Retrenchment can happen at any age. Nonetheless, many people are dealing with this life-changing event in a positive manner, using retrenchment as the impetus to start their lives afresh, with positive outcomes in the end.

If you’re told that your services are no longer required, respond quietly instead of reacting. The person in charge is only doing what has to be done to save the company; there’s nothing personal in it. However, there’s no reason why you can’t calmly discuss the details of the retrenchment package and ask the person concerned for a letter of testimonial for you, and if you could use him or her as a reference.

What you can expect to receive

Labour law requires a minimum severance pay of one week per year of service. The typical retrenchment package consists of your notice salary (1 to 3 months depending on your contract), leave pay (leave due but not taken) and the severance payment. But, if you’re offered alternative employment on similar terms and conditions, the company doesn’t have to pay severance.

You will also be paid your accrued pension, which you can choose to have paid in cash (on which you will pay tax); transferred tax-free into a retirement annuity until you reach a minimum age of 55 (you can top it up as you wish); or left in your employer’s retirement fund, (you have no control over assets, you could have difficulties if the company is taken over or liquidated, and you can’t access the money until you retire).

Tips to cope with retrenchment

    • Generally, your medical aid cover ceases on your last day of work. Don’t allow your medical aid to lapse, ask your existing fund for a basic cover or a hospital plan until you can upgrade. Some employers allow you to stay on the fund for a few months after retrenchment.
    • Curb your spending until you have some form of fixed income, no matter how big your payoff was. Try not to borrow money; if you have lots of bills to pay, consider phoning your creditors to explain your situation, or ask your bank manager for a period of grace. You will have to pay the funds back with interest later, but by then you may have a job or your own business up and running.

Our Employee Wellbeing Programme (EAP) is available 24 hours a day if you want to know more about coping with retrenchment.