Retrenchment is a sensitive issue. It's for this reason that the Labour Relations Act (LRA) encourages you to look carefully at ways and means of avoiding it.
This could include offering your employee:
Another job elsewhere in the company or group. You may need to consider offering alternative positions to employees with long service even if that means retrenching other employees who currently occupy those positions.
A lesser job with a lower package;
Now the question is what happens if you offer your employee an alternative job and he refuses to accept it?
Your employee isn't obliged to accept an alternative job, but you should offer one anyway.
If he unreasonably refuses an offer of alternative employment, you're not obliged to pay severance pay (Section 41(4) of the BCEA).
Experts behind the Labour Law for Managers Loose Leaf Service say the refusal would generally only be unreasonable if what you were offering was a similar job without loss of pay and benefits.
There you have it. If your employee turns down an alternative job to retrenchment, you don't have to pay severance pay.