Retrenchment can be a difficult and emotional process for employees, but it is important to know that they have rights and support available to them. The Labour Relations Act (LRA) in South Africa outlines the procedures for retrenchment and the severance pay that employees are entitled to receive. This article will highlight the rights of employees in retrenchment situations, with specific reference to Section 189 of the LRA and tax directives.

As per Section 189 of the LRA, an employer is required to initiate a consultation process before retrenching employees. This process provides an opportunity for the employer to consider alternatives to retrenchment and for the employees to voice their concerns. If retrenchment is unavoidable, the employer must provide each affected employee with written notice of termination, which must include the date of termination and the reasons for the retrenchment.

In terms of severance, employees are entitled to receive a payment equivalent to at least one week’s pay for each completed year of service. This payment must be made within seven days of the termination of the employment contract. The LRA also requires that the employer provide the employee with a certificate of service, which the employee can use to claim unemployment benefits from the Department of Labour.

It is important to note that in cases of mass retrenchment, the employer must engage in consultation with the affected employees or their representative trade union or council. This is a crucial step in ensuring that the rights of employees are protected during retrenchment.

In terms of tax directives, severance payments are subject to normal income tax. However, the first R500,000 of a severance payment is exempt from income tax, providing relief to affected employees.

In conclusion, retrenched employees have rights and entitlements under the LRA, including a severance payment and the opportunity for consultation during the retrenchment process. Tuckers Incorporated is dedicated to helping employees navigate the retrenchment process and ensuring that their rights are protected.

If employees have any concerns or feel that their rights have been violated, they may contact Tuckers Incorporated for assistance at 011 897 1900, 076 777 1920 or


Article contributed by Tristan Judge of Tuckers Attorneys.