Retrenchments in Lesotho

Termination of an employee’s employment for operational reasons is called a retrenchment. Three main reasons may bring about such a termination/dismissal: fiscal strains on the employer’s side, technological advancement and/or restructuring. These reasons are common reasons, but the list is not exhaustive. There should, however, be a rational link between the intended business objective from the employer and the termination/dismissal. Section 19 of the Labour Code (Codes of Good Practice) Notice 2003 makes provision of all these factors of retrenchment and lays out the guiding principles thereof.

There are specific requirements an employer must comply with before resorting to the dismissal for operational requirements. These guidelines are outlined in the Labour Code (Codes of Good Practice) notice 2003. They include, but are not limited to, consultations in good faith between the employer and the employee(s); the purpose of negotiation is to permit the parties, in the form of a joint problem-solving exercise, to reach an agreement on alternatives to dismissals. Consider alternatives to the dismissal i.e., transfer to other jobs, temporary lay-offs, early retirement, reduced pay and/or demotion. The obligations placed on an employer are procedural and substantive, and fair in selecting the role(s) to be terminated. This is where the last-in, first-out (LIFO) criteria are applied. Consideration will also be given to the length of service, skills, qualifications, experience, age, and other reasonable criteria. The parties (employer and employee(s)) must seek and reach a consensus regarding all these. See Mpota v Standard Lesotho Bank (LAC/CIV/A/010/08) [2011] LSLAC 8. Section 13 of the Labour Code (Codes of Good Practice) states that a dismissal is unfair if the employer cannot prove the reason.

There are numerous/ various reasons considered fair, and they are laid out under section 16 of the Labour Code (Codes of Good Practice); they are, however, not exhaustive, and the Labour Code under section 66 provides for the unfair reasons for dismissal. Dismissal for operational requirements is listed as fair, and the employer should follow the abovementioned procedure. The procedure should also be conducted in good faith and fair, and transparent. Section 11 of the Codes of Good Practice provides for the fair procedure, while section 10 of the Codes provides for the criteria to determine the fairness of the reason behind the termination.