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Recently proposed labour law amendments will, if implemented, result in employers having to pay retrenchees two weeks’ pay per year of service instead of the 1 week per year currently prescribed. While this would initially assist retrenchees financially until they find new work it will deplete the finances of employers who are retrenching. This extra cost could force employers to retrench more employees as a way of making up for the cost of the doubled retrenchment bill. This will not only weaken the viability of the business but will also cause increased unemployment.
This amendment might make sense in a case where the employer is retrenching for reasons other than financial difficulties, such as the introduction of AI or other technology to replace employees.
Based on the abovementioned potential unintended consequences of doubling the severance pay, ought the legislators to rethink this proposed amendment?
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