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Labour Relations Act, 1995 (Act No. 66 of 1995)


Motor Industry Bargaining Council  (MIBCO)

Main Collective Agreement

Division A : Provisions Applicable to all Establishments in the Industry

Clause 7 : Termination of Employment

7.3 Retrenchment Pay



(1) Notwithstanding anything to the contrary contained in this Agreement, an employer shall, whenever an employee’s services are terminated for the reason that he is retrenched, pay to such an employee, in addition to any payment that may be due in lieu of notice of termination of services, a sum equal to two weeks’ wages for each completed year of service for the first four years’ service with an employer, and one week’s wages thereafter with that employer; provided that two weeks’ retrenchment pay calculated on a pro-rata basis after only four months’ employment in the first year of employment shall be applicable:


Provided further that –

(a) in the case of a motor vehicle salesperson or supply salesperson “wages” shall mean their basic wage plus average commission on sales earned over the preceding period of 13 weeks;
(b) the earnings of an employee may be reduced as an alternative to retrenchment where this has been agreed to in writing by the employer, the employee and the trade union representing the employee and, in the case of a non-party establishment and a non-union employee in a party shop, the employer shall apply to the Regional Council concerned for such approval.
(c) Any employee who unreasonably refuses to accept an offer of alternative employment, either with the same, or with a different employer, shall forfeit entitlement to retrenchment pay, providing the employer initiating the retrenchment makes a written offer of alternative employment on behalf of himself or another employer, and the offer must be reasonable taking into account location, status, its nature, remuneration and employees’ capacity, and providing further that the right to retrenchment pay shall not be affected where the retrenched employee secures alternative employment through his own efforts without assistance from the retrenching employer.