The Voluntary Severance Agreement is a crucial document in South African employment law, typically used during corporate restructuring, organizational changes, or when an employer and employee mutually agree to terminate their employment relationship. This agreement is distinct from forced retrenchment as it represents a consensual separation where the employee voluntarily accepts the severance package. The document must comply with South African legislation, including the Labour Relations Act 66 of 1995 and the Basic Conditions of Employment Act 75 of 1997. It typically includes comprehensive details about severance payments, benefits, tax implications, confidentiality obligations, and mutual releases. The agreement serves to protect both parties' interests and provides legal certainty regarding the termination terms while ensuring all statutory requirements are met.
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1. Parties: Identification of the employer and employee, including full legal names, registration/ID numbers, and addresses
2. Background: Context of the agreement, including employment history, reason for voluntary severance, and confirmation that both parties enter into the agreement freely and voluntarily
3. Definitions: Definitions of key terms used throughout the agreement
4. Termination Date: Specific date when employment will terminate and last working day if different
5. Severance Package: Details of the total severance payment, including calculation method and payment timing
6. Statutory Payments: Leave pay, pro-rata bonus, and other statutory entitlements
7. Tax Treatment: Tax implications and employer's obligations regarding tax deductions
8. Full and Final Settlement: Confirmation that the payment represents full and final settlement of all claims
9. Release and Waiver: Mutual release of claims and waiver of rights to future claims
10. Company Property: Requirements for return of company property and documentation
11. Confidentiality: Ongoing obligations regarding confidential information
12. General Provisions: Standard contractual terms including governing law, entire agreement, and amendments
13. Signatures: Execution clause and signature blocks for both parties
1. Restraint of Trade: Include when the employee had access to sensitive information or key clients, specifying non-compete and non-solicitation terms
2. Medical Aid Continuation: Include when offering extended medical aid benefits post-termination
3. Share Options/Long-term Incentives: Include when employee has outstanding share options or long-term incentive schemes
4. Reference Letter: Include when agreeing to provide a reference letter, including terms of reference
5. Consulting Services: Include when the employee will provide transition or consulting services post-termination
6. Legal Advice Confirmation: Include when the employee has received legal advice before signing, particularly for senior employees
7. Garden Leave: Include when employee will be placed on garden leave before termination date
8. Outplacement Support: Include when offering career transition or outplacement services
1. Schedule A - Payment Calculation: Detailed breakdown of severance package calculation, including base pay, benefits, and statutory payments
2. Schedule B - Company Property List: Itemized list of company property to be returned
3. Schedule C - Benefits Summary: Summary of benefits continuation or termination, including medical aid, pension, etc.
4. Appendix 1 - Acknowledgment of Professional Advice: Form confirming employee has received or waived right to professional advice
5. Appendix 2 - Resignation Letter: Standard format resignation letter to be signed by employee
6. Appendix 3 - Reference Letter Template: Agreed format and content of reference letter if applicable
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