An employee who is retrenched must receive at least one month of salary or wages for every year they worked, and a proportionate amount for part of a year. This replaced the old standard of two weeks a year.

The regulations set a floor, not a ceiling. An employer and a works council or trade union may agree a larger package. Commentary indicates the calculation is normally made on the gross salary shown on the final payslip, although that reading has not yet been settled by the courts. The package applies both to retrenchment under section 12C and to separations by mutual agreement under section 12(4a) and 12(4b) of the Labour Act.

Applies to: Employees retrenched on or after 6 December 2024