Notice and Severance
Notice Requirement
The employment relationship may be terminated by either party. A statutory written notice period is provided under the Labour Act. The notice period will be as follows to terminate the contract by either party:
- 07 days’ notice for less than 6 months of service (including termination during the probationary period);
- 14 days’ notice for 6 months to 1 year of service;
- one-month notice for more than 1 year of service
The Labour Act allows parties to agree on a longer notice period for termination than what is specified in the Act. It permits an employer to waive the right to notice and allows a worker to accept payment in lieu of notice.
Additionally, an employer is not required to provide notice for termination due to serious misconduct, and they can establish a retirement age of at least sixty years for all workers. Both parties retain the right to terminate the contract for lawful cause according to the Act.
Regarding payment in lieu of notice, the Labour Code allows employers to pay a worker instead of providing the required notice. In this case, the worker receives a sum equal to the minimum notice period outlined in the Act or the agreed-upon notice period, including all due wages. If a worker terminates a contract without a specified end date and notice was required, they may be liable to pay the employer basic wages for the unobserved notice period.
Source: §130 &131 of the Labour Act, 2024 (Act No. 3 of 2024)
Severance Pay
The Labour Act has made provisions for severance pay that is directly linked to the length of service of the employee.
For any employee who has completed more than one year of continuous service with the same employer, a severance payment equivalent to two week’s wages is paid for each completed year of service.
Severance pay is not paid to employees who have been dismissed by the employer for misconduct.
In the event of violation of the above provisions, the employer is liable on conviction to a fine of five thousand maloti or imprisonment for thirty months.
Source: §136 & 137 of the Labour Act, 2024 (Act No. 3 of 2024)
