The economic climate in which many South African firms operate
has meant that dismissals for operational requirements have become
an inescapable concern. However are employees always entitled to
severance pay?
Section 41(1) of the Basic Conditions of Employment Act, 1997
provides that a retrenched employee is entitled to severance pay at
least equal to one week’s remuneration for every year of
completed service with the employer. This obligation to pay
severance pay is tempered by the provisions of section 41(4). A
retrenched employee is not entitled to severance pay if that
employee unreasonably refuses an offer of alternative
employment.
An example of how these provisions have been applied can be
found in the recent decision of the Labour Appeal Court
(“LAC”) in Lemley v T-SYSTEMS
(Pty) Ltd. The employee in this matter was retrenched from his
post in Port Elizabeth. During the retrenchment consultation
process, the employer offered him alternative employment at
