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Severance Letter Template for South Africa

A formal document issued under South African employment law that outlines the terms and conditions of an employee's severance from employment. The letter details the severance package, including statutory requirements under the Basic Conditions of Employment Act, final payment calculations, treatment of benefits, and other termination-related matters. It serves as an official record of the termination arrangement and ensures compliance with South African labor legislation, particularly regarding fair dismissal procedures and minimum severance pay requirements.

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What is a Severance Letter?

The Severance Letter is a critical document in South African employment law, typically used when employment is terminated due to operational requirements (retrenchment) or other justified business reasons. It must comply with the Basic Conditions of Employment Act 75 of 1997 and the Labour Relations Act 66 of 1995, which mandate minimum severance pay of one week's remuneration per completed year of service. The letter serves as a formal record of the termination arrangement, detailing the severance package, final payments, benefit treatments, and any post-employment obligations. It protects both employer and employee interests by clearly documenting the terms of separation and ensuring legal compliance with South African labor regulations.

What sections should be included in a Severance Letter?

1. Letterhead and Date: Company letterhead, date, and reference number if applicable

2. Recipient Details: Employee's full name, employee ID, position, and address

3. Subject Line: Clear indication that this is a severance letter

4. Confirmation of Termination: Statement confirming termination decision, effective date, and reason (e.g., retrenchment, operational requirements)

5. Severance Package Details: Breakdown of severance pay calculation and other termination benefits

6. Final Salary and Leave Pay: Details of final salary payment and accumulated leave pay

7. Company Property: Instructions regarding return of company property

8. Tax Treatment: Information about tax implications of the severance payment

9. Legal Compliance Statement: Confirmation of compliance with relevant labor laws

10. Signature Block: Space for authorized signatory and employee acknowledgment

What sections are optional to include in a Severance Letter?

1. Long-term Incentives: Treatment of outstanding share options or long-term incentives, if applicable

2. Medical Aid Continuation: Details about post-employment medical aid benefits if offered

3. Restraint of Trade: If applicable, reminder of existing restraint of trade obligations

4. Reference Letter Offer: Offer to provide a reference letter if agreed

5. Outplacement Support: Details of any career transition support services offered

6. Release Agreement: Reference to any mutual release of claims if required

7. Confidentiality Obligations: Reminder of ongoing confidentiality obligations if applicable

What schedules should be included in a Severance Letter?

1. Schedule A - Severance Calculation: Detailed calculation of severance pay showing years of service and applicable formula

2. Schedule B - Benefits Summary: Comprehensive list of all benefits and their treatment post-termination

3. Schedule C - Outstanding Loans/Advances: Statement of any outstanding loans or advances and repayment arrangements

4. Schedule D - Company Property Checklist: List of company property to be returned

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents

Jurisdiction

South Africa

Publisher

Ƶ

Document Type

Termination Letter

Cost

Free to use

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