Retrenchment Pauses and Procedural Fairness

Retrenchment Pauses and Procedural Fairness: When Employers Must Restart Consultations

The Labour Court has once again reaffirmed the importance of procedural fairness in retrenchment processes under section 189A of the Labour Relations Act (LRA), 66 of 1995. In NUMSA v ArcelorMittal South Africa (2025), Acting Judge Harvey ruled that employers cannot simply resume a retrenchment process that has been paused for several months without revisiting consultations — particularly where the operational or financial circumstances have materially changed.

This ruling serves as a critical reminder that a temporary pause in a retrenchment process does not equal a procedural reset or closure. Employers must remain vigilant to ensure that consultations reflect current realities and maintain the integrity of the joint consensus-seeking process mandated by the LRA.

Background of the Case

ArcelorMittal South Africa (AMSA) initiated a section 189(3) consultation process in January 2025 to retrench approximately 2,000 employees within its Newcastle and Vereeniging operations. The consultations were facilitated by the Commission for Conciliation, Mediation and Arbitration (CCMA), as required for large-scale retrenchments under section 189A.

By March 2025, AMSA temporarily suspended the retrenchment process following financial relief interventions — including support from the Industrial Development Corporation (IDC) and access to Temporary Employer/Employee Relief Scheme (TERS) funding.

However, six months later, in September 2025, AMSA resumed the retrenchment process and issued dismissal notices without reconvening consultations or updating affected parties on changes to the business context.

The National Union of Metalworkers of South Africa (NUMSA) objected, arguing that significant new developments warranted a fresh consultation process, including:

The IDC’s due diligence process and a potential R8.5 billion acquisition proposal;
A revised NERSA tariff structure; and
AMSA’s own operational and efficiency improvements.

The Legal Question

The Court was tasked with determining whether AMSA was entitled to continue retrenchments based on the January 2025 notice, or whether the changed circumstances required the employer to restart consultations in accordance with section 189A(13) of the LRA.

The Court’s Findings

The Labour Court held that AMSA acted procedurally unfairly by relying on the January process after a prolonged suspension and significant contextual shifts.

In its judgment, the Court emphasized that consultation is not a one-time event, but rather a dynamic, evolving process that must reflect the employer’s current operational context:

“By treating the January consultations as concluded and the deferral period as irrelevant, the employer deprived the union of an opportunity to engage on matters central to meaningful joint consensus-seeking.” — Harvey AJ (2025)

Accordingly, AMSA was ordered to:

Reinstate the affected employees; and
Resume consultations within 10 days, ensuring that new developments were fully discussed.

Comparative Legal Analysis

The Court’s reasoning aligns with established principles in earlier cases:

In Barloworld Equipment v NUMSA (2022) ZALCJHB 197, the Labour Court held that “consultation must be genuine and based on the employer’s prevailing operational requirements.”
In Steenkamp & Others v Edcon Ltd (2019) 40 ILJ 1731 (CC), the Constitutional Court reaffirmed that procedural fairness remains vital even after dismissals, and remedies under section 189A(13) are available to enforce it.
Similarly, NUMSA v General Motors South Africa (2009) 30 ILJ 1175 (LC) highlighted that the cessation and resumption of retrenchment consultations cannot be arbitrary — they must remain substantively fair and consultative.

Together, these precedents underline that fairness evolves over time, and employers must adapt to changing business realities.

Broader Insights from Labour Experts

Labour specialists such as Grogan (2022) and Du Toit et al. (Labour Relations Law, 7th ed.) note that the purpose of section 189 consultations is to facilitate meaningful participation by employees and trade unions in decisions that impact employment security.

If circumstances such as new funding, acquisitions, or strategic shifts occur, continued consultation ensures transparency and good faith in the process — a principle supported by international labour standards under the ILO Convention 158 on Termination of Employment.

Practical Implications for Employers

Pause ≠ Termination
- A suspended retrenchment process should be treated as temporarily halted, not complete. Any major lapse in time or change in circumstances warrants renewed engagement.
Update Stakeholders
- Communicate openly with trade unions and employee representatives about financial or operational changes that could influence retrenchment decisions.
Document the Process
- Maintain detailed records of communications, postponements, and consultations to demonstrate procedural compliance if challenged.
Engage in Good Faith
- Employers should avoid the perception of “rubber-stamping” previous decisions. Genuine engagement helps mitigate disputes and reputational damage.

The ArcelorMittal ruling reinforces a central tenet of South African labour law: procedural fairness is not static. When an employer pauses a retrenchment process and material conditions subsequently change, fairness requires a fresh, transparent consultation process.

In essence, when “pause” means “restart”, employers must ensure that every step taken aligns with both the letter and spirit of section 189A — promoting equitable, lawful, and ethical retrenchment practices.

At HR Consult, we assist organisations in managing disciplinary procedures, union relations, and communication policies that align with the Labour Relations Act and best-practice industrial relations standards.

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Adapted by HR Consult, specialists in South African labour and employment law compliance.

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