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Tuesday, May 28, 2024

The payout you’re entitled to after being retrenched

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With the ongoing disruptions in the trucking industry in South Africa, it has become an unpleasant reality that many truck drivers will be retrenched.

SA Trucker is sharing this piece of advice with fellow truck drivers on the payout you are entitled to after being retrenched.

While retrenchment is a difficult process for those involved, the procedure is clearly set out in the Labour Relations Act, says Arlene Leggat, president of the South African Payroll Association.

“The Basic Conditions of Employment Act also provides clear guidance on what has to be included when calculating the severance package,” he said.

“The first step is to consult with employees as soon as the company contemplates a reduction of staff through retrenchments.”

In many instances, trade unions feel that as soon as the company starts consulting, they are not “contemplating” anymore and that they have already made the decision to let people go, said Leggat.

In comparison companies are not too optimistic about these consultations, she said.

“The unions simply want to keep all the jobs without finding a solution. There is often little understanding that if something is not done, everyone can lose their jobs.”


Once the decision to continue with staff reductions has been made, employees must be provided with:

  • Information relating to the reason for the retrenchments;
  • What alternatives were on the table, why they were not chosen;
  • What the company is offering those employees who will be let go.

“This offering includes the severance package, but it can also include assistance with the updating of curriculum vitae’s, how and where to look for new employment and how to navigate and use social media,” Leggat said.

“Pay them as per the agreement and make sure all the tax directives are done. The approach must be that the company is not going to make this hard for anyone in any way.”

Leggat said that employees are also entitled to notice, leave, bonus and severance pay.

Severance pay

The Labour Relations Act provides that an employee must pay an employee at least one week for every year of completed continues service.

“It is extremely important to make sure that if the company is acquired by another firm that your contract of employment states that your years of service prior to the take-over will be taken into account.,” Leggat said.

“There is generally an agreement that the new company will not retrench people for at least one or two years – but once that time comes there will be retrenchments, Leggat warned.

“People then find they only have one or two years of completed continuous service.”

To calculate the value of that one week (it could be more, but it may not be less than one week) the employer must include the employee’s salary or wage, average overtime, shift and standby allowances, as well as travel allowances and commissions.

It must also include the employer’s contribution to benefit schemes such as death, funeral, retirement and medical aid contributions.

“The process does not have to be acrimonious. Engage in a genuinely consultative and transparent manner to find solutions that will work for everyone. It is possible,” said Leggat.


Source: BusinessTech

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