Severance Payment

Remuneration by definition means “any payment in money or in kind, or both in money and in kind, made or owing to any person in return for that person working for any other person, including the State” In the case of severance pay section 35(5) allows an employer to exclude allowances, gratuities that are ordinarily paid for purposes of enabling an employee to work and discretionary payment that are not related to hours of work or work performance.

A retrenched employee loses any right to severance package if one unreasonably refuses an offer of alternative employment with one’s employer or another employer. It is important to note that S 41 states that it is the reasonableness of the refusal and not the reasonableness of the offer.

Disputes relating to Severance Pay

Disputes arising out of entitlement of severance pay may be referred to CCMA or to a bargaining council with the necessary jurisdiction.

These forums will seek to resolve the issue by conciliation. Should this fail it may be referred to arbitration. The labour court may inquire and determine the amount of severance pay to be paid to an employee if it is adjudicating a dispute about operational requirements.

A retrenched employee entitled to certificate of service

See attached Calculation of employee’s remuneration in terms of section 35(5) of The Basic Conditions Of Employment Act, 1997 (act 75 of 1997) 

For Some Useful Information, please see:

• Arbitration
• Dispute resolution process
• Conarb process
• Concilliation
• Condonation
• CCMA rules