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We a closing down and have advised the staff accordingly

Hi, we a closing down...
Hi, we a closing down and have advised the staff accordingly that the company will be closing - are you required to pay a "retrenchment" package
JA: What state are you in? It matters because laws vary by location.
Customer: In South Africa - Gauteng
JA: Have you talked to a lawyer yet?
Customer: No not really, been given some advise via a labour broker
JA: Anything else you want the lawyer to know before I connect you?
Customer: Very small business only 4 people involved - what will the fee be for said advise?
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Answered in 10 minutes by:
11/16/2017
CaseLaw
CaseLaw, Attorney
Category: South Africa Law
Satisfied Customers: 1,629
Experience: BCom; LLB; Masters in Law
Verified

Hi there and thank you for your question,

I am a practicing attorney based in South Africa and I will try to assist you with your legal question but please feel free to ask as many follow up questions in order to clarify your initial question. If you have a new question, you must please open a new thread.

Yes, if you are voluntarily closing down the business one of your closing down costs WILL be a retrenchment package for each of the staff members.

The only thing is that normally you would need to give the staff an option of accepting the retrenchment package OR accepting another role in the company, but here it would be a forced retrenchment package.

What can you expect as payment on retrenchment?

1. Severance pay should be at least one week’s remuneration per completed year of service. Remuneration is calculated including basic salary and payments in kind.
2. Outstanding leave must be paid out in full.
3. Notice pay may vary depending on your employment contract.
4. In the absence of a contract, you are entitled to notice pay as follows:

  • If you have been employed for 1-4 weeks: 1 weeks’ notice pay
  • If you have been employed for 4 weeks – 1 year: 2 weeks’ notice pay
  • If you have been employed for more than a year: 4 weeks’ notice pay

Depending on your employment contract, again, you may be entitled to a pro-rata payment of your annual bonus, and the balance of any pension or provident fund benefits.

If my answer hasn't provided you with enough clarity regarding your initial question, please send me a REPLY with follow up questions so that I can continue to assist you in this same thread for as long as you need. Let me know if you need more advice - don't just rate my answer as "bad".

If my are HAPPY with my answer then please click one of the STAR ratings or the SMILEY FACES to rate my answer!

Good luck and best regards,

CaseLaw

Ask Your Own South Africa Law Question
Customer reply replied 26 days ago
Thank you - so if the business is closing due to the fact that it is no longer financial viable to continue as it is running at a lose - retrenchment packages still need to be paid - sorry should have maybe told you that in the beginning.

Yes.

But if the company has NO money, then you might want to liquidate the company through a Court liquidation application. But then the employees walk away with nothing.

CaseLaw
CaseLaw, Attorney
Category: South Africa Law
Satisfied Customers: 1,629
Experience: BCom; LLB; Masters in Law
Verified
CaseLaw and 87 other South Africa Law Specialists are ready to help you
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Customer reply replied 26 days ago
Thank you no don't want them to get nothing will work out the packages and make a plan - appreciate the advise.
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CaseLaw
CaseLaw
CaseLaw, Attorney
Category: South Africa Law
Satisfied Customers: 1,629
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