South Africa: Selection Criteria For Retrenchment: The Fair And Objective Requirement

Last Updated: 27 April 2016
Article by Alex Ferreira

Most Read Contributor in South Africa, September 2016

Article by Alex Ferreira and Pieter Moll

One of the issues an employer is obliged to consult on during a potential retrenchment process is the selection criteria to be applied when determining which employees will be dismissed and which will be retained. In doing so, the employer should aim to reach agreement with the other consulting party/parties on what the selection criteria should be. But what happens if an employer reaches agreement with one or some of the consulting parties, but fails to reach agreement with all of them? Furthermore, to the extent trade unions typically tend to rely on the "last in, first out" ("LIFO") principle during consultation, can an employer deviate from LIFO in instances where relying on it may jeopardise the company's ability to remain competitive? If this is the case, may an employer instead use selection criteria that contain an element of potential subjectivity? 

The recent judgment of the Labour Court in National Union of Metalworkers of South Africa and others v Columbus Stainless (Pty) Ltd (JS529/14), handed down on 30 March 2016, provides useful guidance on these questions.

National Union of Metalworkers of South Africa and others v Columbus Stainless (Pty) Ltd

In this case, Columbus Stainless (Pty) Ltd (the "Company") was confronted with weak demand, low prices and significant cost pressures. In order to counter these factors, it proposed a reduction of approximately 220 positions across the entire business. The Company issued a formal section 189(3) letter to the relevant parties and, because a large-scale retrenchment was proposed in terms of the Labour Relations Act 66 of 1995 ("LRA"), section 189A was invoked and the consultation process was chaired by a facilitator requested by the Company.

The Company proposed multi-rating selection criteria, which, in essence, involved a multifaceted assessment comprising various components, each weighted differently. These included:

  • past performance (weighted at 50%);
  • qualifications (20%);
  • years of service (15%); and
  • direct supervisor review (including an assessment of factors such as commitment to company and team goals, teamwork and dependability, discipline, attendance, flexibility, initiative and career potential) (15%).

During the facilitated consultation process, certain amendments were negotiated with some of the consulting parties and conceded to by the Company. The final multi-rating selection criteria were ultimately agreed to with the representatives of approximately two thirds of the workforce. However, the National Union of Metal Workers of South Africa ("NUMSA"), representing approximately one third of the workforce, challenged this selection criteria and insisted on the application of LIFO only.
The requirement to consult on selection criteria stems from section 189(2)(b) of the LRA. Furthermore, section 189(7) provides that "the employer must select the employees to be dismissed according to selection criteria that have been agreed to by the consulting parties; or if no criteria have been agreed, criteria that are fair and objective." It is clear from this formulation that agreed selection criteria enjoy primacy, and only where no agreement is reached will the secondary dual requirements of fairness and objectivity be triggered.

Section 189(7) does not, however, expressly and unequivocally address situations whereby an agreement is reached with only some of the consulting parties. However, the Labour Court has now provided some clarity to this aspect by finding that the multi-rating selection criteria applied by the Company were consistent with the requirements of section 189(7). The criteria were fair and objective in terms of that section, despite a measure of apparent or potential subjectivity attached to at least some of the criteria applied.  

The following principles can be gleaned from the judgment:

  • although the Labour Court has recognised the objectivity of length of service, it has never endorsed LIFO as the only fair and objective criterion. On the contrary, there are numerous decisions in which the court has held that an employer is entitled to adopt criteria such as experience, competency, efficiency and skills. There have also been earlier cases where the court has held that an employer is entitled to select employees on the basis of key skills retention, continued service delivery, performance appraisals and qualifications.
  • when selecting employees for retrenchment, it is important to remember that retrenchment is a "no-fault dismissal". Therefore, if an employer takes into account past performance (or discipline, for that matter), the criteria need to be clear and transparent, and applied in a way that the process does not degenerate into a dismissal for misconduct, poor performance or incapacity. This points to the importance of the methodology applied by the employer. The assessment or rating system itself must be applied fairly, consistently and objectively. This suggests that if the methodology is fair, consistent and objective, this may cure a certain amount of subjectivity attached to the selection criteria themselves. The Labour Court referred to these as "procedural safeguards".
  • if the above reasoning is applied to the wording in section 189(7)(b), it is clear that the requirement for objective criteria is not absolute: a measure of subjectivity may be allowed, as long as the criteria are, for the most part, objective. The Labour Court held that the Company "met the threshold of objectivity and fairness", which also suggests that the concept is not absolute.
  • By the same reasoning, it is clear that the fairness required by section 189(7) is also not absolute, and must be assessed with reference to all affected parties, including the employer. The Labour Court illustrated this principle as follows:

"For an employer not to implement criteria agreed with the majority of representatives in a consultation process would in all probability be unfair; it would be equally unfair to apply a disparate range of selection criteria depending on a particular consulting party's preferences or demands. In the present instance, in the context of the retrenchment process as a whole and the need to balance fairness amongst all of the various consulting partners, including the [employer], the [employer's] decision was clearly a fair one."  

Practical measures for retrenchment selection

If an employer's business and operational needs require it to make use of multi-rating selection criteria during a retrenchment exercise, we suggest that the following practical measures should be followed to increase the likelihood of the employer meeting the threshold of objectivity and fairness:

  • attempt to reach agreement on the selection criteria with as many of the consulting parties as possible (preferably the majority).
  • be open to the idea of amending or tweaking the criteria if this will facilitate agreement with the other consulting parties.
  • ensure that the selection criteria are rationally connected with the operational reasons for the retrenchment and/or the ultimate purpose of the retrenchment exercise.
  • be careful of applying criteria that contain an element of potential subjectivity. If aspects such as experience, skill, adaptability, attitude and potential, are used, then ensure that a rating system that is applied fairly, consistently and objectively is used.
  • performance or past conduct should preferably be used only in circumstances where there is already an assessment system in place, preferably in terms of a pre-existing collective agreement (i.e. pre-dating the retrenchment exercise), and that same system should be used, preferably with reference to pre-existing assessments of performance and/or conduct.
  • ensure that employees have an opportunity to dispute and/or object to their assessments.
  • describe each selection criterion as clearly as possible, and measure it in a transparent, fair and consistent manner, as objectively as practically possible.
  • if there is an element of subjectivity to the assessment, or there is the potential for this, appoint a panel of multiple supervisors to moderate any potential subjectivity.

* ENSafrica acted for Columbus Stainless (Pty) Ltd in this matter.

Pieter Moll is a candidate attorney in the employment department at ENSafrica.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.