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Basic Guide to Severance Pay

Basic Guide to Severance Pay

If retrenched workers have a dispute about severance pay, they may refer the dispute for conciliation or arbitration.  If retrenched workers unreasonably refuse other employment, they are not entitled to severance pay.


The Labour Relations Act applies to all employers, workers, trade unions and employers’ organisations, but does not apply to –
members of the:

  • National Defence Force;
  • National Intelligence Agency; or
  • South African Secret Service

See (Ref)

Applies to all workers and employers and aims to advance economic development, social justice, labour peace and the democracy of the workplace.

Conditions for Severance Pay

Employers must pay severance pay to retrenched workers.  The pay must be equal to at least 1 week’s pay for each completed year of continuous service.In addition to severance pay, workers are entitled to any other amounts that they are legally entitled to.Workers are not entitled to severance pay if they unreasonably refuse other employment with the same employer or with another employer.


A worker may refer a severance pay dispute in writing to –

  • a bargaining or statutory council, or
  • the Commission for Conciliation, Mediation and Arbitration (CCMA).

If a dispute remains unresolved, a worker may refer the dispute to the Labour Court.

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Originally appeared on on 30-05-2008. The views expressed herein are those of the author and do not necessarily reflect those of estome. estome accepts no responsibility for the accuracy, completeness or fairness of the article, nor does the information contained herein constitute advice, legal or otherwise.

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