Pay & Salary

Severance Pay Calculator (South Africa)

Updated November 2026 · Free · No sign-up

Calculate South African severance pay — retrenchment owes one week’s remuneration per completed year of service, on top of notice and leave payouts, with the reasonable-alternative-job forfeiture rule.

Quick answer: Retrenchment severance = 1 week’s remuneration × completed years of service (minimum — agreements often improve it). Refusing a REASONABLE alternative position forfeits it; dismissal for misconduct or resignation earns none.

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The Section 41 Rule

One week per completed year for dismissals based on operational requirements (retrenchment) — the floor; collective agreements and senior packages exceed it routinely. "Remuneration" is broad: salary PLUS regular payments in kind/allowances (housing, consistent commissions) per the remuneration definition — a wider base than many payrolls use.

Worked Examples

Example 1. R4,600/week, 9 completed years: R41,400 + notice (1-4 weeks by tenure) + leave payout.

Example 2 — the alternative-job rule. Employer offers a comparable role (same pay, reasonable location): refusing forfeits the severance — "reasonable" is the fight; materially worse terms keep your entitlement.

Example 3 — year counting. 9 years 11 months = 9 weeks (completed years only) — exits near anniversaries are worth timing where any control exists.

Process Rights (The Bigger Money)

Retrenchment requires s189 consultation (selection criteria, alternatives, timing); procedurally unfair retrenchments add compensation up to 12 months at the CCMA/Labour Court — the severance floor is often the SMALLER number in badly-run processes.

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The Exit Stack

Retrenchment final pay: severance + notice (or pay in lieu) + accrued leave + pro-rata bonus per contract + UI-19 for UIF. Tax: severance benefits get the retirement-style tax table — first R550,000 lifetime at 0% (verify current) — materially better than salary tax; ensure payroll applies the directive.

Frequently Asked Questions

How much is severance pay in South Africa?

One week’s remuneration per completed year of service for retrenchments — the BCEA floor, payable on top of notice and leave payouts.

Who qualifies for severance?

Operational-requirement dismissals (retrenchment) — not resignation or misconduct dismissals; refusing reasonable alternative employment forfeits it.

What counts as a week’s remuneration?

Salary plus regular allowances and payments in kind — the broad remuneration definition, wider than basic pay.

How is severance taxed?

Under the favourable retirement-fund tax table (lifetime R550k at 0% — verify current), not as ordinary salary — payroll needs the SARS directive.

What if the retrenchment process was unfair?

s189 consultation failures add CCMA/Labour Court compensation up to 12 months — often exceeding the severance itself.

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✓ Formula verified  •  Last updated: November 3, 2026