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    Severance pay

    One week's pay per completed year of service, payable to employees retrenched for operational reasons (BCEA Section 41).

    Full definition

    Severance pay is the statutory minimum of one week's remuneration for each completed year of continuous service, due to any employee retrenched under Section 189 for operational requirements. It is in addition to notice pay and outstanding leave pay, and the first R500,000 is tax-free under a SARS tax directive.

    See also

    Notice pay
    BCEA notice period: 1 week (under 6 months), 2 weeks (6 months–1 year), or 4 weeks (1 year+).
    Retrenchment
    Termination for operational (economic, structural, technological) reasons under Section 189 of the LRA.
    BCEA
    The Basic Conditions of Employment Act sets the minimum working hours, leave and pay conditions for South African employees.

    Automate Severance pay in your payroll

    Payroll Africa handles Severance pay calculations automatically for South African employers — SARS-aligned for 2026/27. From R90/month.

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