Pay & Employment
Severance Pay Calculator
Retrenchment severance pay under the BCEA: one week's pay for each completed year of service.
Result
Updates as you typeMinimum severance pay
R 32 307,66
- Weekly remuneration (monthly ÷ 4⅓)
- R 4 615,38
- Completed years
- 7
- Weeks of severance pay
- 7
How it's calculated
Section 41(2) of the Basic Conditions of Employment Act requires an employer who dismisses an employee for operational requirements to pay severance of at least one week's remuneration for each completed year of continuous service. Remuneration is calculated under section 35: a month is 4⅓ weeks, and benefits in kind count.
Worked example
R 20 000 a month, 7 completed years:
- Weekly: R 20 000 / 4⅓ = R 4 615,38
- Severance: R 4 615,38 × 7 = R 32 307,66
Severance pay table
| Monthly pay | 1 year | 3 years | 5 years | 10 years | 20 years |
|---|---|---|---|---|---|
| Monthly pay: R 10 000 | 1 yearR 2 307,69 | 3 yearsR 6 923,07 | 5 yearsR 11 538,45 | 10 yearsR 23 076,90 | 20 yearsR 46 153,80 |
| Monthly pay: R 15 000 | 1 yearR 3 461,54 | 3 yearsR 10 384,62 | 5 yearsR 17 307,70 | 10 yearsR 34 615,40 | 20 yearsR 69 230,80 |
| Monthly pay: R 20 000 | 1 yearR 4 615,38 | 3 yearsR 13 846,14 | 5 yearsR 23 076,90 | 10 yearsR 46 153,80 | 20 yearsR 92 307,60 |
| Monthly pay: R 30 000 | 1 yearR 6 923,08 | 3 yearsR 20 769,24 | 5 yearsR 34 615,40 | 10 yearsR 69 230,80 | 20 yearsR 138 461,60 |
| Monthly pay: R 50 000 | 1 yearR 11 538,46 | 3 yearsR 34 615,38 | 5 yearsR 57 692,30 | 10 yearsR 115 384,60 | 20 yearsR 230 769,20 |
Frequently asked questions
How much severance pay do I get after 7 years?
At least 7 weeks' remuneration. On R 20 000 a month the weekly pay is R 4 615,38 (monthly ÷ 4⅓), so the minimum severance is R 32 307,66. Notice pay and accrued leave are paid on top.
When is severance pay due?
When you are dismissed for the employer's operational requirements (retrenchment: economic, technological, structural or similar needs), or when the employer's insolvency ends the contract. It is not due on resignation, dismissal for misconduct or incapacity, or the end of a fixed-term contract.
What counts as remuneration?
Section 35(5): your pay plus the cash value of payments in kind such as housing, car allowances, employer contributions to medical aid and pension funds; overtime, discretionary bonuses and reimbursements are excluded. Many employers use basic salary only, which understates the minimum.
Can I lose the right to severance pay?
Yes, if you unreasonably refuse an offer of alternative employment with the employer or another employer (section 41(4)). A collective agreement or your contract can provide more than one week per year, never less.
Is severance pay taxed?
Severance benefits are taxed on SARS's retirement tables: the first R550 000 is tax-free over your lifetime (aggregated with retirement lump sums), then 18%, 27% and 36% bands. The employer applies for a tax directive before paying.
Sources
Statutory minimum under s 41 of the BCEA for retrenchment; contractual packages and tax directives are not modelled. Results are for guidance only.
Updated: