Termination of employment ends the employment relationship, whether by resignation, dismissal, retrenchment, retirement, death, or expiry of a fixed-term contract.
What it means
How employment ends determines what an employer owes on the way out. Notice pay, accrued and unused leave, and any contractual termination benefits must be calculated and settled, and in retrenchment or certain dismissal cases a severance payment becomes due on top of ordinary final pay.
Where it fits in
Final pay calculations draw on accrued annual leave, any outstanding notice pay, and - where applicable - severance pay taxed under a tax directive rather than ordinary PAYE tables. The employee's IRP5 for the tax year must reflect all of these correctly, since it is often issued earlier than usual when employment ends mid-year.
Key rules
- Notice period and pay are determined by the contract and the BCEA minimums, whichever is more generous to the employee.
- Accrued, unused annual leave must be paid out as part of final pay.
- Severance pay, where applicable, typically requires a tax directive rather than standard PAYE treatment.
- An IRP5 covering the period worked must be issued for the tax year in which employment ends, even if it ends mid-year.
