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RECENT CASE LAW
Retrenchment pay: how much?
Retrenchment is a traumatic experience for all concerned, and a costly one.
In summary (there are grey areas here, so take proper advice in doubt), retrenched employees must be paid: -
- All outstanding salary or wages
- Any other benefits due in terms of the employment contract (e.g. pro rata bonuses, etc)
- Notice pay (where no notice period is worked)
- Any leave pay due
- Retirement benefits per the relevant fund, if applicable
- Severance pay*. The minimum severance pay is 1 week’s remuneration for every completed year of continuous service (“remuneration” includes any payment in kind and also certain discretionary payments – take advice in doubt). This minimum may increase – often to 2 weeks’ remuneration or more – where a higher rate is stipulated in, for example,
- The employer’s standard retrenchment policies
- The particular employment contract
- An agreement reached during the consultation process leading to the retrenchment, etc.
* Note that severance pay is not payable if the employee, on being offered alternative employment, "unreasonably refuses" the offer.
The employee must also be given a certificate of service and (where applicable) his/her UIF card.
Don’t take a chance – seek advice if there is anything you don’t fully understand! At Bissets we advise on all aspects of labour law. Should you wish to speak to an expert about any labour law related concern you may have, please feel free to contact Mr Adam Brink at (021) 441 9800 or at a.brink@bissets.com.
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