Severance Pay Calculator (South Africa, 2026)
South African severance pay = at least one week's remuneration for each completed year of continuous service, for employees dismissed for the employer's operational requirements (retrenchment) or whose contract ends because of the employer's insolvency (Basic Conditions of Employment Act, section 41). For monthly-paid staff, one week is the monthly remuneration divided by 4.33.
· Calculated with AiStaffo
The rules in South Africa
| Law | Basic Conditions of Employment Act 75 of 1997, sections 35 and 41 |
|---|---|
| When due | Dismissal for operational requirements (economic, technological, structural or similar needs), or termination under section 38 of the Insolvency Act |
| Amount | At least one week's remuneration for each completed year of continuous service |
| Part years | Only completed years count |
| One week's pay | Monthly remuneration ÷ 4.33 (the Act treats a month as 4⅓ weeks) |
| Remuneration includes | Basic pay plus housing, car allowance (unless needed for the job), employer contributions to medical aid, pension or provident fund, and a pro-rata share of annual payments such as a 13th cheque |
| Not due | If the employee unreasonably refuses an offer of alternative employment; resignation; dismissal for misconduct or incapacity |
| Contracts | One week per year is the minimum; a contract or collective agreement may give more |
Worked example
Monthly remuneration R26,000, retrenched after 7 years and 10 months. Only completed years count, so 7 years are used.
One week = 26,000 ÷ 4.33 = R6,004.62. 7 × R6,004.62 = R42,032.33. The calculator shows this as 5 working days a year at R1,200.92 a day (26,000 ÷ 21.65, which is 4.33 weeks × 5 days).
What counts as remuneration
Severance is worked out on remuneration under section 35, not basic salary alone. Payments in kind and employer contributions to medical aid, pension, provident or funeral schemes count, as do housing and most car allowances. Payments to enable the work (such as tools or travel), relocation, tips, discretionary bonuses and share schemes do not. If pay varies, use the average of the last 13 weeks.
For employers: gratuity is one line of what a role costs
Gratuity, leave, statutory contributions and notice periods all sit on top of salary. Routine back-office roles such as data entry, follow-ups, reconciliations and reporting can be handed to AI workers that carry none of these costs. Book a free automation audit and we will put your own figures on it.
Please note: this calculator follows the published law and common practice as checked on 21 October 2026. It is a guide, not legal advice. Contracts can give more than the legal minimum, and special cases (part-time work, free zones, disputes) can change the figure, so confirm the final amount with your HR team or a lawyer before paying or accepting a settlement.
Sources
Questions people ask
How is severance pay calculated in South Africa?
Do I get severance pay if I resign?
Is severance pay based on basic salary?
What if I refuse another job offered by my employer?
Do part years count?
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