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.