Analyses: The Entitlement to Severance Pay Revisited

• Jurisdiction: South Africa
• Author: DW de Villiers
• Citation: (2010) 22 SA Merc LJ 114
• Date: 25 May 2019
• Published date: 25 May 2019
• Pages: 114-126

The Entitlement to Severance Pay Revisited

DW DE VILLIERS

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.

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(2010) 22 SA Merc LJ 114

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