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Severance Pay for Domestic Workers, Explained with Examples
If you retrench a domestic worker, the law sets a minimum parting payment: severance pay. It is separate from notice pay and from the payout of unused leave, and households often confuse the three. This page explains exactly when severance is owed, when it is not, and how to calculate it, with worked examples at wages South African households actually pay.
Last reviewed June 2026 · wage figures from 1 March 2026
What severance pay is and when it is owed
Section 41 of the Basic Conditions of Employment Act requires an employer who dismisses an employee for operational requirements, in other words a retrenchment, to pay severance of at least one week's remuneration for each completed year of continuous service. It applies to domestic workers exactly as it does to office workers.
Two conditions matter: the dismissal must be for operational reasons (you can no longer afford the worker, you are relocating, the role has fallen away), and the worker must have at least one completed year of continuous service. You may always pay more than the minimum; you may never pay less.
When severance is NOT payable
Severance is not a general goodbye payment. It is not owed when: the worker resigns; the worker is dismissed for misconduct or poor performance after a fair process (those are fault-based dismissals, not retrenchments); the worker has less than one completed year of service; or the worker unreasonably refuses a reasonable offer of alternative employment that you arranged, whether with you or with someone else. For example, if you offer the same job at the same pay in your new home ten minutes away and the worker declines without good reason, the right to severance falls away.
Be careful with that last exception: the alternative must genuinely be reasonable. A job in another city, at lower pay or with much longer travel is usually not, and refusing it does not cost the worker their severance.
How to calculate severance pay
Count only completed years of continuous service: a worker employed for 7 years and 9 months gets 7 weeks. Then work out one week's remuneration. Remuneration is wider than the cash wage: it includes the value of regular benefits such as food or accommodation you provide, but it excludes transport money to and from work, tips and gifts. For a monthly-paid worker, one week's remuneration is the monthly remuneration divided by 4.33.
Here are three worked examples at common wages, using the national minimum wage of R30.23 per hour that applies to domestic workers from 1 March 2026.
| Scenario | Weekly remuneration | Completed years | Severance owed |
|---|---|---|---|
| Full-time housekeeper, 45 hours/week at the minimum wage (R30.23/hour) | 45 x R30.23 = R1,360.35 | 6 | 6 x R1,360.35 = R8,162.10 |
| Nanny paid R5,000 per month | R5,000 / 4.33 = R1,154.73 | 4 | 4 x R1,154.73 = R4,618.92 |
| Gardener, 2 days a week (16 hours) at the minimum wage | 16 x R30.23 = R483.68 | 10 | 10 x R483.68 = R4,836.80 |
Severance vs notice pay vs leave payout: three separate amounts
A retrenched worker's final payment has three distinct legal components, and paying one does not cancel another. Severance compensates completed years of service. Notice pay covers the notice period, either worked or paid out instead. The leave payout covers accrued annual leave the worker never took, which section 40 of the BCEA says must be paid on termination.
Worked example: Thandi has worked full time (45 hours, five days a week) for the same family for 7 years and 4 months, earning R6,000 per month. The family is emigrating and retrenches her following a fair process, paying her notice out rather than having it worked. One week's remuneration is R6,000 / 4.33 = R1,385.68, and one day is R277.14. She has 8 days of accrued leave.
| Item | Calculation | Amount |
|---|---|---|
| Severance pay | 7 completed years x R1,385.68 | R9,699.76 |
| Payment instead of notice | 4 weeks x R1,385.68 | R5,542.72 |
| Accrued leave payout | 8 days x R277.14 | R2,217.12 |
| Total | R17,459.60 |
Paying it properly
Pay the full amount on or before the last working day, and give the worker a written breakdown showing each component, like the table above. Itemising protects both of you: most severance disputes start because the worker cannot tell what a lump sum was for. Declare the termination to the UIF promptly so the worker can claim unemployment benefits.
If you and the worker disagree about whether severance is owed or how much, the worker can refer the dispute to the CCMA free of charge, and a commissioner can rule on it. Getting the arithmetic right up front is far easier.
Frequently asked questions
Does a part-time domestic worker qualify for severance pay?
Yes. If a worker who comes one or two days a week is retrenched after at least one completed year of continuous service, severance of one week's remuneration per completed year is owed. A week's remuneration is simply what they earn in their normal week, so the amounts are proportionally smaller.
Is severance one week per year worked or per completed year?
Per completed year of continuous service. Nine years and eleven months counts as nine weeks. Many employers round up as a gesture of goodwill, which is allowed: the law sets a floor, not a ceiling.
Do I owe severance if I dismiss my domestic worker for theft?
No. Severance applies only to dismissals for operational requirements. A dismissal for misconduct, done after a fair procedure, carries no severance. You must still pay wages owed and accrued leave.
Must I include the room I provide in the severance calculation?
Severance is based on remuneration, which includes the value of regular payments in kind such as accommodation and food, not just the cash wage. Transport money to and from work, tips and gifts are excluded.
Can my worker claim UIF as well as severance?
Yes. Severance comes from you; UIF unemployment benefits come from the fund the two of you contributed to (1% each of the wage, payable monthly). One does not reduce the other. Declare the termination promptly so the claim is not delayed.
Is severance pay taxed?
Severance is treated differently from normal wages and special tax rates can apply, with a directive obtainable from SARS before payment. At typical domestic-worker wage levels the practical effect is usually small, but check with SARS or a tax practitioner if the amounts are large.