Skip to main content

Article 38/2026

Section 41(2) of the BCEA regulates the entitlement of an employee, dismissed for reasons based on the employer’s operational requirements, to severance pay.

In terms of s41(4) of the BCEA, an employee, who unreasonably refused to accept the employer’s offer of alternative employment with that employer or any other employer, is not entitled to severance pay ito s41(2).

How does the assistance provided by the retrenching employer to a retrenched employee affect such employee’s entitlement to severance pay?

_____________________________________

  • Two schools of thought developed over the years in South Africa as to the purpose of severance pay. The first school of thought holds that an employee would be entitled to severance pay from the employer on the loss of employment – severance pay’s purpose is to compensate an employee for the loss of the accrued rights to a job, irrespective of whether, after the dismissal, the employee was unemployed.  This school of thought reflects the general entitlement of an employee to seek severance pay, as encompassed in section 41(2) of the BCEA.
  • The opposing school of thought is of the view that the purpose of severance pay is to tide the employee over after his dismissal, in his efforts to search for another job – consequently, severance pay received is influenced by the period of unemployment. The period of unemployment and the reason for such unemployment are important factors when applying the second school of thought.
  • Section 41(4) of the BCEA, indicating that an employee, who unreasonably refuses to accept an employer’s offer of alternative employment with that employer or any other employer, is not entitled to severance pay, reflects the second school of thought.
  • In Khanya Cleaning Group (Pty) Ltd v SA Transport and Allied Workers Union (2025) 36 SALLR 448 (LC) (Khanya Cleaning), the labour court made it clear that the purpose of s41(4) of the BCEA is to incentivise employers to secure alternative employment – the extent to which the retrenching employer secures alternative employment will ultimately determine whether or not there is a duty on the employer to pay severance pay to the retrenched employee.
  • In analysing the undertakings of retrenching employers, with reference to the applicable case law, the following scales can be identified:

Upper-end of the scale undertaking

    • if the retrenching employer arranged alternative employment and if it was accepted by the retrenched employee, alternatively not so accepted, then there is no entitlement to severance pay
    • see: Irvin & Johnson v CCMA (2006) 27 ILJ 395 (LAC) (Irvin & Johnson), referred to with approval in Astrapak Manufacturing Holdings v Chemical, Energy, Paper, Printing, Wood and Allied Workers Union [2013] 12 BLLR 1194 (LAC) (Astrapak)

Middle-end of the scale undertaking

    • it is not a requirement to escape the responsibility of paying severance pay that the retrenched employer concludes an agreement with the recruiting employer that it will employ the retrenched employees at the same level of remuneration
    • see, further, Servest Landscaping Turf Maintenance (Pty) Ltd v SACCAWU (2023) 44 ILJ 380 (LC) (Servest), so guided by Vergenoeg vir Seniors v Stone [2010] ZALAC 35 (Stone)

Lower-end of the scale undertaking

    • introducing an employee to the recruiting employer and providing a reference is facilitation and not arrangement of alternative employment and, therefore, the employer is still obliged to pay severance pay to such employee
    • see, further, Fidelity Supercare Cleaning v Busakwe NO and Others [2010] 3 BLLR 260 (LC) (Fidelity Supercare)
  • In Khanya Cleaning, the labour court undertook an extensive interpretation exercise of the aforesaid three levels of assistance guided by an employer and came to the following conclusions:

Upper-end of the scale undertaking

    • Irvin & Johnson does not elevate to a principle that, to escape paying severance pay, the employer must negotiate a deal that entails an offer of alternative employment
    • this viewpoint was based on the specific facts in casu

Middle-end of the scale undertaking

    • the approach adopted in Servest merely entails that an employer ‘must not sit on its hands and passively watch the world go by’
    • it must actively assist the recruiting employer in dealing with the retrenched employees

Lower-end of the scale undertaking

    • again, Fidelity Supercare does not elevate to a principle that only facilitation is established if alternative employment does not lead to the consequences that the retrenching employer must still pay severance pay (and, obviously, also is not elevated to a principle that the obligation to pay severance pay only falls away when the employer makes the aforesaid arrangement)

Food for thought

  • The viewpoint is held that the retrenching employer, in order not to pay severance pay ito s41(4) of the BCEA, needs to, at least:
    • attempt to find potential recruiting employers
    • if such potential recruiting employers are interested in employing the retrenched employees, the retrenching employer should assist in this process by, inter alia, providing information, making arrangements for meeting, providing input in the process, etc
    • the extent of compliance with the requirement of ‘not sitting on its hands’ will be determined by the specific facts of each case, but, essentially, what the retrenching employer aims for is for the recruiting employer to hold the viewpoint that, without the retrenching employer’s input and assistance, it would not have been in a position to make the offer of alternative employment
November 9, 2026

Section 187(1)(f) of the LRA reads as follows: ‘A dismissal is automatically unfair if the reason for the dismissal is that the employer unfairly discriminated against the employee, directly or indirectly, on any arbitrary ground, including but not limited to religion, conscience and belief”.

In terms of s187(2)(a) of the LRA, despite the aforesaid s187(1)(f), a dismissal may be fair if the reason for the dismissal is based on the inherent requirements of a particular job.

What approach is to be followed to determine, firstly, whether the reason for the dismissal on the basis of religion, conscience or belief is based upon an inherent requirement of a particular job?

And, secondly, what approach is to be followed to determine whether or not an employer complied with its duty to reasonably accommodate the aforesaid category of employees?

November 2, 2026

In the previous article, we set out the traditional approach to s187(2)(b) of the LRA, covering the scenario where an employee reached the normal or agreed-upon retirement age, but continued to work beyond such age. The constitutional court, in Motor Industry Staff Association and Another v Great South Auto Body CC t/a Great South Panelbeaters (Landman); Solidarity obo Strydom and Others v State Information Technology Agency Soc Ltd (Solidarity) – combinedly referred to as Landman; Solidarity – had the opportunity to scrutinise such traditional approach and delivered three conflicting judgments. So, what approach should role players now employ, seeing that consensus was not reached in the constitutional court?

October 26, 2026

In terms of s187(1)(f) of the LRA, a dismissal is automatically unfair if the reason for the dismissal is that the employer unfairly discriminated against the employee, directly or indirectly, on any arbitrary ground, including, but not limited to, age.

In terms of s187(2)(b) of the LRA, despite s187(1)(f), dismissal, based on age, is fair if the employee has reached the normal or agreed retirement age for persons employed in that capacity.

What is the approach traditionally adopted where an employer permits an employee to work beyond the normal or agreed-upon retirement age and subsequently wishes to terminate the services of the employee, based on age, and wishes to rely on the defence as set out in s187(2)(b)?