What your employer legally owes you when you resign

You’ve found a new job, drafted your resignation letter, and are ready to hand it in.

Amid the excitement of a new chapter, confusion often arises around your final payout.

Will you receive any money? What happens to your leave days? Is a package included?

There are many myths about resignation payouts. To ensure you don’t leave money behind—or expect money that isn’t due—here is a clear breakdown of what your employer legally owes you when you resign in South Africa.

1. The Big Myth: Severance Pay

Let’s clarify this first: you are not entitled to severance pay if you resign. Severance pay (typically one week’s pay for every year of service) applies only in cases of retrenchment—that is, dismissal based on operational requirements.

Because resignation is a voluntary act, your employer is not legally obliged to offer a separation package or a “golden handshake”, regardless of how long you’ve been with the company.

2. Accrued Annual Leave

This is usually the most significant item on your final payslip. In terms of the Basic Conditions of Employment Act (BCEA), you must be paid out for any statutory annual leave you’ve accumulated but not taken.

Calculation: The payout is based on your daily wage. For example, if you earn R1,000 per day and have 10 days’ leave remaining, you should receive R10,000 (subject to tax).

Limitation: Your employment contract may contain clauses about excess leave. While the law protects your minimum statutory leave (15 working days per annum), some contracts state that any additional leave carried over from previous years is forfeited upon resignation.

3. Notice Pay

This depends on how your departure unfolds:

• If you work your notice period, you receive your normal salary for that duration.

• If your employer waives the notice period (e.g., “We accept your resignation—don’t return tomorrow”), they must still pay you for the full notice period you were willing to work.

• If you resign with immediate effect, you are breaching your contract. The employer is not required to pay you for unworked notice, and in some cases, may even claim damages for operational disruption.

4. Bonuses and Commission

13th Cheque: Unless your contract specifically guarantees a pro rata 13th cheque, most require that you be “in the employ” of the company on the payout date to qualify. So, if you resign in November and the bonus is paid in December, you may forfeit it.

Commission/Incentives: If you’ve closed deals but payment is still pending, check your commission policy. Generally, you are entitled to commission earned before your resignation, even if paid out later—but this depends heavily on your contract terms.

5. Pension or Provident Fund

This money belongs to you, including the employer’s contributions made on your behalf. However, this is administered by the retirement fund, not your employer directly.

You usually have two options:

• Withdraw the funds (subject to heavy tax).

• Preserve them by transferring to a preservation fund or your new employer’s fund (a more tax-efficient route).

6. Certificate of Service

While not a monetary benefit, this is a legal entitlement. Upon request, your employer must provide a Certificate of Service that includes:

• Your full name

• Employer’s name and address

• Details of any applicable sectoral employment standard or bargaining council

• Start and end dates of employment

• Job title or description of duties

• Remuneration at termination

A Final Note on UIF

Because you resigned voluntarily, you are not eligible to claim Unemployment Insurance Fund (UIF) benefits. However, your employer must still submit a UI-19 form marked “Resigned” for your records, which you may need for future employment.

Before you hand in your resignation, review your contract’s termination clause and calculate what you’re owed. It pays to exit professionally—and with your finances in order.

** Aslam Moolla is the founder and director of Legal Leaders and co-founder of Legal Leaders Insurance. He is a passionate labour lawyer with over 14 years of experience. Moolla and the Legal Leaders have become a prominent voice for workplace fairness and a commitment to ensuring every South African knows their rights and how to defend them.

***The views expressed here do not necessarily represent those of Independent Media or IOL.

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