Notice and Severance

Notice Requirement

An employment contract is terminated in any of the following cases: mutual consent of the parties; by the worker on grounds of ill-treatment or sexual harassment; by the employer if the worker dies before the end of the employment period; by the employer if the worker is medically certified to be unfit for the job; by the employer if the worker is because of the inability of the worker to carry out his work due to sickness or accident, or the incompetence of the worker (capacity issues), or proven misconduct of the worker.

The termination of employment contract is fair if the contract of employment is terminated by the employer on any of the following grounds: incompetence or lack of qualification on the part of the worker for work he/she is employed; the proven misconduct of the worker; redundancy of workers due to structural, organizational and technical change; and due to legal restriction imposed on the worker prohibiting the worker from performing the work for which he or she is employed.

Length of notice period, before terminating an employment contract by either party, varies according to the length of contract. Workers employed on a weekly contract may be given a week's (7-day) notice. Workers employed on a contract of less than 3 year duration may be given a 2 weeks' notice. Workers employed on a contract of longer duration (3 years or more) may be given one month notice.

A contract terminating party (employer or employee) has to pay gross wages for the notice period or part remaining thereof in lieu of notice if a contract is terminated without complete observation of notice period. In case parties have signed an “at will” clause in the contract, employment may be terminated by any party at the end of working day without any notice.  The contract termination notice should be in the written form and the notice period includes the day on which notice was given.

A contract termination is deemed unfair if the only reason for termination is: trade union membership (or even intention thereof); workers' representative (or seeking the office thereof); filing of complaint or participation in proceedings against the employer on violation of labour laws; worker’s gender, race, colour, ethnicity, origin, religion, creed, social, political or economic status; pregnancy and maternity leave; disability; temporary illness or injury as certified by a recognized medical practitioner; lack of qualification for work in which the worker has been employed (the current qualification requirement being different from the qualification required at the commencement of employment); and the refusal (or intention thereof) to do work at the time of participation in lawful strike unless the work is necessary to prevent actual danger to life, personal safety or health or maintenance of plant and equipment.

Employment contract is deemed to have been terminated unfairly if the worker terminates employment contract, with or without notice, because of the ill treatment of the worker by the employer; and failure on the part of employer to take action on repeated complaints of sexual harassment of the worker. A termination is unfair if the employer fails to prove that the reason for termination is not fair or the that the termination was made in accordance with a fair procedure of the Labour Act. 

Sources: § 15-17 & 62-66 of the Labour Act 2003 (Act 651) 

Severance Pay

There is a provision in the law regarding redundancy pay (paid only if an organization closes down or is merged with another organization and this leads to the worker losing his benefits or even job), however this compensation is subject to negotiation between the employer or representative of the employer and the worker or the trade union. There is no severance pay in the case of individual dismissals (for non economic reasons).

In the event of unfair dismissal, a worker may file a complaint with the Commission. If on investigation, the Commission finds that the termination of employment was unfair, it may order the employer to reinstate the worker from the date of termination of employment; order the employer to re-employ the worker, either in work in which the worker was employed before termination or in other reasonably suitable work on the same terms and conditions enjoyed by the worker before termination; or order the employer to pay compensation to the worker. 

Other than redundancy pay (for economic dismissals), workers are also entitled to following payments on termination of employment: any remuneration earned by the worker before contract termination; any deferred pay due to the worker before contract termination; any compensation due to the worker in respect of sickness or accident; and repatriation expenses in the event of contract termination for foreign contracts. Employer is required to make all these payments within the duration of notice period. In case no notice is required, payment must be made until next working day after termination.

 

Sources: § 18, 64 & 65 of the Labour Act 2003 (Act 651)

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