How the severance pay calculator works
Last updated 10 November 2026
When a business retrenches staff, the law sets a minimum payment. This calculator works out that minimum, compares it with what you are offered and shows the tax on a lump sum, so you know what reaches your account.
How it works
- Minimum severance = one week’s pay for each completed year of continuous service. Weekly pay here is monthly pay times 12, divided by 52.
- Tax uses the SARS table for lump sums: tax on (earlier lump sums + this one) minus tax on the earlier lump sums.
- If you enter an offer, the tax is worked out on the offer.
Worked example
With the starting figures:
- With R26 000 a month and 10 completed years, weekly pay is about R 6 000.
- The statutory minimum is R 60 000 and the tax on it is R 0, so R 60 000 after tax.
How to read your result
The headline is either the statutory minimum or, if you entered an offer, the offer. The rows below break it into weekly pay, the minimum, the tax on the lump sum and what is left after tax. The average tax rate shows the tax as a share of the lump sum. With the starting figures, R 60 000 is left after tax from a lump sum of R 60 000, an average rate of 0.0%.
If you enter an offer that is lower than the minimum, the calculator shows the gap. It uses an estimated weekly pay, so check the result against your payslip before you raise it with anyone.
A closer look at weekly pay and years of service
- Weekly pay is your monthly pay multiplied by 12 and divided by 52. If you are paid by the week, or your pay changes from month to month, your payslips may give a different weekly figure.
- Completed years means whole years only. Part of a year does not add a week. If you are a few weeks short of a year, the calculator will not count it.
- Continuous service is the period you worked for the same employer without a break. Questions about whether service was continuous can be complicated, so check them with the CCMA, your union or a labour lawyer.
How the tax on the lump sum works
A severance payment is a lump sum, and SARS taxes it using its own table rather than adding it to your monthly salary. The tax on this lump sum is the tax on all your lump sums together, minus the tax on the lump sums you took earlier. That is why the calculator asks about earlier lump sums. Retirement fund withdrawals and earlier severance payments can both count.
The rates in that table rise with the size of the lump sum, so a larger payment tends to have a higher average rate. Your employer may withhold tax under a directive from SARS. The final amount is settled when you file your return.
What this does not cover
The minimum applies to dismissals for the employer’s operational reasons. A contract, a collective agreement or company policy may promise more. Notice pay, leave pay, a bonus or a retirement fund payout are separate from severance, and this tool does not add them. It also does not say whether a dismissal was fair or lawful, and it does not give legal advice.
Things to watch
- Count only completed years of service.
- Tax may be withheld by your employer under a SARS directive. Your final tax is settled when you file.
- Dispute an offer below the minimum through the CCMA or a union. This tool does not give legal advice.
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