Termination of an Employee Contract

termination employee contract

Notice of termination of an employee contract must be given in writing.

If an employee who receives notice of termination is not able to understand it, the notice must be explained orally by employer/representative to the employee in an official language the employee reasonably understands.

Notice of termination of a contract of employment given by an employer must not be given during any period of leave to which the employee is entitled to, and not run concurrently with any period of leave to which the employee is entitled to except sick leave.

Payment made to employee for notice period

Instead of giving an employee notice in terms of section 37, an employer may pay the employee the remuneration the employee would have received, calculated in accordance with section 35, if the employee had worked during the notice period.

Payments due on termination of employee

On termination of employment, an employer must pay an employee:

  1. for any paid leave that the employee is entitled to in terms of section 10 (3) or 16 (3) that the employee has not taken,
  2. remuneration calculated in accordance with section 21 (1) for any period of annual leave due in terms of section 20 (2) that the employee has not taken; and
  3. if the employee has been in employment longer than four months, in respect of the employee’s annual leave entitlement during an incomplete annual leave cycle as defined in section 20 (1)-
    1. one day’s remuneration in respect of every 17 days on which the employee worked or was entitled to be paid; or
    2. remuneration calculated on any basis that is at least as favourable to the employee as that calculated in terms of subparagraph (i).

Severance payments

  1. An employer must pay an employee who is dismissed for reasons based on the employer’s operational requirements or whose contract of employment terminates or is terminated in terms of section 38 of the Insolvency Act, 1936 (Act 24 of 1936), severance pay equal to at least one week’s remuneration for each completed year of continuous service with that employer, calculated in accordance with section 35.
  2. An employee who unreasonably refuses to accept the employer’s offer of alternative employment with that employer or any other employer, is not entitled to severance pay in terms of subsection (2).
  3. The payment of severance pay in compliance with this section does not affect an employee’s right to any other amount payable according to law.
  4. The employee who refers the dispute to the council or the CCMA must satisfy it that a copy of the referral has been served on all the other parties to the dispute.
  5. The council or the CCMA must attempt to resolve the dispute through conciliation.
  6. If the dispute remains unresolved, the employee may refer it to arbitration.

Certificate of service

On termination of employment an employee is entitled to a certificate of service stating the employee’s personal particulars, address, job title, commencement and dismal/termination date and reason of termination if requested.

This article was written by: Christopher Naidoo, PATC Trainee Accountant

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