Often employees request to be paid for the years of service they have rendered to the employer when the employment relationship comes to an end. However, any employee who receives wages or a salary is compensated for their services when they receive remuneration.
When an employee resigns or reaches his/her retirement age, there is no duty on the employer to pay the employee for his/her years of service. Where the employee resigns, they will also not be in a position to claim UIF. The employee may however claim UIF if their contract came to an end due to reaching the agreed retirement age.
If an employee is dismissed, resigns or reaches retirement age, the employee should receive the following:
- Salary up to the last working day,
- Accumulated leave,
- Any other payment owed for example overtime, pro-rata bonus.
The only circumstances when an employer is obligated to compensate an employee for years of service, is when the employer retrenches the employee. This is referred to as severance pay and the employee will be entitled to the following:
- Remuneration up to the last working day;
- Accumulated leave due to the employee;
- Severance pay for 1 week’s salary for every year of completed service;
- Notice pay if the employee is not required to work during the statutory notice period.
Keep in mind that correct procedures have to be followed when an employee’s services is terminated.
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