When a company announces they are cutting jobs, the office instantly becomes a stressful place. Often, before management forces anyone out, they will ask if anyone wants to put up their hand, take a voluntary severance package, and leave.
If you find yourself in this situation, you are faced with a very tough choice, do you take the money and walk away, or do you hold onto your job and hope you don't get forced out later?
It is a terrifying decision to make. To protect your family’s financial future, you need to understand exactly what you are giving up, and what you are getting, with each choice.
Taking the Package (Voluntary Retrenchment)
When a company wants to reduce staff quickly, they ask for volunteers. To make it tempting, they usually offer a much better payout than the law requires. Instead of just giving you one week of pay for every year you worked, they might offer you two or three weeks, plus pay out your leave and maybe even a bonus. It gives you a nice cash cushion while you look for a new job.
But there is a major catch. When you take a voluntary package, you have to sign an agreement. By signing it, you are officially agreeing to part ways. This means you give up your right to challenge the company later. If you wake up two weeks from now and feel like you were bullied into taking the deal, you cannot go to the CCMA. You have traded your right to fight for a bigger payout.
Waiting It Out (Forced Retrenchment)
If not enough people volunteer to leave, the company will have to start forcing people out.
The biggest downside to being forced out is the money. Once it becomes involuntary ,the company will usually only pay you the absolute legal minimum: just one week of pay for every year you have been there, plus your notice pay.
The upside, however, is that you keep all of your legal rights. Management cannot just fire you because they do not like you. They have to prove the business is actually struggling, and they have to use fair rules to choose who stays and who goes, usually "last in, first out." If they break these rules or try to use retrenchment as a sneaky way tofire you, you have the absolute right to take them to the CCMA and fight for your job or compensation.
What About Claiming UIF?
A lot of people worry that if they take a voluntary package, they won't be allowed to claim from the Unemployment Insurance Fund (UIF) because it looks like a resignation.
This is a myth. If you take a voluntary package specifically because the company is going through a formal retrenchment process, you can still claim your UIF. You just need to make absolutely sure your HR department writes down "Retrenchment" on your UI-19form, and not "Resignation."
Sitting across from HR with a dense legal agreement on the table is incredibly overwhelming, especially when your livelihood is on the line. This is exactly where having Legal Leaders changes everything. As a member, you can hand the settlement offers to a dedicated team who can break them down into plain, simple English for you. Having a specialist in your corner brings real peace of mind, ensuring you never accidentally sign away your rights or accept a bad deal when you are feeling vulnerable.
Never let boardroom panic force you into a quick decision. Take a breath, get the offer checked, and make the choice that is best for you and your family.
** 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 IOL.
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