Termination of employment is the discharge of a worker from an employment at the initiative of the employer for justifiable reasons other than misconduct. The employment of a worker terminates on expiry of employment contract; or expiry of contract for a fixed term or completion of specific task without renewal. A worker may terminate an employment contract with or without notice in case of misconduct on the part of the employer; and also before expiry of termination notice period.
A worker may be terminated after serving due notice period or paying in lieu of notice. The required notice period depends on the worker's length of service as follows:
i- 2 weeks for service of more than 6 months but less than 1 year; ii- 1 month for service of more than 12 months but less than 5 years;
iii- 2 months for service of more than 5 years but less than 10 years;
iv- 3 months for service of 10 years or more.
In all instances, termination should be based on fair reasons (including termination by notice). It is prudent for an employer to follow a fair hearing/consultation procedure and explain reasons for termination prior to terminating a contract. A worker can still claim unfair termination and it is the duty of the employer to prove that the termination was fair and procedures were followed.
Worker terminated unfairly is compensated by a basic compensation order for four weeks' wages.
Source: §58 of the Employment Act 2006
There is a provision in the law regarding severance pay but this compensation is subject to negotiation between the employer and the worker. Severance pay is entitled to the worker after continuous service (of a particular employer) for at least 6 months. It is due in the following circumstance: unfair dismissal of the worker by the employer; death of the worker at work not attributable to any misconduct of the worker; termination by the worker due to physical incapacity not attributable to any misconduct of his own; termination by reason of the death or insolvency of the employer; termination by a labour officer following the inability or the refusal of the employer to pay wages; and other cases as provided by the Minister.
No severance allowance is paid when an employee is summarily dismissed with justification, when an employee is first dismissed but later is offered reemployment which he/she unreasonably refuses; and in case where employee abandons his employment and absconds the workplace for a period of more than 3 days without any explanation given to the employer. Severance pay is also not payable on termination of the probationary contract.
Amount of severance pay is negotiable between the employer and the worker or the labour union that represents them.
Source: § 87-92 of the Employment Act 2006