Section 189: The Consultation Mistake That Invalidates Retrenchments

For many employers, the biggest legal risk in a retrenchment is not the commercial reason for the restructure. It is the consultation process.

This is where retrenchments most often fail.

Employers frequently assume that once the business has decided jobs must go, the legal requirement is simply to notify employees, explain the reasons and move forward. That is not what section 189 of the Labour Relations Act requires. In South Africa, consultation must be a genuine joint consensus-seeking process. When employers treat it as a formality, the retrenchment process can unravel very quickly.

Why Consultation Matters So Much

Section 189 does not only regulate the outcome of a retrenchment. It regulates the process that leads to it.

That means an employer cannot simply make a final decision behind closed doors and then present it to employees as a done deal. Once that happens, consultation loses its purpose. It becomes a notification exercise rather than a legal process and that is where employers create serious exposure.

In practice, many retrenchment disputes turn on one issue: whether the employer genuinely consulted or whether the outcome had already been decided.

The Consultation Mistake That Causes the Most Damage

The most common and most dangerous mistake is this:

The employer decides on retrenchment before consultation starts and then uses consultation to communicate the decision rather than to test it.

That single error can undermine the fairness of the entire process.

Consultation under section 189 is not there to justify a decision already taken. It is there to engage on whether retrenchment can be avoided, reduced or structured differently. If the employer has already closed its mind, the process is vulnerable to challenge from the outset.

What Employers Often Get Wrong

In many businesses, the internal process looks something like this:

• management decides roles must be cut

• the organogram is finalised

• the affected employees are identified

• the decision is announced as part of a consultation meeting

From a business perspective, this may feel efficient. From a legal perspective, it is dangerous.

The moment employees can show that the employer had already made up its mind, the consultation process may be attacked as meaningless. This creates risk even where the underlying financial or operational rationale is sound.

Consultation Is Not Notification

This distinction is critical.

Employers are often surprised to learn that consultation is not satisfied by telling employees:

• why the business is restructuring

• how many positions will be affected

• when terminations are likely to occur

That is information sharing. It is not consultation in the legal sense.

A lawful section 189 process requires genuine engagement on issues such as:

• whether retrenchment is necessary at all

• how dismissals can be avoided

• how the number of dismissals can be reduced

• the timing of dismissals

• the selection criteria to be applied

• severance and related consequences

If those issues are presented as fixed and non-negotiable, the employer may already be on the wrong side of the law.

Why This Mistake Is So Costly

When consultation is defective, the consequences can be severe.

Employers may face:

• unfair dismissal claims

• urgent applications to stop the retrenchment process

• orders requiring the process to start again

• compensation claims

• major operational delays

• reputational damage

What makes this especially frustrating for employers is that they often do have a legitimate operational reason. The problem is that a valid reason does not cure a defective process.

That is the hard lesson many employers learn too late.

The “Predetermined Outcome” Problem

One of the most common allegations in retrenchment disputes is that the consultation process was a sham because the outcome was predetermined.

Employees may point to:

• internal communications showing the decision was already final

• pre-selected employees or departments

• fixed implementation dates set before consultation

• refusal to consider alternatives

• a consultation meeting that feels like an announcement

Even where none of this was intended unfairly, it can create a powerful impression that the process was never open.

That is often enough to trigger a dispute.

The Danger of Treating Section 189 as an HR Exercise

Another common mistake is treating retrenchment consultation as an administrative HR step rather than a legally sensitive process.

Once this happens, employers often move too quickly, document too little and engage too narrowly. They focus on execution rather than fairness. That may work operationally in the short term, but it is exactly what creates legal vulnerability later.

Retrenchments are not ordinary terminations. They are one of the most scrutinised dismissal processes in South African labour law.

Small Businesses Make This Mistake Too

There is a common assumption that only large corporates face real section 189 risk.

That is incorrect.

Small and medium-sized businesses often make the same consultation error, usually because they believe a smaller retrenchment allows for a more informal approach. It does not. The duty to consult meaningfully still applies. A smaller employer may have fewer layers of process, but not fewer legal obligations.

What Employers Should Take Away

The key lesson is simple:

Do not treat consultation as a step that follows the decision. Treat it as part of the decision-making process itself.

The moment the process becomes performative, the risk escalates. Employers do not need to abandon commercial realities or surrender decision-making authority. But they do need to show that consultation was genuine, open and legally defensible.

That is where many retrenchments succeed or fail.

Final Thoughts

Section 189 consultation is often where retrenchments are won or lost.

Most employers do not get into trouble because the business lacked a reason to restructure. They get into trouble because they approached consultation too late, too narrowly or with a closed mind.

That single mistake can invalidate an otherwise legitimate retrenchment process and expose the business to unnecessary cost and disruption.

Need Advice on a Retrenchment Process?

Barter McKellar advises employers on section 189 consultations, restructuring exercises, retrenchments and Labour Court disputes.

If your business is considering retrenchments, early legal input can make the difference between a defensible process and an expensive dispute.