Section 189 Consultation Pack
An editable Word document and print-ready PDF covering the stage the notice does not: a pre-consultation checklist, a meeting agenda in the order section 189(2) sets out, a minute template built around the section 189(6) duty to respond in writing, a selection criteria record, and a closing checklist. Copy the agenda and minute pages once per meeting.
Meeting starting in ten minutes?
Copy the agenda and minute template, paste it into Word or Google Docs, and run the meeting off it. The thirteen items are in the order section 189(2) requires them to be considered.
Looking for the opening letter instead?
This pack covers the consultation. The written notice that starts it is a separate document: download the section 189(3) notice template here, laid out to Annexure A of the 2025 Code.
The Process, Step by Step
Seven stages, in this order. Doing them out of order is itself the defect, an employer who selects before consulting has, on the face of the record, decided first.
Economic, technological, structural or a similar need. Write down what changed and when, with the numbers behind it. "We need to cut costs" is a conclusion, not a reason, and it is rejected routinely.
Short time, a hiring freeze, redeployment, voluntary packages, pay restraint. Consider them before you issue the notice, and record why each was rejected. Retrenchment must be a genuine last resort.
Section 189(1) sets a strict order: whoever a collective agreement names, then a workplace forum and registered union, then a registered union with members affected, then the employees themselves. Consulting the wrong party is a procedural defect on its own.
In writing, disclosing everything the section lists. This invites consultation. It does not terminate anybody. A first letter that reads like a decision is the single most common fatal error.
Meet, disclose the information requested, listen to proposals, and respond to each one in writing with reasons where you disagree. This is the stage the consultation pack is built for.
Only after consultation. Score every affected employee against the criteria you actually agreed or justified, consistently, and keep the matrix.
Individual written notice with the BCEA section 37 period, severance under section 41, accrued leave under section 21, a certificate of service under section 42, and the UI-19 with the correct termination code.
How Long Does Section 189 Take?
There are two regimes, and which one you are in changes every date that follows.
Ordinary section 189
No fixed statutory minimum. Consultation must be genuine and complete, which in practice means two to six weeks for a small employer, long enough for at least two meetings, for information requests to be answered, and for written responses to proposals. Rushing it to a single meeting is the thing that gets tested.
Section 189A (large-scale)
Applies where the employer has more than 50 employees AND the proposed dismissals meet the threshold: 10 for employers of up to 200, on a sliding scale to 50 for employers of more than 500, measured over 12 months. Notice of termination may generally only be given 60 days after the section 189(3) notice. Either party may ask the CCMA to appoint a facilitator; where none is appointed, a 30-day period runs before either side may act.
Check the threshold before you start, not after
The section 189A count runs over a rolling twelve months, so retrenchments you already did this year push you toward the threshold. An employer who runs an ordinary section 189 when 189A applied has given notice too early, and the dismissals can be set aside on that ground alone.
What Real Consultation Looks Like
Section 189(2) lists the topics that must be consulted on, and it is a joint problem-solving list, not an announcement agenda. You must attempt to reach consensus on measures to avoid the dismissals, minimise their number, change their timing and mitigate their effects, plus the selection method and severance.
Section 189(6) is the provision employers overlook most often, and the one that decides cases. If the consulting party makes representations, the employer must consider them and respond in writing, giving reasons for disagreeing. A minute that records the employer's position and nothing else is affirmative evidence that no consultation took place. The pack's minute template is built around this: proposal, response, reason.
Disclosure works the same way. Section 189(4) requires the employer to disclose in writing all relevant information. Refusing to share the financial basis for the retrenchment while insisting the retrenchment is financially necessary is not a position that survives arbitration.
If employees refuse to attend
The process continues. Your duty is to provide a genuine opportunity, not to compel attendance. Record the written invitation, the non-attendance, and a reasonable deadline for written representations instead, then proceed. Documented properly, a boycott does not make the retrenchment unfair.
Choosing Who Goes
Selection criteria must be agreed with the consulting party or, failing agreement, be fair and objective. “Objective” means capable of being measured by someone other than the manager who chose.
Generally accepted
- LIFO: last in, first out
- Skills and qualifications the retained roles need
- Attendance and disciplinary record, where applied consistently
- Operational requirements of the remaining structure
Renders it unfair
- Anything arbitrary or unexplained
- Grounds listed in the Employment Equity Act
- Union membership or protected conduct
- Pregnancy, or being on maternity leave
- Salary alone: “the expensive ones”
Whatever you choose, apply it to everyone in the affected pool and keep the scoring matrix. The most common substantive challenge is not that the criteria were wrong, it is that they were not actually applied to the person who was let go.
What Section 189 Costs
Four amounts fall due, and employers routinely budget for the first and are surprised by the rest.
Severance pay (BCEA s41)
At least one week’s remuneration per completed year of continuous service. On R25,000 a month that is roughly R5,769 a year. Under one completed year means no statutory severance. An employee who unreasonably refuses a suitable offer of alternative employment forfeits it entirely.
Notice pay (BCEA s37)
One week if employed six months or less, two weeks between six months and a year, four weeks at a year or more. It may be paid in lieu under section 38. Severance is owed in addition to notice, never instead of it.
Accrued annual leave (BCEA s21)
Every untaken day paid out in full, at the daily rate. Not discretionary and not negotiable.
Pro-rata amounts
Any bonus or 13th cheque earned to date, plus remuneration to the termination date.
Work the total out before the notice goes out, because the proposed severance has to appear in it. Our free retrenchment calculator gives severance, notice and leave in one view, with the SARS tax split, and the daily rate calculator gives you the per-day figure everything else is built on.
Where Employers Lose
Deciding first, consulting after
The notice reads like a termination, or the org chart for the new structure is already signed off. Everything after that is theatre, and the record shows it.
Never responding in writing to proposals
Section 189(6) requires it. Employers hold the meetings, take no minute of the employer’s reasons, and cannot later show they engaged with a single suggestion.
Getting the consulting party wrong
Consulting individual employees where a collective agreement or a recognised union should have been consulted first is a defect no amount of good faith cures.
Running an ordinary 189 when 189A applied
Notice given before the 60-day period expires is premature, and the count includes retrenchments already done in the rolling twelve months.
Selecting on criteria nobody applied
The criteria in the notice say LIFO; the person who went was the one the manager found difficult. The matrix either exists or it does not.
Forgetting the exit paperwork
No certificate of service, or a UI-19 with the wrong termination code, delays the employee’s UIF claim and turns a completed retrenchment back into a dispute.
The Retrenchment Sequence
Five artefacts, in the order you need them. Each one is free.
Work out the cost
Free tool →Severance, notice and leave with the SARS tax split before the notice goes out, because the proposed severance has to be in it.
Issue the section 189(3) notice
Free tool →The opening letter, laid out to Annexure A of the 2025 Code. It invites consultation; it does not terminate.
Run and record the consultation
The pack on this page: checklist, agenda, minute, selection matrix, closing list. This is the stage that decides the case.
Understand the calculation
Free tool →How each amount is worked out, with the tax treatment explained line by line.
Close the exit properly
Free tool →The UI-19 with the correct termination code, so the UIF claim is not held up by your paperwork.
Keeping the Record That Proves It
A retrenchment is won or lost on the paper trail. When it is tested, often a year later, by which time the manager who ran it has left, the question is not whether you meant well. It is whether you can produce the notice, the minutes of every meeting, the information you disclosed, the selection matrix you actually applied, and your written response to each proposal.
NALA knows the 2025 Code of Good Practice: Dismissal and walks you through the sequence in order. Synthro keeps every document on the employee record with its date, so the full history stays coherent long after the process closes.
Frequently Asked Questions
What is Section 189 of the Labour Relations Act?
Section 189 is the part of the LRA that governs dismissal for the employer’s operational requirements: retrenchment. It obliges an employer contemplating job cuts to consult, in good faith, before any decision is taken: on avoiding the dismissals, minimising them, changing their timing, mitigating their effects, the selection method, and severance pay.
How does the Section 189 process work?
The employer issues a written section 189(3) notice inviting consultation and disclosing the required information. Meaningful consultation meetings follow, with the employer responding in writing to every proposal made. Only once consultation has genuinely run its course may selection be applied and notice of termination given.
How long does a Section 189 process take?
For a smaller employer there is no fixed minimum: consultation must simply be genuine and complete, which in practice is usually two to six weeks. Where section 189A applies, notice of termination may generally only be given 60 days after the section 189(3) notice, with a 30-day period where no facilitator is appointed.
When does Section 189A apply instead of Section 189?
Section 189A applies where the employer employs more than 50 people and the number of proposed dismissals meets a threshold of 10 for employers of up to 200, rising on a sliding scale to 50 for employers of more than 500, measured over 12 months. It adds facilitation, minimum periods and a right to strike over the retrenchment.
Can an employee refuse to attend a Section 189 consultation?
They can, and the process does not stop. The employer’s duty is to give a genuine opportunity to consult, not to secure attendance. Record the invitation, the non-attendance and the deadline for written representations. An employer who documents the invitation properly is not prejudiced by a boycott.
What questions should employees ask during a retrenchment consultation?
The financial evidence behind the operational reason; which alternatives were considered and why they were rejected; the exact selection criteria and how they will be scored; whether vacancies elsewhere in the business exist; how severance was calculated; and whether preferential re-employment is offered, and for how long.
Is a Section 189 retrenchment automatically unfair without a union?
No. Section 189(1) sets an order of consulting parties: any person required by a collective agreement, then a workplace forum and registered union, then a registered union with members affected, and failing all of those, the employees themselves or their representatives. Consulting employees directly is correct where no union is present.
Can you be retrenched while on probation or maternity leave?
Yes to both, provided the process is genuine and the selection is not driven by the protected status. Retrenching someone because they are on maternity leave is an automatically unfair dismissal. Including them in an objective, consistently applied selection exercise is not, but expect it to be scrutinised closely.
What must the employer disclose in a Section 189(3) notice?
The reasons for the proposed dismissals, alternatives considered and why they were rejected, the number and categories of employees affected, the proposed selection method, the timing, severance pay proposed, assistance offered, prospects of future re-employment, the total number employed, and how many were retrenched in the preceding 12 months.
Can an employer change its mind during a Section 189 process?
Yes, and that is the point of consultation. An employer that emerges from the process having accepted no proposal and changed nothing invites a finding that the consultation was a formality. Recording where you did move (fewer cuts, later timing, a better package) is some of the strongest evidence of good faith.
This guide and pack reflect the Labour Relations Act, the Basic Conditions of Employment Act and the 2025 Code of Good Practice: Dismissal (effective 4 September 2025) as at August 2026. It is general information, not legal advice. Take advice on a large, contested, or section 189A retrenchment.
