What you need to know and do if you are facing retrenchment
Getting professional financial advice to help you sift through your options will pay off
The poor state of the South African economy has resulted in many organisations reviewing their cost structures. Some local companies have already begun retrenching employees, with others indicating their intention to start the process. If you are in the unfortunate position of facing retrenchment, it is critical to have the presence of mind to carefully consider your options. Focusing on the long-term may not be easy once you have been retrenched. But it’s important to get professional financial advice tailored to your circumstances and it will pay off in the years to come. The Basic Conditions of Employment Act requires that a severance package be paid to retrenched employees at a minimum of one week’s salary for every year of service. From March 1 2011, the Income Tax Act was amended to allow for severance benefits to be taxed according to the retirement tax tables, provided that certain requirements were met. Leave pay, pro rata bonuses and final salary do not form part of the se...
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