Ask Lanceford
September 23, 2005
I resigned after 8 years, am I entitled to severance pay?


After working with one company for

8 years, I resigned to take up a position with another company. Am I entitled to severance pay?


This is a frequently asked question. It is a question with a very simple and straight forward answer: The answer is no. I always found though, during the period I served at the Department of Labour that persons often find it difficult to understand this response, in most cases, because they do not fully understand the concept of severance payment.{{more}}

There are many persons who view severance payment as compensation for the years they “put in” into the company. It is not. Severance payment is compensation for severing or cutting the employment relationship. When you resign, you are cutting the employment relationship and the current law does not force the employer to compensate you.

There are situations where persons may receive payments calculated along the lines of severance payment upon resignation. This is so usually, when it is negotiated by a trade union and forms part of a collective agreement or when it forms part of an individual contract.