How Proper Guidance on Retrenchment Processes can save Your Business
The Labour Court recently dismissed a challenge by the National Union of Metalworkers of South Africa (NUMSA) against Cube Route Logistics for the retrenchment of 20 employees, affirming the substantive fairness of the process under sections 189 and 189A of the Labour Relations Act (LRA). This judgment, delivered on 28 January 2026, underscores critical lessons for employers navigating retrenchments.
Cube Route Logistics, assisted by Labournet, initiated retrenchments in November 2019 amid a 30% business decline, rising wage costs, and a R22 million loss in the 2018/19 financial year, exacerbated by reduced volumes from key client Royal Canin. Employing 166 staff, the company targeted 36 positions via a facilitated Section 189A process, proposing alternatives such as short-time and bonus changes, and proposing Last-In-First-Out (LIFO) as a fair and objective selection criterion. Consultations spanned December 2019 to April 2020, but broke down over disagreements on short-time proposals, leading to dismissals on 9 April 2020.
The Court found a valid commercial rationale, accepting unchallenged evidence of unsustainable operations despite prior cost-cutting, including director salary sacrifices. On alternatives, Cube Route engaged meaningfully, countering NUMSA’s 152-hour short-time proposal with 130 hours in addition to pro rata picking and offloading bonuses, offering voluntary severance packages (taken by six employees), and considering Temporary Employer/Employee Relief Scheme (TERS) – contradicting NUMSA’s pleaded case of non-consideration. Selection via LIFO was deemed fair and objective, as NUMSA failed to plead or evidence specific misapplications such as comparative service lengths or improper retentions. A central theme was the plaintiff’s failure to align trial arguments with their statement of claim and pre-trial minute, rendering new claims on alternatives and selection inadmissible.
Citing precedents such as SA Breweries v Louw and Minister of Safety v Slabbert, the judgment stresses that pleadings define the dispute, bind parties post pre-trial, and prevent “making up one’s case” at trial – ensuring fair notice and judicial efficiency. Arend Posthuma from Snyman Attorneys expertly defended the respondent in the matter, ensuring that fairness prevailed.
Throughout the Section 189A process, Labournet facilitated and guided Cube Route through consultations, proposals, and compliance to secure a defensible process that withstood Labour Court scrutiny.
Reinstatement with back-pay would have forced Cube Route into business rescue, crippling operations amid ongoing losses.
The ruling reinforces retrenchment principles: Prove valid rationale for terminations, explore alternatives genuinely, apply objective criteria, and plead disputes precisely in court. Employers facing operational pressures should partner with specialists to mitigate disputes and safeguard viability.
Full details of the actual judgement can be found here: https://www.saflii.org/za/cases/ZALCJHB/2026/19.html
