Resigning: Notice, Leave Pay and the 13th Cheque Question

Resignation is the one form of leaving where the employee is in control, and where the entitlements are narrower than most people assume. Understanding the difference between what is owed by law and what is owed by contract is what stops a final payslip becoming an argument.

Notice

The Basic Conditions of Employment Act sets minimum notice periods based on how long you have been employed:

• Six months or less: one week
• More than six months but less than a year: two weeks
• One year or more: four weeks

Farm workers and domestic workers employed longer than six months are entitled to four weeks.

These are minimums. A contract may require more — two calendar months is common in senior roles — and the longer period applies. What a contract may not do is reduce the statutory minimum.

Notice must be in writing, and it runs from the day it is received, not the day you decided.

Leaving without working notice. You can, but there are consequences. Your employer can hold you liable for the notice period you did not work, and may deduct it from your final pay where your contract permits. Many employers waive this, particularly if you have handed over properly. Do not assume it — get any waiver in writing.

Being told to leave immediately. An employer may pay you in lieu of notice and ask you to go. In that case you are paid for the full notice period as though you had worked it.

What must be paid out

Outstanding salary to your last working day.

Accrued annual leave. This is not discretionary. Under the BCEA, leave that has accrued and not been taken must be paid out on termination. The entitlement is 21 consecutive days per annual cycle for someone working a five-day week — commonly expressed as 15 working days.

An employer may require you to take leave during your notice period rather than pay it out, if the contract allows, but it cannot simply disappear.

Pro-rata bonuses, only if your contract or the company's policy provides for them.

A certificate of service. You are entitled to one, and it records the facts of your employment — dates, position, remuneration — not an opinion about your performance. It is different from a reference.

The 13th cheque question

This is the most common dispute on a final payslip, and the answer disappoints people.

A 13th cheque is not a legal entitlement. There is nothing in the BCEA requiring one. Whether you are owed anything depends on:

• Your contract. If it says a 13th cheque is payable, and on what terms, that governs.
• Company policy, where it forms part of your conditions of employment.
• Established practice. Where a bonus has been paid consistently, unconditionally and over a long period, it can become a term of employment by practice — but this is harder to argue than people expect, and a discretionary bonus paid at varying amounts usually stays discretionary.

Most policies require you to be in service on a particular date to qualify. Resigning in October, with the bonus payable in December, usually means no bonus, and that condition is generally enforceable.

Read the clause before you set your resignation date. Timing a departure a few weeks later is sometimes worth several thousand rand.

What may be deducted

An employer may not deduct freely from your final pay. Deductions are limited to what the law requires, what you have agreed to in writing, and specific narrow categories.

Common lawful ones: outstanding study loans or salary advances you signed for, unreturned company property where your agreement provides for it, and notice not worked where the contract allows.

Deductions for damage or loss require your written consent, and even then there are conditions — a fair procedure, and the loss actually being attributable to you.

If something appears that you did not agree to, ask for the written authority relied on.

The UIF point most people miss

Resigning generally disqualifies you from UIF unemployment benefits.

The fund pays unemployment benefits where you lost work through no choice of your own — dismissal, retrenchment, or a contract ending. A voluntary resignation is normally excluded.

This matters enormously if you are resigning without another job lined up. The safety net you have contributed to for years is generally not available, and people discover this after the fact.

There are narrow exceptions where a resignation is found to be a constructive dismissal — that is, you resigned because the employer made continued employment intolerable — but that is a finding someone else makes, not a label you apply yourself, and it has to be proven.

A worked final payslip

Take someone on R32,000 a month with three years' service, resigning with four weeks' notice worked, 9 days of accrued leave, and a discretionary December bonus they will not qualify for.

• Salary for the final month: R32,000
• Leave pay, 9 days at roughly R32,000 ÷ 21.67 = R1,477 a day: R13,293
• Bonus: nil, because the policy requires being in service in December
• Less an outstanding study loan they signed for: −R4,000

Gross R41,293, then PAYE.

Two things about the tax. The leave payout is ordinary income, not a lump sum benefit, so it is taxed at normal rates — the concessionary retirement table does not apply to a resignation. And because the month's gross is unusually high, the PAYE deducted will look disproportionate; the system taxes that month as though it were the new normal. Most of the excess comes back on assessment.

The point of writing it out: the only genuinely non-negotiable lines are the salary and the leave. Everything else depends on a document you signed.

Restraint of trade and what you may take with you

Two clauses matter more on the way out than they ever did on the way in.

A restraint of trade is enforceable in South Africa, but not automatically. A court weighs whether the employer has a protectable interest — trade secrets, customer connections — against your right to work, and considers whether the scope, duration and geography are reasonable. A blanket restraint stopping you working in your whole industry nationwide for two years is unlikely to survive; a narrow one protecting specific client relationships for six months may well.

If you have one and are moving to a competitor, get it read before you resign, not after your new employer has announced you.

Confidential information and company property remain the employer's. Client lists, pricing, internal documents — copying them on the way out converts an ordinary resignation into a dispute where you are on the wrong side of it. Return devices and get written acknowledgement that you did.

If you are resigning because of how you are treated

Do not simply leave and call it constructive dismissal afterwards. That is a finding someone else makes, and the bar is high: you must show the employer made continued employment genuinely intolerable, and that resigning was the only reasonable option left.

What strengthens such a case is a record made at the time — grievances raised in writing, responses received or not received, dates. What weakens it is resigning first and building the argument later.

Get advice before resigning if that is the situation, because the sequence is very hard to undo.

Before you hand in the letter

1. Read your contract — notice period, bonus conditions, restraint of trade, repayment clauses for study or relocation costs.
2. Check your leave balance on your own records, not only the payslip.
3. Establish whether you qualify for a bonus and when.
4. Plan for no UIF. If there is no next job, the gap is unfunded.
5. Resign in writing, dated, and keep a copy.
6. Do the handover properly. Goodwill is what gets a notice period waived and a reference given.

Your retirement fund

Leaving triggers a decision about the fund, and it is the most expensive one on this list.

You may transfer it to a preservation fund or a new employer's fund — tax neutral, and it keeps the money compounding. Or you may withdraw it, which is taxed on the withdrawal table where only the first R27,500 is free, and which permanently consumes part of a lifetime allowance you will want at retirement.

Cashing out a fund on resignation is the single most costly habit in South African retirement saving. See tax on retirement and withdrawal lump sums for how the two tables differ and why the difference compounds.

Frequently asked questions

Can my employer refuse to accept my resignation?

No. Resignation is a unilateral act; it takes effect once communicated. What an employer can do is hold you to your notice period.

Must my leave be paid out if I resign?

Yes. Accrued but untaken annual leave is payable on termination.

Can I claim UIF after resigning?

Generally no. Unemployment benefits are for people who did not choose to leave. Maternity and illness benefits work differently and are not affected in the same way.