Severance Pay Calculator South Africa 2026
This severance pay calculator estimates what you would actually walk away with if you are retrenched in South Africa — your severance pay, your notice pay and your unused leave, after tax. Severance for retrenchment is taxed under the SARS lump-sum table, where the first R550,000 is tax-free; your notice and leave pay are taxed at your normal income-tax rate. Enter your details below and the figures update as you type.
Last updated: June 2026 · Source: BCEA · SARS
Whole years you have completed — severance is paid per completed year.
Paid out at your daily rate (monthly salary ÷ 21.67 working days). Leave 0 if none.
Got your number? Two things worth doing next
→ Claim your UIF — retrenchment qualifies you for unemployment benefits; here’s how to claim. → Your take-home in a new job — work out the net pay on your next salary offer.How Your Retrenchment Pay Is Worked Out
When you are retrenched — dismissed because the employer is cutting positions, which the law calls dismissal for operational requirements — the Basic Conditions of Employment Act sets the minimum you are owed. Your severance pay is at least one week’s remuneration for every completed year of continuous service. This calculator works a week out as your monthly salary × 12 ÷ 52, then multiplies it by your completed years.
On top of severance you are owed your notice pay and any leave you never took. Notice is one week if you have worked six months or less, two weeks up to a year, and four weeks once you reach a year of service — this tool assumes a year or more, so it uses four weeks; if you have worked less than a year, adjust to one or two weeks. Outstanding leave is paid at your daily rate, worked out as your monthly salary ÷ 21.67 average working days, based on a five-day week.
How Retrenchment Pay Is Taxed
The tax is the part most people get wrong, because the two halves of your package are taxed differently. Your severance pay is a “severance benefit” in the eyes of SARS, and it is taxed under the retirement lump-sum table: the first R550,000 is taxed at 0%, the next slice to R770,000 at 18%, then 27% and 36%. Because that R550,000 is a once-in-a-lifetime tax-free amount shared with any retirement lump sums you have taken, most retrenchment severance payouts fall entirely within it and attract no tax at all.
Your notice pay and leave pay are different — they are normal remuneration, taxed at your usual PAYE rate as if they were extra salary. This calculator adds them on top of your annual salary and taxes them at that marginal rate, which is why a slice of your notice and leave goes to SARS even when your severance is tax-free. Your employer applies to SARS for a tax directive before paying you, so the final figure is confirmed by SARS.
What Else You’re Entitled To
Retrenchment is not supposed to be a surprise. Your employer must follow a fair process and consult you first — for a larger employer this is set out in section 189 of the Labour Relations Act — looking at ways to avoid or soften the job cuts before any final decision. You are also entitled to a certificate of service when you leave, and you can claim from the UIF, because retrenchment counts as dismissal, not resignation. If you believe the retrenchment was not genuine or the process was unfair, you can refer it to the CCMA within 30 days. Always check your payslip and final-pay breakdown against the figures above before you sign an acceptance.
Frequently Asked Questions
How is severance pay calculated in South Africa?
At least one week’s pay for every completed year of continuous service, under section 41 of the BCEA. A week is your monthly salary × 12 ÷ 52.
Is my retrenchment package taxed?
Your severance pay is taxed under the SARS lump-sum table, where the first R550,000 is tax-free, so most severance is untaxed. Your notice pay and leave pay are taxed at your normal income-tax rate.
How much notice am I owed?
One week if you have worked six months or less, two weeks from six months to a year, and four weeks once you have a year or more of service.
Can I claim UIF if I am retrenched?
Yes. Retrenchment is a dismissal for operational reasons, not a resignation, so you qualify to claim unemployment benefits from the UIF.
Related pages
📋 Verified — Official sources: Department of Employment and Labour (BCEA s41 / s37) · SARS (severance lump-sum tax) · SARS (income-tax brackets)
⚠️ This is general information, not financial, tax, or legal advice. KnowMyGovt is an independent service — not affiliated with or endorsed by the Department of Employment and Labour, the CCMA, SARS, the UIF, or the South African government — and is not liable for decisions made in reliance on it.
