Severance Pay Calculator
Work out the minimum severance pay for a retrenchment, and how much of it you keep after tax.
Your pay and service
Worked example
These are the calculator's starting values, so the results above match this example until you change an input.
Thandi earns R 20 000 a month and is retrenched after 6 completed years. Her employer pays the legal minimum of one week’s pay for each completed year.
A week’s pay is her monthly pay divided by 4.33, which is R 4 618,94. Six weeks of pay gives severance of R 27 713,63.
She has had no earlier retirement or severance lump sums, so the whole amount falls inside the first R 550 000, which is tax-free: tax is R 0 and she keeps R 27 713,63. Her notice pay and unused leave are paid separately and taxed as normal salary.
Who gets severance pay?
Under section 41 of the Basic Conditions of Employment Act 75 of 1997, an employee who is dismissed for operational requirements (retrenched) must be paid at least one week’s remuneration for each completed year of continuous service. It applies whatever you earn: the BCEA earnings threshold does not limit severance pay. You lose it only if you unreasonably refuse other suitable work offered by your employer or a new employer that takes over the business.
Severance is not paid when you resign, are dismissed for misconduct or poor performance, or when a fixed-term contract simply ends on the agreed date.
How a week’s pay is worked out
For a monthly earner, a week’s pay is the monthly remuneration divided by 4.33 (the average number of weeks in a month). Remuneration includes regular allowances and payments in kind, such as a travel allowance or housing, but not occasional overtime. Only completed years count: 6 years and 10 months is 6 years for the legal minimum, although many employers and retrenchment agreements are more generous.
How severance is taxed
Severance benefits are taxed on the same table as retirement fund lump sums, not with your salary. The first R 550 000 is tax-free over your lifetime, so earlier retirement or severance lump sums (since 1 October 2007) use up part of it.
| Severance and retirement lump sums (2026/27) | Tax |
|---|---|
| R 0 – R 550 000 | 0% |
| R 550 001 – R 770 000 | 18% of the amount above R 550 000 |
| R 770 001 – R 1 155 000 | R 39 600 + 27% of the amount above R 770 000 |
| R 1 155 001 and above | R 143 550 + 36% of the amount above R 1 155 000 |
Notice pay, unused leave and your last salary are not severance: they are taxed as normal income through PAYE. Use the notice period and leave pay calculators for those.
How this calculator works
It divides your monthly pay by 4.33, multiplies by the weeks per year and the number of completed years, then works out the tax as the difference in lump sum tax with and without this payment, after any earlier lump sums.
Section 41 and section 35 of the Basic Conditions of Employment Act 75 of 1997. Severance benefit tax table from the National Treasury and SARS Budget 2026 tax guide. Checked 16 October 2026. This page is general educational information, not legal or tax advice. Sectoral determinations, bargaining council agreements and your contract can give you more than the legal minimum.
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Frequently asked questions
How much severance pay am I entitled to in South Africa?
At least one week’s pay for every completed year of continuous service with the employer, if you are retrenched. Your contract or a retrenchment agreement may give more.
Is severance pay taxable?
Yes, but on the lump sum table: the first R 550 000 of all your severance and retirement lump sums together is tax-free, and the rest is taxed at 18% to 36%.
Do I get severance pay if I resign?
No. Severance pay is for dismissal because of the employer’s operational requirements, such as restructuring or closing down.
Can I claim UIF as well as severance pay?
Yes. Severance pay does not stop you from claiming unemployment benefits from UIF after a retrenchment.