It is advisable to seek professional assistance with any retrenchment.

Retrenchments are covered in the Labour Act (Chapter 28.01) Section 12C.  Procedures to follow are:

1. The employer should first identify the grounds for retrenchment, the employees to be retrenched, and the proposed terms and conditions of the retrenchment.

2. Written notice of the retrenchment should then be given to the organization’s Works Council, NEC, or Retrenchment Board (Section 12C (1) (a))

3. The written notice should state the details of every employee whom the employer wishes to retrench and the reasons for the proposed retrenchment (3. Section 12C (1) (b))

4. The Works Council or NEC should attempt to reach an agreement between the employer and employees as to whether or not the employees should be retrenched and, if they are to be retrenched, the terms and conditions on which they may be retrenched taking into account the continuance of operations of the organization and the mitigation of consequences of retrenchment on the employees.

5. Negotiations must be concluded within one month.  If no agreement has been reached the matter should be referred, in writing together with supporting documentation, to the Retrenchment Board.

6. The Retrenchment Board shall consider the matter and make a recommendation to the Minister on whether to permit the retrenchment and the terms and conditions that should apply within two weeks.

7. If the Retrenchment Board fails to decide the documentation regarding the case will be forwarded, within two weeks, to the Minister for a decision on whether to allow or disallow the retrenchment.

8. If the Minister fails to decide within the time frames provided then the scheme of retrenchment will be deemed to have been approved.

9. When an agreement is reached LRR2 form is submitted

10. Final approval granted by Ministry

Acceptable grounds for retrenchment

- Liquidation,

- Restructuring,

- Mergers, and

- Overstaffing.

A retrenchment package could include:

- 3 Months’ Notice Pay

- Severance Package

- Service Allowance

- Relocation Allowance

- Medical Aid for 3 - 6 Months

- Purchase of assets at book value

Follow the steps below to correctly process a retrenchment package in Belina Payroll.

Step 1 – Verify Tax Settings

1.Go to Setup → Tax → Existing.

2.In the bottom right corner of the Tax Settings screen, check the Retrenchment Parameters.

•Exemption: ⅓ of package or minimum of USD 3,200

•Limit: USD 5,033.33 (⅓ of USD 15,100)

If the values are incorrect, update them to match the current legislation.

Step 2 – Create a Retrenchment Transaction Code

If a retrenchment transaction code does not already exist, create one:

1.Go to Edit → Transaction Codes.

•Click Insert.

•Select the 'Earnings - Retrenchment' earning category

•Enter a suitable Description (this appears on the payslip).

•Verify Default Currency is correct. If not, change it.

•Select Manual Edit to allow amount entry per employee.

•Click OK to save.

Note: In a dual-currency payroll where the retrenchment package is also processed in two currencies, create two transaction codes—one in USD and another in ZWG.

Step 3 – Insert Retrenchment Amount on Payslip

You can process retrenchment using Payslip Input which allows capturing payslip transactions for individual employees. Use Bulk Input if the amounts are the same for groups of employees, or Speed Input as alternative methods.

To process using Payslip Input:

1.Go to Process → Payslip Input.

2.Select the employee.

3.In the Payslip Input screen, click Insert.

4.Select the Retrenchment Transaction Code.

5.Enter the retrenchment amount in Employee Amount.

6.Click OK to save.

7.Repeat for all employees receiving a retrenchment payment.

Belina Payroll will automatically calculate tax on the retrenchment amount based on your configured exemption rules. Any amount above the exemption is taxed using the gazetted tax tables for the year.