Severance Pay Calculator South Africa: Estimate Your Retrenchment Package
Work out the severance pay you are entitled to under the BCEA if you are retrenched. Enter your monthly remuneration, completed years of service and severance rate to get an instant gross and after tax estimate using the 2026/2027 SARS severance benefit tax table.
Calculate My Severance Pay ↓Severance Pay Calculator
Enter your details below, then press Calculate to see your estimated severance pay.
Your Estimated Net Severance Pay
R0
After estimated severance tax
Severance breakdown
| Component | Basis | Amount |
|---|
This estimate applies the BCEA severance formula and the 2026/2027 SARS severance benefit tax table.
Under Section 41 of the BCEA, a retrenched employee is entitled to a minimum of one week’s remuneration for each completed year of continuous service. Your weekly remuneration is your monthly remuneration multiplied by 12 and divided by 52. Multiply that weekly figure by your severance rate and your completed years of service to get your gross severance pay. Severance benefits are then taxed on their own SARS table, with the first R550,000 tax free over your lifetime. Use the calculator above for your own estimate, and confirm the exact figure with your employer or a labour law professional.
How to Use the Severance Pay Calculator
Three quick steps to an estimated severance package.
- 1 Enter your monthly remuneration. Include your basic salary plus regular cash allowances.
- 2 Add your completed years of service and severance rate. Leave the rate blank to use the statutory minimum of 1 week per year.
- 3 Press Calculate. Your gross severance pay, estimated tax and net severance pay appear instantly, with a full breakdown. Use “Copy Result” to save it.
The Severance Pay Calculation Formula
Severance pay is built from your weekly remuneration, your service and your severance rate.
Gross Severance Pay = Weekly Remuneration x Severance Rate (weeks) x Completed Years of Service
Estimated Severance Tax = LOOKUP( Gross Severance Pay on the SARS severance benefit tax table )
Net Severance Pay = Gross Severance Pay – Estimated Severance Tax
The statutory minimum severance rate is 1 week per completed year of service. Some employers, collective agreements or bargaining councils provide more.
Worked Examples
Real calculations using the BCEA formula and the 2026/2027 SARS severance benefit tax table.
Example 1: R20,000 per month, 5 completed years, statutory minimum of 1 week per year
| Weekly remuneration: R4,615.38 | Gross severance pay: R23,077 |
| Severance tax: R0 (below R550,000) | Estimated net severance pay: R23,077 |
Example 2: R45,000 per month, 12 completed years, employer offers 2 weeks per year
| Weekly remuneration: R10,384.62 | Gross severance pay: R249,231 |
| Severance tax: R0 (below R550,000) | Estimated net severance pay: R249,231 |
Example 3: R120,000 per month, 20 completed years, statutory minimum of 1 week per year
| Weekly remuneration: R27,692.31 | Gross severance pay: R553,846 |
| Severance tax: R692 (18% above R550,000) | Estimated net severance pay: R553,154 |
Severance Pay in South Africa: The Complete Guide
Severance pay, sometimes called a retrenchment package, is the statutory payment an employer must make when an employee is dismissed for operational requirements, commonly known as retrenchment. It compensates the employee for the loss of employment and is paid in addition to normal remuneration, notice pay, leave payout and any retirement fund withdrawal benefit.
Who qualifies for severance pay
An employee qualifies for statutory severance pay once they have completed at least one year of continuous service and are dismissed for operational requirements. Severance pay is not payable on resignation, retirement, dismissal for misconduct or poor performance, or where the employee unreasonably refuses suitable alternative employment offered by the employer.
The BCEA severance formula
| Component | Statutory Position |
|---|---|
| Minimum severance rate | 1 week’s remuneration per completed year of continuous service |
| Weekly remuneration | Monthly remuneration x 12, divided by 52 |
| Enhanced rate | An employer, collective agreement or bargaining council may agree to pay more than 1 week per year |
What counts as remuneration
Remuneration for severance purposes is based on gross pay, not just basic salary. It can include the cash value of regular allowances such as housing, transport or a cellphone allowance, and employer contributions to medical aid or retirement funds. Once off bonuses, reimbursive expenses and irregular overtime are generally excluded.
How severance pay is taxed
A severance benefit is taxed under its own SARS tax table, separate from your normal PAYE. For the 2026/2027 tax year, the first R550,000 of severance and retirement lump sum benefits combined is tax free over your lifetime, not per payout. Amounts above this threshold are taxed according to the table below.
| Lump Sum (Cumulative) | Rate of Tax |
|---|---|
| R0 to R550,000 | 0% |
| R550,001 to R770,000 | 18% of the amount over R550,000 |
| R770,001 to R1,155,000 | R39,600 plus 27% of the amount over R770,000 |
| R1,155,001 and above | R143,550 plus 36% of the amount over R1,155,000 |
This tax free threshold is cumulative across your lifetime and is reduced by any previous retirement fund lump sum or severance benefits you have received.
Severance pay compared to notice pay and leave payout
Severance pay is separate from notice pay and any accrued but untaken leave, which must also be paid out on termination. Notice pay and leave payout are taxed as normal income through PAYE, while severance pay is taxed on the more favourable severance benefit table described above.
Methodology
This calculator converts your monthly remuneration into a weekly figure, multiplies it by your severance rate and completed years of service to get your gross severance pay, then applies the 2026/2027 SARS severance benefit tax table, assuming no prior lump sum benefits have been received, to estimate the tax and net severance pay.
Assumptions used in this calculator
- Remuneration is entered as a gross monthly figure before any deductions.
- The tax estimate assumes this is the first retirement or severance lump sum you have received, with the full R550,000 exemption available.
- Only completed years of continuous service are used, in line with the BCEA statutory minimum.
- This calculator does not include notice pay, leave payout or retirement fund withdrawal benefits, which are calculated separately.
Frequently Asked Questions
It estimates the severance pay you are entitled to under the BCEA based on your remuneration, completed years of service and severance rate, then applies the SARS severance benefit tax table to estimate your net payout.
Yes, but favourably. Severance benefits are taxed on their own SARS table, with the first R550,000 tax free over your lifetime, rather than being taxed at your normal PAYE rate.
No. Statutory severance pay under the BCEA is only payable when an employee is dismissed for operational requirements, commonly known as retrenchment. It is not payable on resignation, retirement or dismissal for misconduct.
Enter the higher weeks per year rate offered by your employer, collective agreement or bargaining council in the severance rate field, and the calculator will use that figure instead of the statutory minimum of 1 week per year.
No. Notice pay compensates you for your notice period and accrued leave payout covers untaken leave, both taxed as normal income. Severance pay compensates you for the loss of employment itself and is taxed on the separate severance benefit table.
No. This tool gives a planning estimate. Prior lump sum benefits, the exact definition of your remuneration, or a negotiated retrenchment package can all change your actual payout, so always confirm the exact figure with your employer, the CCMA or a labour law professional.