Tag Archive for: retrenchment

Tips for employers when retrenching and exiting employees from the company

Unfortunately, with the event of COVID many businesses have not survived or are struggling to survive, and for this reason retrenchments are becoming the “new normal”. Before retrenching employees maybe consider reading my previous blog about “alternatives to retrenching”. Once the retrenchment process is concluded (in line with the regulatory requirements) one needs to exit the employee from the company.

These 18 tips will ensure regulatory compliance, and ensure that an employee is successfully exited from the company.

  1. Provide support. Have you ever been retrenched? If not, count yourself fortunate. It is an extremely stressful event in one’s life and therefore as a manager, one needs to give the process careful thought. Provide counselling and assist with the compilation of the employee’s CV or contacts details for to your networks to assist with job hunting. If the business can afford it, provide an outplacement service that specialises in providing the support people need.
  2. Provide a checklist/guide or conduct an educational workshop to assist the employee with the process of exiting the company. There is a mountain of forms that need to be completed, and this can be very confusing and stressful for the employee.
  3. Keep copies of all signed and personal documentation in a safe place for 5 years (SARS requirement) e.g. Notice of Termination letter and/or Retrenchment Agreement, Section 189 notice, payslips etc. Do not share this information with anyone without the employee’s consent (POPI Act).
  4. Keep copies of minutes from the consultations.
  5. Check severance package calculations and ensure that the correct deductions have been made. It may help to issue two payslips in the last month. One for the normal salary and associated deductions such as UIF, PAYE etc, and the second payslip for the retrenchment package. Arrange for the terms of re-payment of loans by the employee. If you receive the UIF TERS payment after the employee has left the company, ensure that you pay this to the employee.
  6. If applicable, the payroll person should submit a request for a Tax Directive from SARS and then issue this to the employee.
  7. Ensure that the employee supplies his/her personal email address for future IRP5 Certificates, future correspondence or payments from TERS.
  8. Notify any benefit providers (medical aid or provident fund) of the termination if applicable.
  9. Encourage the employee to seek tax or financial advice from a professional to capitalise on possible tax efficient options, and also for guidance about the best way to invest their severance package.
  10. Ensure all leave, allowances, UIF, TERS, overtime claims etc are paid to the employee.
  11. Complete the UIF form UI19 and supply the last 6 payslips to the employee in the final month if they do not have copies.
  12. Issue a Certificate of Service to the employee (mandatory) as part of termination documentation. Ensure that it states the reason for termination and the dates of employment. This will help with job hunting.
  13. Ensure that a letter of recommendation/ work reference is issued to employee. This is not mandatory, but it does help with finding new employment.
  14. Conduct education sessions about the completion of the UIF forms and the process to follow. Many claims are rejected by the Department of Labour due to incomplete forms being submitted. This causes additional stress to the employee.
  15. Ensure all company equipment and access cards are returned. If the company is closing, consider allowing employees to keep or buy the company equipment once “scrubbed” e.g. laptop, company phone.
  16. Ensure that the employee activates the out of office/ autoreply on email or redirects the phone to another colleague
  17. Ensure all passwords, company documents and folders are accessible to Management. Also, ensure that a
    thorough handover is concluded with the employee.
  18. Bid farewell and acknowledge the employee’s contribution to your company. Be compassionate, consider how you would like to be treated if the shoe was on the other foot. An ex-employee could be your next client, customer, Independent Consultant or someone who refers others to your business.

Retrenchment checklist for employees

Due to the COVID-19 pandemic many businesses are struggling to survive and are retrenching employees. Often employees do not know what they need to do before exiting the organisation. Here is a 17 point checklist to make sure that when you leave the organisation that all goes smoothly, and with minimal stress.


Employee checklist for retrenchment (less than 50 employees) YES NO
1.  Have I received my Notice of Termination letter and/or Retrenchment Agreement with my retrenchment calculation?
2.  Have I submitted the signed Retrenchment Agreement to Management?
3.  Do I need to raise any concerns or questions with management?
4.  Have I approached a tax professional for advice on my package?
5.  Have I received the copy of the Tax Directive from payroll?
6.  Have I updated my personal email address with payroll and management for the next IRP5 to be sent to me?
7. Do I need to ask payroll for copies of previous salary slips (often needed by banks or new employers)?
8. Have I received the UI19 UIF form from payroll so that I can claim UIF?
9. Have I received a Certificate of Service (will help future employers to do reference checks on you, confirms employment with previous company)? This is a regulatory requirement and is mandatory.
10. Do I need a letter of recommendation from management (work reference for job hunting)?
11. Do I need the company to sign forms if I decide to use an Independent UIF agent or have I registered on the Dept of Labour website for UIF?    www.labour.gov.za
12. Have I cleaned out my desk and handed in company equipment or access cards?
13. Have I done a thorough handover to management or appointed person?
14. Have I supplied all passwords to management or appointed person?
15. Have I put the “out of office” autoreply and forwarded my phone to someone else?
16. Use family and friends for support as it is a traumatic event in one’s life.
17. You need to find another job as quickly as possible, so remember to leave on a high note even though you are mad with your ex-employer for retrenching you. Remember work references will be taken from your ex-employer by a prospective new employer. Rather focus your energy on finding a new job and taking good care of yourself.