Retrenchment Calculator South Africa: Estimate Your Full Package
Work out an estimate of your retrenchment package before you sign anything. Enter your salary, years of service and leave balance to get an instant breakdown of your severance pay, notice pay and leave payout under the BCEA.
Calculate My Package ↓Retrenchment Package Calculator
Enter your employment details below, then press Calculate to see your estimated package.
Your Estimated Retrenchment Package
R0
Severance, notice and leave payout combined
Package breakdown
| Component | Basis | Amount |
|---|
This total adds together your severance pay, notice pay and leave payout.
A South African retrenchment package is generally made up of three parts: severance pay of at least one week’s remuneration for each completed year of service, notice pay if you are paid out instead of working your notice period, and payment for any accrued leave days you have not used. Under Section 41 of the BCEA, one week per completed year is the legal minimum, and some employers pay more. Use the calculator above for your own estimate, and confirm the exact figures with your employer or a labour law professional.
How to Use the Retrenchment Calculator
Three quick steps to an estimated retrenchment package.
- 1 Enter your salary and service period. Add your basic monthly salary, plus your completed years and months of service.
- 2 Choose your severance rate and add any leave or bonus. Select the statutory minimum, an enhanced rate, or a custom rate, then add your leave balance and any pro-rata bonus.
- 3 Press Calculate. Your estimated total package and a full breakdown appear instantly. Use “Copy Result” to save it.
The Retrenchment Calculation Formula
Your package is built from three components, each based on your weekly or daily rate of pay.
Daily Rate = Monthly Salary / 21.67
Severance Pay = Weekly Rate x Severance Weeks per Year x Completed Years of Service
Notice Pay = Weekly Rate x Notice Weeks (only if paid in lieu of notice)
Leave Payout = Daily Rate x Accrued Leave Days
Total Package = Severance Pay + Notice Pay + Leave Payout + Pro-rata Bonus
Severance pay only counts completed years of service, so a part year on its own does not add to the statutory minimum. Notice pay is based on your total length of service, including part years, using the BCEA notice period brackets below.
Worked Examples
Real calculations using the BCEA statutory minimum, so you can see exactly how the total is built.
Example 1: 5 years of service, statutory minimum
| Monthly salary: R25,000 | Weekly rate: R5,769 |
| Severance: 5 weeks (1 week x 5 years) | R28,846 |
| Notice pay: 4 weeks (1 year or more) | R23,077 |
| Leave payout: 12 days | R13,839 |
| Total Package | R65,762 |
Example 2: 9 months of service, statutory minimum
| Monthly salary: R18,000 | Weekly rate: R4,154 |
| Severance: 0 weeks (under 1 completed year) | R0 |
| Notice pay: 2 weeks (6 months to under 1 year) | R8,308 |
| Leave payout: 6 days | R4,983 |
| Total Package | R13,291 |
Example 3: 12 years of service, enhanced rate
| Monthly salary: R32,000 | Weekly rate: R7,385 |
| Severance: 24 weeks (2 weeks x 12 years) | R177,231 |
| Notice pay: 4 weeks | R29,538 |
| Leave payout: 15 days | R22,151 |
| Total Package | R228,920 |
Retrenchment in South Africa: The Complete Guide
Retrenchment happens when an employer ends a job for operational reasons, such as restructuring, financial difficulty, or technological change, rather than anything the employee has done. South African labour law sets minimum standards for what a retrenched employee is owed, though the actual process and any extra benefits can vary by employer and by industry agreement.
What makes up a retrenchment package?
A typical package has three core parts: severance pay, notice pay, and payment for unused leave. On top of these, some employers add a pro-rata bonus or 13th cheque if one is owed under your contract, and you may also be able to claim UIF unemployment benefits separately from your employer’s payout.
Severance pay under Section 41 of the BCEA
Severance pay is the statutory minimum an employer must pay for a retrenchment. It is set at one week’s remuneration for each completed year of continuous service. Employees only qualify once they have completed at least one full year of service, and part years on their own do not add to this statutory minimum. Employers can agree to pay more than one week per year, but cannot legally agree to less for a qualifying operational requirements dismissal.
Notice periods under the BCEA
| Length of Service | Minimum Notice Period |
|---|---|
| Less than 6 months | 1 week |
| 6 months to less than 1 year | 2 weeks |
| 1 year or more | 4 weeks |
An employer can either have you work this notice period or pay you out in lieu of notice. Only the paid-out option counts as notice pay in your final package.
Leave payout
Any annual leave you have accrued but not taken must be paid out when your employment ends, no matter the reason for termination. This is worked out using your daily rate, commonly calculated as your monthly salary divided by 21.67, the average number of working days in a month.
Methodology
This calculator applies the BCEA statutory minimum of one week’s remuneration per completed year of service for severance pay, the standard BCEA notice period brackets, and a daily rate of monthly salary divided by 21.67 for leave payout. It allows an enhanced or custom severance rate where a more generous package applies, and an optional field for a pro-rata bonus. It does not calculate UIF benefits, tax on retrenchment payouts, or industry-specific bargaining council formulas, which can differ from the BCEA default.
Assumptions used in this calculator
- Salary is entered as a basic monthly amount before deductions.
- Severance pay only counts completed years of service, in line with Section 41 of the BCEA.
- Notice pay is only included if you select the paid in lieu of notice option.
- This calculator does not account for tax, UIF contributions, or retirement fund withdrawal benefits.
Frequently Asked Questions
The BCEA sets one week’s pay per completed year of service as the legal minimum. Anything above that, such as two or three weeks per year, is considered more generous. What counts as good also depends on your notice pay, leave payout, and any extra benefits your employer agrees to during consultation.
The statutory minimum under Section 41 of the BCEA is based on completed years of service. If you have not yet completed a full year, you generally do not qualify for statutory severance pay, though you may still be owed notice pay and leave payout.
Severance pay compensates you for losing your job due to your employer’s operational requirements. Notice pay compensates you for the notice period you did not get to work, if your employer pays you out instead of having you work it. They are separate entitlements and both can apply at the same time.
Retrenchment payouts are generally taxed according to SARS rules for severance benefits, which can include a tax-free portion depending on your circumstances. This calculator does not apply tax, so treat its result as a gross estimate and confirm your net amount with SARS or a tax professional.
Yes, retrenched employees can generally apply for UIF unemployment benefits separately from their employer’s retrenchment package, provided they meet the UIF qualifying requirements. UIF benefits are not included in this calculator’s total.
No. One week’s remuneration per completed year of service is the legal floor for a qualifying operational requirements dismissal, and any agreement attempting to reduce it below that is not valid. Your employer can offer more, but not less.
No. This tool gives a planning estimate based on the standard BCEA formulas. Your actual entitlement depends on your contract, any collective or bargaining council agreements, and the specific circumstances of your retrenchment, so confirm exact figures with your employer, a union, or the CCMA.