Abstract

The retrenchment and severance pay provisions in the Labour Relations Act 66 of 1995 (LRA) cannot be reviewed without analysing the supporting provisions of s 41 of the Basic Conditions of Employment Act 75 of 1997 (BCEA), specifically the relationship between s 41(4) and s 84(2) of the BCEA and the jurisprudence on these provisions to date. Ultimately, the courts’ reasoning is that s 41(4) of the BCEA ensures employment security by deterring employers from retrenching employees by paying severance pay, and conversely by ensuring that employees do not unreasonably refuse alternative employment in an effort to frustrate the retrenchment process or to secure a severance payment instead. Further focal discussion points in this article are the determination of the reasonableness of rejecting alternative employment, the length of the interruption(s) in the employment period, and the calculation of severance pay that is due to affected employees (taking into account any prior payments already made to the employees). Additionally, the impact of contractually agreed severance pay on the BCEA statutory provisions is considered and recent jurisprudence in this regard is critiqued.