Question 1

How much severance pay am I entitled to?

Accepted Answer

The legal minimum is 1 week's pay for every completed year of service. So if you worked for 5 years and earn R20,000/month, your minimum severance is 5 weeks × R5,000/week = R25,000. Many employers offer more than the minimum.

Question 2

Is severance pay taxed?

Accepted Answer

Yes, but at a special lower rate. The first R500,000 of severance is tax-free (lifetime limit). After that, it's taxed on a sliding scale similar to retirement fund withdrawals. This is much lower than normal income tax.

Question 3

Do I get paid for unused leave days?

Accepted Answer

Yes. Your employer must pay you for all accumulated annual leave days you haven't taken. This is calculated at your normal daily rate. This payment is taxed as normal income (not at the special severance rate).

Question 4

What notice period am I entitled to?

Accepted Answer

1 week if employed less than 6 months. 2 weeks if employed 6 months to 1 year. 4 weeks if employed more than 1 year. Your employer can pay you out instead of making you work the notice period (payment in lieu of notice).

Question 5

Can I claim UIF after retrenchment?

Accepted Answer

Yes. You can claim UIF for up to 238 days (about 8 months) depending on how long you contributed. You get between 38-60% of your salary (capped at R17,712/month). Apply at your nearest Labour Centre within 6 months of losing your job.

Question 6

What is the difference between retrenchment and dismissal?

Accepted Answer

Retrenchment is when your job is cut due to business reasons (company restructuring, financial problems). Dismissal is when you're fired for misconduct or poor performance. Retrenchment entitles you to severance pay; dismissal does not.

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