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Gratuity & Severance Calculator South Africa 2026

Work out your retrenchment package under the BCEA and Section 189 of the LRA — severance pay, notice pay and accrued leave — plus the tax on your lump-sum payout.

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Gratuity & severance payout

Live estimate · BCEA & SARS lump-sum tax · 2026

R

Your gross monthly remuneration

1 week/yr is the BCEA retrenchment minimum — check your contract

Retrenchment & retirement get the first R550,000 tax-free

Net payout (after tax)

R58 562

for 10.5 years · 1 week / yr

Gross gratuity
R84 873
Tax payable
R26 311
Effective tax rate
31.0%
Taxable amount
R84 873

Resignation after 10.5 years at R35 000/month (1 week / yr) gives a gross gratuity of R84 873. After R26 311 tax (31.0%), you take home R58 562 — resignation is taxed as ordinary income.

BCEA severance (retrenchment)

  • Minimum: 1 week's pay per completed year of service
  • First R550,000 of a severance/retirement lump sum is tax-free
  • Severance is payable on genuine retrenchment (Section 189), not resignation
  • Must usually be paid within 7 days of your last working day

Severance & gratuity rules

Retrenchment

BCEA minimum 1 week per year of service. Many employers offer more, paid within 7 days of termination.

Tax treatment

Retirement/retrenchment: first R550,000 tax-free. Resignation is taxed as income at your marginal rate.

Pension fund

Fund withdrawals have separate rules. Preserving rather than cashing out is usually more tax-efficient.

Gratuity is not mandatory in South Africa unless specified in your employment contract. The BCEA only mandates severance pay for retrenchment. This is an independent estimate, not tax or legal advice.

BCEA severance pay: how much am I entitled to?

The Basic Conditions of Employment Act guarantees a minimum of one week's remuneration per completed year of continuous service when you are retrenched. The first R550,000 of your severance lump sum is tax-free, and your contract may entitle you to more than the legal minimum.

1 week per year

BCEA minimum severance: one week's pay for each completed year of service.

R550,000 tax-free

The first R550,000 of your severance lump sum is taxed at 0% under the SARS lump-sum table.

Paid within 7 days

Severance and final pay must usually be paid within 7 days of the last working day.

Contract may beat it

Your contract, policy or bargaining council may offer 2+ weeks per year — the BCEA is only the floor.

Types of end-of-service pay

Retrenchment severance

BCEA minimum of 1 week per completed year. Many employers offer 2 weeks or more. Tax-free up to R550,000.

Voluntary retrenchment

Often a more generous package to encourage voluntary exits, with the same favourable lump-sum tax treatment as a normal retrenchment.

Notice & leave pay

Paid on top of severance: notice pay (1–4 weeks depending on service) plus any accrued annual leave. Both are taxed as ordinary income.

Resignation

No legal entitlement to severance. You only receive your accrued leave pay-out, which is taxed as normal remuneration.

Pension and provident fund impact

Pension or provident fund withdrawals are separate from your severance package and have their own tax treatment. Where possible, consider preserving your fund rather than cashing it out for better long-term tax efficiency. Withdrawal rules changed with the two-pot retirement system introduced in 2024. You can also claim UIF benefits separately, in addition to your retrenchment package.

Frequently asked questions

Quick answers to the most common questions.

How much severance pay am I entitled to in South Africa?
Under the Basic Conditions of Employment Act (BCEA), the minimum severance pay on retrenchment is one week’s remuneration for each completed year of continuous service. For example, 5 completed years at R10,000 per week earns at least R50,000. This is a legal minimum — your contract, company policy or a bargaining-council agreement may provide more, and packages are often negotiated higher.
When is severance pay actually payable?
Severance is payable when you are dismissed for operational requirements — a genuine retrenchment under Section 189 of the Labour Relations Act (e.g. restructuring, redundancy or business closure). It is not payable if you resign, are dismissed for misconduct or poor performance, or if you unreasonably refuse a reasonable offer of alternative employment.
Do I get notice pay on top of severance?
Yes. Notice pay is separate from severance. The BCEA notice period is 1 week if you have been employed for 6 months or less, 2 weeks for 6 months to 1 year, and 4 weeks if employed for more than a year. Your employer can either let you work the notice period or pay you in lieu of notice.
Is my accrued leave paid out when I am retrenched?
Yes. Any annual leave you have accrued but not taken must be paid out in full when your employment ends, in addition to severance and notice pay. Accrued leave pay is taxed as normal remuneration, not under the lump-sum tax tables.
Is severance pay taxed in South Africa?
Severance benefits are taxed under SARS’s favourable retirement/severance lump-sum table. The first R550,000 (a lifetime cumulative amount across all such lump sums) is tax-free, and amounts above that are taxed at progressive rates. Notice pay and leave pay-outs, however, are taxed as ordinary income at your normal PAYE rates.

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