Mini-Retrenchments Made Simple: A Guide for South African SMEs

Retrenchments are never easy, especially for small businesses trying to stay afloat in a tough economy. But if you're a South African SME and you find yourself in a position where you have to reduce staff to keep the lights on, it's important to understand how "mini-retrenchments" work under Section 189 of the Labour Relations Act.

Section 189 comes into effect when an employer needs to dismiss employees due to operational reasons. These could include financial constraints, restructuring, or changes in technology or processes. For SMEs, this often happens when you're forced to downscale due to rising costs or declining revenue. If you're letting go of fewer than ten employees over 12 months, this is what’s referred to as a “mini-retrenchment.” The good news is that the process is a bit less formal than when retrenching larger numbers, but it still needs to be handled correctly and fairly.

The law doesn’t expect you to follow the same detailed consultation process required for large-scale retrenchments. However, you still need to engage meaningfully with the affected employees or their representatives. That means having honest discussions about why the retrenchment is necessary, how employees were selected, and whether there are any alternatives to job losses. You don’t need to submit notices to the Department of Labour like in larger retrenchments, but you do need to keep records of your consultations and ensure that you gave people a fair chance to comment or propose solutions.

Too often, small businesses overlook the emotional and legal impact of retrenchment. People aren't just losing jobs; they’re losing income, security, and sometimes a sense of purpose. So it’s best to handle the process with compassion, transparency, and respect. Be clear about what you can offer in terms of notice pay, severance, and support. If your budget allows, consider assisting the affected staff by providing references or leads for new opportunities.

While cutting jobs might feel like a failure, it’s sometimes the only way to give your business a chance to survive. Just remember that doing it the right way doesn’t only protect your team’s dignity—it also protects your business from unnecessary legal trouble. Mini-retrenchments may be smaller in scale, but they carry big responsibilities. If you're unsure about the process, it’s always wise to get legal advice tailored to your specific situation. It could save you time, money, and reputational harm in the long run.

The StartUp Legal offers expert legal services tailored for SMEs, helping you secure a winning edge. For personalized support, book a complimentary consultation: https://calendar.app.google/jvrnTkNsYSZijq1T7 or email us at hello@thestartuplegal.co.za

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