Check Online Application Status 2024-2025How to Apply Online 2024-2025Check Admission Requirements 2024-2025
Tvet Colleges Online Application Form

Bursaries Closing in November 2024

Application Forms 2024-2025

How to Work Out a Retrenchment Package in South Africa?

The Steps to Work Out a Retrenchment Package in South Africa

 

What payments can I expect as retrenchment benefits in South Africa?

  • Severance pay – this should be at least one week’s remuneration per completed year of service. Remuneration is calculated including basic salary and payments in kind.
  • Outstanding leave must be paid out in full.
  • Notice pay may vary depending on your employment contract.
  • In the absence of a contract, you are entitled to notice pay as follows:
    • If you have been employed for 1-4 weeks: 1 week’s notice pay
    • If you have been employed for 4 weeks-1 year: 2 weeks’ notice pay
    • If you have been employed for more than a year: 4 weeks’ notice pay
See Also  Palladium Shoe Prices in South Africa

Depending on your employment contract again, you may be entitled to a pro rata payment of your annual bonus and the balance of any pension or provident fund benefits.

 

Do I Pay Tax on Retrenchment Benefits in South  Africa?

In South Africa, the taxman now uses the retirement tax tables for severance benefits, which are taxed (in aggregate for your lifetime) as follows:

Benefit Rate of tax
R0 – R500 000

R500 001 – R700 000

R700 001 – R1 050 000

R1 050 001 and above

0% of benefit

18% of benefit over R500k

R36,000 + 27% of benefit over R700k

R130,500 + 36% of benefit over R1,050k

See Also  How to Become a Doula in South Africa

 

How is retrenchment compensation calculated?

While effecting retrenchment of the workmen, it is obligatory on the part of the employer to pay retrenchment compensation at the rate of 15 days wages (for every completed year) to be calculated at the last drawn salary of an employee.

 

How does retrenchment work in South Africa?

In South Africa,  retrenchments are “no fault” dismissals. It is not the fault of the employee that the company cannot afford the salary of the employee anymore and as such notice periods agreed upon must be honoured. The employer may ask the employee not to return to work but must then pay the notice period.

See Also  How Many Foreigners in South Africa 2019

 

Overview of MBA
Choosing Your MBA
MBA Schools in SA
How to Apply