Severance pay calculator
Facing retrenchment is hard enough without guessing the numbers. This works out the minimum package the law requires and what tax will actually take, so you can check any offer against the floor before signing anything. No signup, nothing leaves this page.
How this works
Section 41 of the BCEA sets minimum severance at one week's remuneration per completed year of service, where a week is your monthly pay divided by 4.33. Notice (section 37) and accrued leave (section 40) are owed on top. The severance benefit is taxed on the special retirement lump sum table, so the first R550 000 across your lifetime of severance and retirement lump sums is tax free; leave and notice are ordinary salary taxed by PAYE. If you refuse a reasonable offer of alternative employment, the severance entitlement can fall away, which is the clause worth reading twice in any settlement. Retrenchment must also follow a fair section 189 consultation process; the money being right does not make an unfair process fair.
Frequently asked questions
How is severance calculated?
The BCEA minimum is one week's remuneration for every completed year of service, on top of notice pay and your leave payout. A week is your monthly pay divided by 4.33. Employers may offer more; many packages settle at two weeks or more per year.
Is a retrenchment package tax free?
The severance benefit itself is taxed on the retirement lump sum table: the first R550 000 of lifetime severance and retirement lump sums is tax free, then 18% up to R770 000 and higher bands beyond. Leave payout and notice pay are taxed as normal salary.
Do I get severance under one year of service?
The statutory formula counts completed years, so under one year the BCEA minimum severance is zero, though notice pay and leave payout still apply and an employer can offer more voluntarily.
Can I claim UIF after retrenchment?
Yes. Retrenchment is exactly what the fund exists for: benefits run on a sliding scale from about 38% to 60% of earnings for up to 12 months depending on your credit days. Claim as soon as possible; it does not reduce your severance.
Your UIF comes next
See what the fund pays and for how long, on the official formula.
UIF calculator →Check the leave maths
The leave payout and notice numbers on their own, for any exit.
Leave payout →Was the process fair?
Retrenchment needs proper consultation. Know the CCMA basics.
CCMA guide →BCEA sections 37, 40 and 41 minimums; severance tax per the SARS retirement lump sum table. Settlement agreements, bargaining councils and contracts can change the picture. Free tools are estimates, not legal or tax advice.