Home Letters Termination of employment on the grounds of redundancy
Under the Termination of Employment and Severance Pay Act, Chapter 99:08, (Section 12) an employer may terminate the employment of employees as part of the reduction of the workforce on the grounds of operational requirements including:-
– modernisation, automation or mechanisation;
– closure, sale or other disposition of part or whole of the business or reorganisation for efficiency;
– impossibility or impracticability to continue business on account of shortage of materials, mechanical breakdown, force majeure or natural disaster;
– reduced operations on account of difficult economic and market conditions.
The employer is required, before terminating employment for redundancy reasons, to inform and consult the recognised trade union, the employees or their representatives and the Chief Labour Officer as soon as possible, but not later than one month from the date of the existence of the circumstances giving rise to contemplated redundancy action. In informing these persons, the employer is required to provide all the relevant details, the reasons, circumstances, the affected employees, and follow the procedures and timelines set by Section 15 of this Law.
Under Section 7 of the Termination of Employment and Severance Pay Act, a contract of employment, without term limit, may at any time be terminated:-
– by mutual consent of the parties;
– by either party for good and sufficient cause; or by notice to the other party; and
– on any ground of redundancy which relates to operational requirements (Section12);
Where a contract of employment is being terminated for reasons of redundancy or by
notice to the other party in keeping with Section 12 of this Act:
– Two weeks’ notice is required where the employee has less than one year’s service; and
– one month for one year or more service.
– An employee is also required to give corresponding notice to the employer where the employee terminates his employment contract.
– The parties can agree to longer periods of termination notice.
– An employer can waive the right to receive such notice.
Payment in lieu of Notice (Section 16)
In lieu of giving the required notice, the employer or employee is required to pay to the
other party a sum equal to the remuneration and benefits accrued for the relevant period of notice.
Certificate of Termination (Section 17)
The employer is required to provide an employee with a statement of Termination upon
the request of the employee.
Severance Pay (Section 21)
On termination by reason of redundancy or by reason of severance of employment, an employee with one year or more years of continuous employment with an employer is entitled to be paid a severance or redundancy allowance equivalent to:
– One week’s wages for the first five years’ service;
– Two weeks’ wages for the sixth to the tenth year; and
– Three weeks’ wages in excess of ten years subject to a maximum of fifty-two weeks.
Severance or redundancy allowance is not applicable where the employee unreasonably refuses to accept another job offer by the employer at no less favourable conditions than those enjoyed prior to termination.
Prosecution by Chief Labour Officer (Section 22)
The Chief Labour Officer may institute or cause to be instituted any prosecution for the purpose of enforcing this Act. Any officer of the Department of Labour may appear as a prosecutor for and on behalf of the Chief Labour Officer.
Samuel J Goolsarran