Retrenchments

RedViking

Nord of the South
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Feb 23, 2012
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#21
I'm not sure if there is a standard rule wrt retrenchment payouts. A good buddy of mine got 2 months notice of retrenchment end of January this year. The company said they would continue paying salaries until end April, and his last day would be end March. So he basically will only get 1 month salary extra after working 8 years at the company.

A few days before payday in Feb they told most of the staff it isn't necessary to come back to the office. 75% of the staff in their office got retrenched.
The company probably closed down completely. Otherwise he could have taken them to CCMA.
 

PoppieChoffel

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#22
They are quite big, already said one week per year worked. I trust this place to keep to their word.
I stand corrected here but I think the standard is 1 week per year worked. I'm not sure if that is a legal requirement, though, probably more just accepted norm.... I'll hold thumbs that your situation improves and something better comes out of this for you!
 

geezer

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#23
https://www.legalwise.co.za/help-yourself/quicklaw-guides/retrenchment

What payments must be made to a retrenched employee?
  • Severance pay – a retrenched employee must at least be paid 1 week’s pay for each completed year of ongoing service. However, the employer must pay the retrenched employee the amount specified in any policy or his/her employment contract, if that amount is larger. If an employee refuses alternative employment with the employer or other employer s/he will not be entitled to severance pay.
  • Leave – an amount of money equal to the annual leave, or time off, that has not yet been taken by the employee must be paid out.
  • Notice pay instead of working the employee’s notice period -
    • if the employee was employed for less than 6 months, s/he must be paid 1 weeks’ notice pay;
    • if the employee was employed for more than 6 months but less than 1 year, s/he must be paid 2 weeks’ notice pay;
    • if the employee was employed for more than 1 year, s/he must be paid 4 weeks’ notice pay.
  • Other pay – depending on the employment contract this would be any pro-rata payment of a bonus, pension and so on.
  • Once an employee is retrenched, s/he is entitled to claim unemployment benefits (“UIF”).
 

vigras rojara

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#25
I stand corrected here but I think the standard is 1 week per year worked. I'm not sure if that is a legal requirement, though, probably more just accepted norm.... I'll hold thumbs that your situation improves and something better comes out of this for you!
Yeah, it's statutory although some companies are a bit more generous.

@Cr419, I hope it doesn't affect you - all the best mate. My wife was actually retrenched today, so my belt will have to be tightened a bit.
 

RedViking

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Feb 23, 2012
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#26
https://www.legalwise.co.za/help-yourself/quicklaw-guides/retrenchment

What payments must be made to a retrenched employee?
  • Severance pay – a retrenched employee must at least be paid 1 week’s pay for each completed year of ongoing service. However, the employer must pay the retrenched employee the amount specified in any policy or his/her employment contract, if that amount is larger. If an employee refuses alternative employment with the employer or other employer s/he will not be entitled to severance pay.
  • Leave – an amount of money equal to the annual leave, or time off, that has not yet been taken by the employee must be paid out.
  • Notice pay instead of working the employee’s notice period -
    • if the employee was employed for less than 6 months, s/he must be paid 1 weeks’ notice pay;
    • if the employee was employed for more than 6 months but less than 1 year, s/he must be paid 2 weeks’ notice pay;
    • if the employee was employed for more than 1 year, s/he must be paid 4 weeks’ notice pay.
  • Other pay – depending on the employment contract this would be any pro-rata payment of a bonus, pension and so on.
  • Once an employee is retrenched, s/he is entitled to claim unemployment benefits (“UIF”).
Also


What remedy does an employee have if s/he has been unfairly retrenched?

  • An employee that feels s/he has been unfairly retrenched may refer his/her dispute.
  • The employee must refer a dispute to the CCMA or bargaining council within 30 days from date of retrenchment.
  • If the dispute is not resolved at conciliation, the employee may refer the dispute to the Labour Court.
  • An employee may claim:
    • For the employer to reinstate him/her (with or without back pay).
    • For the employer to re-employ him/her, either in the work in which s/he was employed before the retrenchment or in another reasonably suitable work (without back pay).
    • For the employer to pay compensation to him/her.
  • The claim made by the employee must be practically possible. For example, the employee cannot claim for reinstatement or re-employment if the business closed.
  • There is a limit on the compensation that may be given to the employee, being a maximum of 12 months, depending on the circumstances.
 

deweyzeph

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Apr 17, 2009
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#28
If the company is retrenching because it's gone under and is not liquid then you can take them to the CCMA all you want, you probably won't see a single cent of any retrenchment package. If there's no cash then there's no cash.
 

Daruk

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#32
While not able to help with the queries, if you have an inkling that your company is in the doldrums (or even if it's not), see if you can get retrenchment insurance, there would be a waiting period (my provider was 6 months waiting period and they do not do retrenchment cover on new sign-ups anymore) and they would only pay take home for a certain period of months,
Good advice.
 

RedViking

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#34
While not able to help with the queries, if you have an inkling that your company is in the doldrums (or even if it's not), see if you can get retrenchment insurance, there would be a waiting period (my provider was 6 months waiting period and they do not do retrenchment cover on new sign-ups anymore) and they would only pay take home for a certain period of months,
How does monthly fees work for retrenchment insurance and do they also involve your employer?
 

geezer

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May 12, 2006
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#36
Best of luck for you during this daunting process. I also went through this recently where ±42% of current workforce will have to go. In the group I am in, there's currently 26 people, of which only 14 will stay. Early retirements and voluntary severance packages were offered, which I suppose wasn't too bad. This included three weeks' pay for each completed year at the company. In my case it would have been 105 weeks' salary because I have been with the company for just over 35 years now. Luckily I survived, but it came with a salary freeze "until further notice.....".
 

deweyzeph

Executive Member
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Apr 17, 2009
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#37
I was retrenched last year and was taxed heavily. I was fortunate to walk out of one job and back into another.
Yip, there's no special tax treatment for retrenchment packages. SARS will treat any retrenchment payment as normal income, which it is. Your employer should deduct PAYE tax from your payment, but if they don't then the responsibility still lies with you to declare any payment you receive on your annual income tax return.
 

Shi

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Apr 8, 2008
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#38
All the best OP. Please check if the company has a limit on the number of leave days paid out.
 

supersunbird

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#39
Best of luck for you during this daunting process. I also went through this recently where ±42% of current workforce will have to go. In the group I am in, there's currently 26 people, of which only 14 will stay. Early retirements and voluntary severance packages were offered, which I suppose wasn't too bad. This included three weeks' pay for each completed year at the company. In my case it would have been 105 weeks' salary because I have been with the company for just over 35 years now. Luckily I survived, but it came with a salary freeze "until further notice.....".
That's like 2 years salary, sjoe!
 
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