South Africa Severance Pay & Retrenchment Calculator
Calculate your statutory retrenchment package (1 week per year of service), notice pay, accrued leave, and your tax bill under the SARS R550,000 tax-free severance exemption.
Employment & Service Details
Weekly equivalent: R11,077 / week
BCEA mandates at least 1 week's pay per completed continuous year.
The SARS R550,000 tax-free exemption is a lifetime cumulative allowance.
Retrenchment Payout & Tax Status
BCEA & SARS Retrenchment Protections:
Under Section 41 of the BCEA, an employer must pay an employee dismissed for operational requirements at least 1 week's remuneration for each completed year of continuous service. SARS grants a generous lifetime R550,000 tax-free exemption specifically on severance lump sums!
Retrenchment FAQ in South Africa
How is the 1 week per year calculated?
Your weekly remuneration is calculated by dividing your annual remuneration by 52 (or multiplying monthly salary by 12 and dividing by 52). It must include all basic pay, regular overtime, and guaranteed cash allowances.
How does the SARS R550,000 tax-free allowance work?
The first R550,000 of qualifying severance lump sum benefits received over your lifetime is taxed at 0%. Any excess is taxed on the retirement lump sum tax table (18% to 36%), which is far lower than normal PAYE brackets.
Can I claim UIF if I am retrenched?
Yes. Retrenchment is an involuntary termination (operational requirements), which makes you 100% eligible to claim UIF unemployment benefits from the Department of Employment and Labour for up to 238 days.
Are notice pay and leave payout tax-free?
No. Leave pay and notice pay are classified as regular remuneration (income from employment) and are taxed at your normal marginal PAYE tax rate, not under the severance lump sum tax table.
📊 South African Statutory Comparative Matrix (SARS & Statutory Breakdown)
| Statutory Heading / Obligation | Calculated Amount |
|---|---|
| Primary Settlement / Net Amount | R 0.00 |
Engr. Muhammad Shahzad
Principal Financial Systems Architect & Statutory Compliance Specialist
Lead software and systems architect specializing in high-performance browser computing, algorithmic validation, financial models, and zero-telemetry client-side privacy architecture.