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Basic Conditions of Employment Act, 1997 (Act No. 75 of 1997)

Chapter Five : Termination of employment

41. Severance pay


(1) For the purposes of this section, "operational requirements" means requirements based on the economic, technological, structural or similar needs of an employer.


(2) An employer must pay an employee who is dismissed for reasons based on the employer's operational requirements or whose contract of employment terminates or is terminated in terms of section 38 of the Insolvency Act, 1936 (Act No. 24 of 1936), severance pay equal to at least one week's remuneration for each completed year of continuous service with that employer, calculated in accordance with section 35.


(3) The Minister may vary the amount of severance pay in terms of subsection (2) by notice in the Gazette. This variation may only be done after consulting NEDLAC and the Public Service Coordinating Bargaining Council established under Schedule 1 of the Labour Relations Act, 1995.


(4) An employee who unreasonably refuses to accept the employer's offer of alternative employment with that employer or any other employer, is not entitled to severance pay in terms of subsection (2).


(5) The payment of severance pay in compliance with this section does not affect an employee's right to any other amount payable according to law.


(6) If there is a dispute only about the entitlement to severance pay in terms of this section, the employee may refer the dispute in writing to—
(a) a council, if the parties to the dispute fail within the registered scope of that council; or
(b) the CCMA, if no council has jurisdiction.


(7) The employee who refers the dispute to the council or the CCMA must satisfy it that a copy of the referral has been served on all the other parties to the dispute.


(8) The council or the CCMA must attempt to resolve the dispute through conciliation.


(9) If the dispute remains unresolved, the employee may refer it to arbitration.


(10) If the Labour Court is adjudicating a dispute about a dismissal based on the employer's operational requirements, the Court may inquire into and determine the amount of any severance pay to which the dismissed employee may be entitled and the Court may make an order directing the employer to pay that amount.