Retrenchment in South Africa: Your Rights and How to Claim UIF

What is Retrenchment?

Retrenchment is the termination of your employment based on your employer's operational requirements. This is defined in Section 213 of the Labour Relations Act (LRA). It is not a dismissal for misconduct or poor performance—those are different processes.

Valid Reasons for Retrenchment

Your employer can retrench you for legitimate operational reasons, such as:

Economic reasons: The company is losing money, revenue has dropped, or operational costs have increased significantly.
Technological changes: Automation or new systems make your role redundant.
Structural reorganization: The company is restructuring departments or closing down a division.

The employer cannot use retrenchment as a way to get rid of employees they don't like. If the real reason is misconduct or performance, the retrenchment is unfair.

The Legal Process: Section 189 Consultation

Employers cannot just hand you a letter and tell you to leave. They must follow a fair procedure under Section 189 of the LRA:

1. Written Notice

The employer must give you written notice stating:

The reasons for the proposed retrenchments.
How many employees will be affected.
The selection criteria (why you were chosen).
The proposed severance pay.
Whether there are alternatives to retrenchment.
A date for consultation.

2. Meaningful Consultation

You (and your union representative, if applicable) have the right to meet with management to:

Discuss alternatives to retrenchment (e.g., short time, voluntary retrenchments, salary cuts).
Challenge the selection criteria.
Negotiate better severance packages.

The consultation must be meaningful—not just a tick-box exercise. If the employer has already made up their mind and won't consider alternatives, the process is unfair.

3. Selection Criteria

The criteria used to select who gets retrenched must be fair and objective. Common criteria include:

Last In, First Out (LIFO): Employees with the least service are retrenched first.
Skills and qualifications: The company keeps employees with critical skills.
Performance: Based on documented performance reviews.

Discriminatory criteria (e.g., retrenching older workers or pregnant women) are illegal.

What Payments Are You Entitled To?

When you are retrenched, you are legally entitled to the following:

1. Severance Pay

The minimum severance pay is one week's salary for every completed year of service. For example:

If you worked for 5 years, you get 5 weeks' pay.
If you worked for 10 years, you get 10 weeks' pay.

Your employer or your employment contract may offer more than this (e.g., 2 weeks per year), but they cannot pay less.

2. Notice Pay

You are entitled to notice (or payment in lieu of notice):

1 week if you worked less than 6 months.
2 weeks if you worked 6 months to 1 year.
4 weeks if you worked more than 1 year.

3. Leave Pay-Out

Any unused annual leave days must be paid out to you in cash.

4. Other Benefits

Depending on your contract, you may also be entitled to:

Pro-rata bonus (if applicable).
Provident fund or pension fund payout.
13th cheque (if you've worked part of the year).

Unfair Retrenchment: When to Challenge It

A retrenchment is unfair if:

The employer did not consult you properly.
The selection criteria were unfair or discriminatory.
The employer could have avoided the retrenchment but didn't explore alternatives.
You were retrenched, but then the company hired someone new to do your job (this means it wasn't a genuine retrenchment).

If you believe your retrenchment was unfair, you can refer a dispute to the CCMA within 30 days of your last day of work.

Claiming from the Unemployment Insurance Fund (UIF)

The UIF provides short-term financial relief to workers who lose their jobs. Here's how to claim:

Am I Eligible?

You can claim UIF if:

You and your employer contributed to the UIF while you were employed (1% from you + 1% from your employer = 2% total).
You were retrenched, dismissed, or your contract ended (but not if you resigned, unless it was constructive dismissal).
You register as a work-seeker and actively look for work.

How Much Will I Get?

UIF pays a sliding scale based on your previous salary:

If you earned R4,000 or less per month, you get 38% to 58% of your salary.
If you earned more than R17,712 per month (the UIF ceiling), your benefit is capped.

You can claim for one day of UIF benefits for every six days you worked, up to a maximum of 365 days (1 year) of benefits over your working lifetime.

How Do I Apply?

Step 1: Register as Unemployed

You must register with the Department of Employment and Labour as a work-seeker. You can do this online at u-File (TERS) or at your nearest Labour Centre.

Step 2: Get a UI-19 Form from Your Employer

Your employer must give you a completed UI-19 form. This is a certificate showing your employment history and contributions to the UIF. If your employer refuses, you can report them to the Department of Labour.

Step 3: Gather Supporting Documents

You will need:

Your South African ID or valid passport.
The UI-19 form from your employer.
Your last 6 months' payslips.
Your bank statement (showing your account details).
Proof of registration as a work-seeker.

Step 4: Submit Your Claim

You can submit your UIF claim:

Online: Via the uFiling system at www.ufiling.labour.gov.za (recommended for speed).
In person: At your nearest Labour Centre.

Step 5: Await Payment

Once approved, UIF benefits are usually paid within 2-4 weeks. Payments are made monthly into your bank account.

Common UIF Problems and Solutions

Problem: My employer won't give me the UI-19 form. Solution: Report them to the Department of Labour. You can also apply without it, but the process will take longer as the UIF will need to verify your employment records.

Problem: My employer didn't pay UIF contributions. Solution: This is a serious offense. Report your employer to the Department of Labour. Unfortunately, if contributions were not made, you cannot claim UIF benefits for that period.

Problem: My claim is taking too long. Solution: Contact the UIF call centre at 012 337 1680 or visit your Labour Centre to follow up on your claim status.

Key Takeaways

Retrenchment must be for genuine operational reasons, not personal issues.
Your employer must consult you and follow a fair process.
You are entitled to severance pay (minimum 1 week per year of service), notice pay, and leave pay-out.
Challenge an unfair retrenchment at the CCMA within 30 days.
Claim UIF as soon as possible—you have 6 months from your last day of work.
Keep all your documentation (payslips, employment contracts, and the UI-19 form).