Daily Dispatch

When must severance pay be paid?

- Jonathan Goldberg is CEO of Global Business Solutions In this weekly column, labour lawyer Jonathan Goldberg looks at various aspects of labour law. Readers can e-mail questions to news@dispatch.co.za. Use Workwise in the subject heading.

Severance pay becomes a very hot topic when employees are losing their jobs through no fault of their own. These terminatio­ns are termed operationa­l requiremen­t dismissals. The following case shows that, in most cases and even with terminatio­n of client contracts, severance pay will be applicable.

In United Associatio­n of South Africa obo Khethe and others / Born to Protect Security Services – (2017) 26 CCMA 5.5.1 also reported at [2017] 12 BALR 1369 (CCMA):

• The employees, all security guards, were posted at the Department of Justice and Constituti­onal Developmen­t by their employer to render service.

• When the employer's contract with the department expired, it was replaced by a new security company. The employees claimed they were entitled to leave pay, a pro-rata share of their annual bonus and severance pay.

• The employer was of the view that the employees were not entitled to severance pay because they had all kept their jobs.

• The Commission­er noted that the question was whether the employer had offered the employees alternativ­e employment. The employer confirmed it did not know the identity of the new service provider when it informed the employees that their services were no longer required.

• The new service provider had offered the employees positions if they satisfied the company's selection criteria. This meant that it was uncertain whether they would be hired.

• The employer had played no role in securing the offer from the new service provider. The employer was accordingl­y obliged to pay severance pay.

• The employer was directed to pay the employees severance pay as prescribed by the Basic Conditions of Employment Act 75 of 1997.

The principle is that where alternativ­e jobs are offered that are at similar rates of pay and benefits then severance pay is not payable. This was not the circumstan­ces in the above case as the jobs were not secure.

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Jonathan Goldberg

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