Human Resources
Retrenchment
Definition
Retrenchment is the termination of employees because the employer has surplus staff, for example after restructuring or falling business, not because of misconduct or poor performance.
How should an employer plan a retrenchment fairly?
Plan it with written reasons and selection criteria, and consult staff early.
- Look at alternatives first, such as redeployment.
- Apply the selection criteria consistently.
- Pay the notice and termination benefits that the law and contract require.
- Check current reporting duties with JTKSM before notices go out.
What happens for employees after retrenchment?
Affected employees may apply for support under the Employment Insurance System. The Retrenchment and Workforce Reduction Management course covers planning, consultation and records.
Where can you go next?
Courses, checks and reading on the same work.- CourseRetrenchment & Workforce Reduction Management
- CourseEmployee Dismissal & Termination Management
- CertificationCertified HR Separation Manager (CHSP)
- Free online assessmentAre your discipline and termination steps fair and documented? Free separation check
- Glossary termEIS (SIP)
- Glossary termEmployment Act 1955
- Glossary termDomestic inquiry
Which sources does this page use?
Updated 20 October 2026. General information from the Certifyd team, not legal, tax or safety advice for your workplace.