Rights Guide
Retrenchment Rights in South Africa
Being retrenched in South Africa? Your employer must consult you, apply fair selection criteria, and pay at least 1 week's wages per year of service. Here is exactly what the LRA requires and how to challenge an unfair retrenchment at the CCMA.
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South African Law
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Direct Answer
Under Section 189 of the Labour Relations Act, your employer must: (1) consult with you in writing before any decision is made, (2) disclose the reasons, number of people affected, and proposed selection criteria, (3) use fair selection criteria such as LIFO, and (4) pay severance of at least 1 week's remuneration per completed year of service plus notice pay and accrued leave. If any of these steps are skipped, you can refer an unfair retrenchment dispute to the CCMA within 30 days of dismissal — free.
What the Law Says
Your Legal Foundation
Labour Relations Act 66 of 1995
Section 189(1)
“An employer who contemplates dismissing one or more employees for reasons based on the employer's operational requirements must consult the relevant persons, disclose in writing all relevant information, allow them to make representations, and consider and respond to those representations.”
Labour Relations Act 66 of 1995
Section 189A
“Applies to large-scale retrenchments where the employer employs more than 50 employees and proposes to retrench 10 or more. Requires a facilitated process with a minimum 60-day period before dismissals take effect.”
Basic Conditions of Employment Act 75 of 1997
Section 41
“An employer must pay an employee who is dismissed for operational requirements severance pay equal to at least one week's remuneration for each completed year of continuous service.”
What to Say
Exact Words to Use
“"I have the right to consultation under Section 189 of the LRA before any retrenchment decision is made. I require written disclosure of: (a) the reasons for the proposed retrenchment, (b) the number of employees affected, (c) the proposed selection criteria, and (d) the proposed severance pay. I will engage meaningfully with this process and submit written representations."”
Tone: In writing to your employer or HR — during the consultation phase
“"I am referring a dispute to the CCMA on the basis that my retrenchment was procedurally unfair. The employer failed to [consult in writing / apply fair selection criteria / pay the statutory severance]. I am claiming reinstatement or, alternatively, compensation."”
Tone: When completing form LRA 7.11 at the CCMA
Common Questions
Frequently Asked Questions
How is severance pay calculated in South Africa?
Severance pay is at least 1 week's remuneration per completed year of continuous service. "Remuneration" means your total pay package — basic salary plus regular allowances. If you earn R20,000/month, your weekly rate is R20,000 ÷ 4.33 = R4,619. After 5 years, you are owed at least R23,095 in severance. This is in addition to notice pay and any accrued leave.
What is the difference between Section 189 and Section 189A retrenchments?
Section 189 applies to all retrenchments. Section 189A applies only where the employer has more than 50 employees AND proposes to retrench at least 10 people within 12 weeks. Section 189A requires a longer 60-day facilitated process through the CCMA before any dismissals take effect. If your employer is large and retrenching many people, ask whether Section 189A applies — skipping it is procedurally unfair.
Can I be retrenched while pregnant or on maternity leave?
Retrenching you because of your pregnancy is automatically unfair dismissal — one of the strongest protections in the LRA, carrying up to 24 months' compensation with no cap. The employer must prove the retrenchment was for genuine operational reasons and not related to your pregnancy. If the timing coincides with your pregnancy disclosure or maternity leave, escalate immediately to the CCMA.
Can my employer retrench me by email without any consultation?
No. An email announcing your retrenchment without a prior written Section 189 notice and a genuine consultation process is procedurally unfair. The LRA requires meaningful engagement — the employer must provide information, listen to your proposals, and respond to them in writing. Refer to the CCMA within 30 days.
Is severance pay taxable in South Africa?
The first R500,000 of a retrenchment severance package is exempt from tax under the retirement lump sum tax table (as at 2026). Amounts above this are taxed at progressive rates. Your employer must withhold PAYE on any taxable portion. Request an IRP5 document from your employer to use when filing your tax return.
Do I have the right to be rehired if my employer takes on new staff?
Yes. Section 189(7) of the LRA gives you a right of first refusal if the employer recruits for a position that is the same as or substantially similar to your retrenched position within 12 months. The employer must offer you the position before advertising it externally. Failure to do so can be referred to the CCMA as a further unfair labour practice.
Can I claim UIF after retrenchment?
Yes — retrenchment is one of the main qualifying events for UIF. You must apply as soon as possible (within 6 months) to avoid losing benefits. Bring your UI-19 form (completed by your employer), your ID, and your last payslip. Apply online at ufiling.labour.gov.za, via USSD *134*843#, or at a Labour Centre. Your benefit is approximately 38–60% of your last salary, paid for up to 238 days depending on how long you contributed.
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