Acts Online
GT Shield

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


Bargaining Council for the Metal and Engineering Industries

Main Collective Agreement

Part 1 : Conditions of Employment

35. Security of Employment and Severance Payment



(a) In the case of retrenchment an employer, subject to subclause (2), shall pay to each employee who is retrenched, in addition to any other amounts to which he is entitled in terms of this Agreement on termination of service, a severance payment of a minimum of one week’s wages, together with the following:

(i)        pro-rata allowance(s) where applicable;

(ii)        pro-rata leave and leave enhancement pay; and

(iii) an amount equal to the weekly employer contribution to any applicable benefit funds of which the employee was a member at time of retrenchment

In respect of each completed year’s service with the same employer.

Subject to the proviso that an employee who has more than six months service but less than a completed year’s service shall receive a severance payment equal to one week’s remuneration.

(b)        Employees shall be entitled to the following additional ex-gratia payments:

An employee with between five to ten completed years’ service with the same employer:  One week’s ex gratia payment;
An employee with between eleven to fifteen completed years’ service with the same employer: two weeks ex-gratia payment; and
An employee with sixteen or more completed years service with the same employer:  three weeks ex gratia payment”.
(c) An employer who is retrenching as a consequence of financial difficulties and who is unable to comply with the ex gratia payment may make direct application to the independent Exemptions Appeal Board for exemption.  Such exemption application must be supported by  appropriate financial statements showing sufficient financial hardship to warrant the exemption sought”.
(d) An employer and any employee or employee representative shall at either’s request consult in good faith at plant level with a view to reaching agreement on a higher severance payment than that stipulated in subclause (1)(a).
(a) The procedure to be followed in the event of lay-offs, relocation or closure of an establishment, retrenchments, redundancies and the operation of limited duration contracts of employment shall be as provided for in Annexure A to this Agreement.
(b) Where non-observance of the procedures provided for under Annexure A to this Agreement gives rise to a dispute, such dispute shall be dealt with by the Bargaining Council in terms of its dispute resolution procedure.”