Severance Payments
What makes you entitled to Severance?
Any entitlement to a severance payment is based on an employee satisfying four conditions:-
The employee must be working for at least 104 continuous weeks;
The employee must be contracted to work for no less than 21 hours per week;
The employee should be over 16 and under the age of 65 years at the date of dismissal;
The employee must be dismissed for redundancy.
What is Redundancy?
It must be emphasized that redundancy is any event leading to the employer having to cease or carry on work of the type for which the individual was employed. On the other hand, dismissal attributed to ill health, misbehaviour, non-compliance with the rules of management would not necessitate a severance payment.
It should be noted that an employee has one year from the date of dismissal to claim severance payment.
As from the 1st December, 1991 certain changes were made to the method of calculation as well as to the definition of basic pay.
For persons who were dismissed on or after 1st December, 1991 the weeks allowed for basic pay are as follows:
2.5 weeks for each year up to 10 years;
3 weeks for each year exceeding 10 years but not exceeding 20 years;
3.5 weeks for each year exceeding 20 years and up to the maximum of 33 years.
The basic pay as now defined by Regulation 14 of the National Insurance and Social Security (Collection of Contributions) Regulations 1967, would basically include only gross remuneration on which National Insurance contributions are paid up to the maximum for which such are paid.
Example
An employee who after working for 25 complete years of service and who has been receiving a basic weekly average of $200.00 for the last 104 continuous weeks of employment, has now been made redundant, the severance will be calculated as follows:
| $200.00 x 2.5 weeks x 10 years | = | $5,000.00 |
| $200.00 x 3.0 weeks x 10 years | = | $6,000.00 |
| $200.00 X 3.5 weeks x 5 years | = | $3,000.00 |
| Severance due | $14,500.00 | |
Seasonal Employer
If an employee works for less than 35 weeks in a particular period of any given year on a continuous basis, he is said to be a seasonal employee.
To obtain specific information relative to this type of employment the following should be done:
No. of years - take the total number of weeks worked in each season from commencement of employment and divide by 52 (number of weeks in the year).
Average pay - earnings of last two seasons divided by the number of weeks worked in these seasons.
The average is then multiplied by four and then by the number of completed years.