Severance Pay Calculator
Calculate South African severance pay: 1 week per year of service (Section 41 LRA). Includes notice pay, leave pay, pro-rata bonus, and tax on the full package.
How Severance Pay Works in SA
The Labour Relations Act Section 41 sets the minimum severance pay at 1 week's remuneration per completed year of continuous service. This applies to retrenchment (operational requirements) only — not resignation or dismissal for misconduct.
The first R500,000 of combined severance pay (over your lifetime) is exempt from tax. Above that, lump sum tax rates apply. You also receive notice pay, outstanding leave pay, and possibly a pro-rata bonus.
Severance Pay Formula
Severance Tax Table
| Cumulative Lump Sums | Tax Rate |
|---|---|
| R0 – R500,000 | 0% (exempt) |
| R500,001 – R720,000 | 18% |
| R720,001 – R1,080,000 | 27% |
| Above R1,080,000 | 36% |
This is a lifetime cumulative exemption shared with retirement lump sums. If you received a R200,000 retirement payout previously, only R300,000 of your severance is tax-free.
Full Package Breakdown
| Severance Pay (1 wk × 8 yrs) | R 64 665 |
| Notice Pay (4 weeks) | R 32 333 |
| Outstanding Leave Pay (18 days) | R 29 072 |
| Pro-Rata Bonus (8 months) | R 23 333 |
| Gross Total | R 149 403 |
| Lifetime Exemption Remaining | R 500 000 |
| Taxable Severance | R 0 |
| Tax on Severance | -R 0 |
| Income Tax on Other Payments | -R 26 269 |
| Net Package | R 123 135 |