Does an employee qualify for UIF after a mutual separation agreement?

No. Under section 16(1)(a) of the Unemployment Insurance Act, voluntary termination by agreement does not qualify for unemployment benefits. Recording it as retrenchment on the UI-19 is a criminal offence.

Is an ex gratia payment required in a mutual separation?

Not by statute, but an agreement paying only notice and leave risks being set aside by the CCMA as a disguised dismissal because the employee gave up rights without consideration.

Why is a SARS IRP3(a) tax directive needed?

Severance and gratuity lump sums must be taxed per a SARS tax directive (IRP3(a)) obtained by the employer before payout, using the retirement lump sum tables.

Mutual Separation Agreement & SARS IRP3(a) Calculator

Structure a fair, tax-correct settlement and generate a Full & Final Mutual Separation Agreement.

Settlement inputs

Employer name

Employee full name

Monthly gross salary (ZAR)

Years of completed service

Accrued leave days owed

Proposed ex gratia settlement (ZAR)

Termination date

Notice period (BCEA s37)

Tax Directive Basis

Standard Voluntary Mutual Separation (Under Age 55)Sec 189 Operational Restructuring / Age 55+ / Incapacity Severance Benefit

Mandatory SARS IRP3(a) Tax Directive Required Before Payout

Estimate only, using SARS 2026/2027 tables (1 March 2026 – 28 February 2027).

Component	Tax treatment	Gross	Est. tax
Notice pay (4 wk)	Normal remuneration (PAYE)	R 0,00	R 0,00
Accrued leave (0 days)	Normal remuneration (PAYE)	R 0,00	R 0,00
Ex gratia severance lump sum	Ex gratia — IRP3(a), taxed at estimated marginal rate	R 0,00	R 0,00
Total		R 0,00	R 0,00

Estimated net to employee: R 0,00

Benchmark: BCEA s41 retrenchment severance would be R 0,00 (1 week per completed year).

UI-19 Criminal Offence Warning

Under Section 16(1)(a) of the Unemployment Insurance Act, a voluntary mutual separation disqualifies the employee from UIF benefits. Falsifying the UI-19 termination reason code as “Retrenchment” to unlock benefits is a criminal offence. Use reason code for termination by mutual agreement.

[Company Name]

Full and Final Mutual Separation Agreement

PREVIEW

Entered into between [Employer] (“the Employer”) and [Employee] (“the Employee”).

1. The parties agree that the employment relationship terminates by mutual agreement on [date].

2. The Employer shall pay: notice pay of R 0,00; accrued leave of R 0,00; and an ex gratia settlement of R 0,00, subject to a SARS IRP3(a) tax directive.

3. Full and final settlement. The Employee accepts these amounts in full and final settlement of all claims arising from the employment and its termination, and waives the right to refer any dispute to the CCMA, a Bargaining Council or the Labour Court.

4. Confidentiality. The parties shall keep the terms of this agreement confidential.

5. Section 142A LRA. The parties consent to this agreement being made an arbitration award by the CCMA in terms of section 142A of the Labour Relations Act.

6. The Employee acknowledges that the termination is voluntary, that they had the opportunity to obtain independent advice, and that they do not qualify for UIF benefits in terms of section 16(1)(a) of the Unemployment Insurance Act.

Unlocks after payment

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Employee

Unlock the Full & Final MSA — R399 Once-Off

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Frequently asked questions

Does an employee qualify for UIF after a mutual separation agreement?: No. Under section 16(1)(a) of the Unemployment Insurance Act, voluntary termination by agreement does not qualify for unemployment benefits. Recording it as retrenchment on the UI-19 is a criminal offence.
Is an ex gratia payment required in a mutual separation?: Not by statute, but an agreement paying only notice and leave risks being set aside by the CCMA as a disguised dismissal because the employee gave up rights without consideration.
Why is a SARS IRP3(a) tax directive needed?: Severance and gratuity lump sums must be taxed per a SARS tax directive (IRP3(a)) obtained by the employer before payout, using the retirement lump sum tables.

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