Question

Explain the term retrenchment.

Answer 1

In a continuing business, retrenchment refers to the permanent termination of an employee’s employment for financial reasons. Retrenchment does not occur when employees are let go due to disciplinary action, extended illness, retirement and superannuation, agreement expiration, or business closure.

The reason for the termination is worker redundancy. Employee animosity and feelings of insecurity are brought on by layoffs. Therefore, in order to prevent him from speaking negatively about his employer, an employee should be let go without feeling humiliated or resentful.