Retrenchment of a Domestic Worker: What Severance Pay Is Required

Retrenchment Is Not a Simple Goodbye

Retrenchment — dismissal for operational requirements — covers genuine situations where the employer can no longer afford to employ the worker, where the position has become redundant due to changed circumstances, or where the household is closing down or relocating. However, retrenchment is not simply a matter of giving notice and wishing the worker well. There are specific obligations including consultation and severance pay.

Consultation Before Retrenchment

Before retrenching a domestic worker, you are required to consult with them about the proposed retrenchment — informing them in writing of the reason, the alternatives considered, any selection criteria, and the assistance being offered. The worker must be given an opportunity to respond. This does not mean you must be talked out of a genuine retrenchment, but the consultation must be genuine and documented.

Severance Pay

A domestic worker who is retrenched is entitled to severance pay of at least one week's remuneration for every completed year of continuous service. A worker employed for four years and two months is entitled to four weeks' severance pay. For a domestic worker earning R5,000 per month (approximately R1,154 per week), four years of service generates severance pay of approximately R4,615. This is in addition to any outstanding leave pay and notice pay due.

UIF Benefit on Retrenchment

A retrenched domestic worker who is registered for UIF can claim unemployment benefits — a significant safety net. A worker who was never registered has no such protection. This is yet another reason why UIF registration throughout the employment period is so important.

Retrenchment Is Not Available to Avoid Disciplinary Obligations

It is worth emphasising clearly that retrenchment cannot be used as a mechanism to avoid the obligations of a fair disciplinary process. If an employer wishes to dismiss a domestic worker for misconduct or poor performance, the correct route is the disciplinary process with a fair hearing. Using a spurious retrenchment as a shortcut to dismissal without following proper procedures is a well-recognised form of unfair dismissal at the CCMA, and awards in such cases often include both the compensation for unfair dismissal and an adverse finding on the employer's credibility.

Retrenchment When the Household Relocates

One of the most common genuine retrenchment situations in domestic employment arises when the employing household relocates — either to another city, province or country. In this situation, the position genuinely becomes unavailable and retrenchment is appropriate. The obligation to consult and to pay severance applies equally. If the employer is moving within South Africa and could in theory offer the worker a position at the new location, this possibility should be discussed in the consultation process before a final decision to retrench is made.

Keep Written Records

Maintain written records of the retrenchment consultation, severance pay calculation, notice given and all payments made. MyHelper's document storage service keeps all employment records secure and accessible. Start at myhelpersubmit.co.za.