COSATU is calling on the Minister of Employment and Labour to increase the statutory severance package given to retrenched workers to two weeks for each completed year of service

19 May 2020

The Congress of South African Trade Unions is calling on the Minister of Employment and Labour, Thulas Nxesi to use the powers of his office to increase the statutory severance given to workers who are being retrenched.

This minimum severance pay is set by section 41 (2) of the BCEA at one week’s remuneration for each completed year of service.  This payment has remained unchanged since statutory minimum severance pay was introduced by the LRA in 1996. 

It is the Federations view that the current severance pay package of one week per year of service is grossly inadequate and must be increased as a matter of urgency.  

The failure to set an adequate level of severance pay in statute undermines the job security of workers and enables employers to retrench at will. The urgency with which this issue must be addressed is increased by the Covid-19 pandemic and its anticipated impact on employment. Already, our affiliated trade unions are reporting widespread retrenchments of their members.

Section 41 of the Basic Conditions of Employment Act, 1997 (BCEA) provides for a minimum statutory severance pay benefit that must be paid by an employer to any employee, who is dismissed for reasons based on the employer’s operational requirements.  This payment must also be made to an employee whose contract terminates as a result of the employer’s insolvency.

Section 41 (3) of BCEA provides that the Minister of Employment and Labour may vary the amount of severance pay in terms of subsection 41 (2) by notice in the Government Gazette. This variation may be done by the Minister after consulting with NEDLAC and the Public Service Co-ordinating Bargaining Council.

 COSATU, on behalf of its affiliates, demands that the Minister tables this matter to be discussed at Nedlac for urgent consultations with social partners at NEDLAC.

Issued by Sizwe Pamla, National Spokesperson, COSATU, 19 May 2020