can my current employer use the basis of me possibly having employment post the retrenchment process to not pay out severance pay? I have no intention of resigning from my current employer and would consider another position within the company if its suitable and agreed on. I have a possible employment option although its a temporary service contract (nothing in writing or signed yet) with no promise of employment at the end of the 4 month contract.
No, an employer cannot deny paying you severance if you are retrenched.
It is only if you decline suitable alternative employment that is offered to you within the company that you would not be able to claim UIF. Severance on the other hand must be paid out by the employer regardless.