Practical guide
Severance and Retrenchment Pay Explained
A retrenchment package can contain several separate amounts. Severance, notice pay, unused leave and other agreed benefits should be calculated and checked individually.
Fact checked and updated 13 September 2026
What severance covers
A common statutory starting point for qualifying operational-requirements dismissals is at least one week of remuneration for each completed year of service. Eligibility and the meaning of remuneration need to be checked in the applicable law and agreement.
Other amounts in the package
Notice pay may apply when notice is not worked, and accrued leave may be payable on termination. Bonuses, retirement benefits, incentives and negotiated enhancements depend on the employment terms and process.
Tax and professional checks
Gross estimates are not the same as the final amount paid. SARS applies specific rules to qualifying severance benefits and previous lump sums can affect the tax calculation. Request a written breakdown and obtain labour or tax advice where necessary.
Use the related calculators
Apply the explanation above with your own figures. Open a calculator below, check every input and review the result assumptions before making a decision.
Official source checked
This guide was checked against Department of Employment and Labour. Rules, rates and institutional requirements can change, so confirm time-sensitive information at the official source.