Analyses: The Entitlement to Severance Pay Revisited

JurisdictionSouth Africa
AuthorDW de Villiers
Citation(2010) 22 SA Merc LJ 114
Date25 May 2019
Published date25 May 2019
The Entitlement to Severance Pay Revisited
University of Pretoria
1 Introduction
As a rule, severance packages are paid to employees dismissed for
operational requirements. But sometimes these packages are not paid, in
instances specif‌ied in s 41(4) of the Basic Conditions of Employment Act 75
of 1997 (BCEA).
It seems that the payment of severance packages is limited by statute when
retrenchments are made. Facing a minef‌ield of options over and above the
general legal requirements of ss 189 and 189A of the Labour Relations Act 66
of 1995 (LRA), some employers willingly pay severance benef‌its, but others
allege that they need not do so (P de Bruin ‘Loop Lig Met Af‌legging Van
Werkers, Waarsku Hof’ (2004) Beeld (6 October 12)).
The forums that hear labour disputes are also divided on how to decide on
these matters (John Grogan ‘Package Puzzle: The Right to Severance Pay’
(1999) 15(2) Employment Law July 6). The Commission for Conciliation,
Mediation and Arbitration (CCMA), the Labour Court, the Labour Appeal
Court and the Constitutional Court have given different decisions on similar
facts (eg, National Education Health & Allied Workers Union v University of
Cape Town & Others (2000) 21 ILJ 1618 (LC); NEHAWU v University
of Cape Town & Others [2002] 4 BLLR 311 (LAC); National Education
Health and Allied Workers Union v University of Cape Town & Others 2003
(3) SA 1 (CC); SAMWU & Others v Rand Airport Management Co (Pty) Ltd
& Others [2002] 12 BLLR 1220 (LC); SA Municipal Workers Union &
Others v Rand Airport Management Co (Pty) Ltd (2005) 26 ILJ 67 (LAC)).
More recently, an important decision was delivered by Zondo JP in the
Labour Appeal Court in Irvin & Johnson Ltd v CCMA & Others ([2006] 7
BLLR 613 (LAC)). This precedent, discussed at length below, has not always
been followed, as in Vergenoeg vir Seniors v CCMA & Others (27 June 2006
JR 322/05 LC (unreported)), where severance pay was awarded by the CCMA
and an application to review the ruling was dismissed. But Irvin & Johnson
Ltd v CCMA (supra) was followed in SAEWA obo Molepi & Others v
Laingsdale Engineering ([2006] 10 BALR 1005 (MEIBC) at 1009J). Wide
confusion abides.
The purpose of this analysis is to explore the dilemma when disputes arise
during a procedure under s 189 of the LRA through which an employer has
secured ongoing employment for his employees at another employer. Is
the employer then liable to pay severance packages? I hope that some of the
confusion can be cleared up.
(2010) 22 SA Merc LJ 114
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