Notice and Severance
Notice Requirement
Before terminating an indefinite term contract, the contract terminating party (employer or employee) has to give due notice to the other party. On receiving the notice from the employer, an employee has the option to either continue working until the end of notice period or, at any time during the period, require the employer to pay him half the wages that would be payable in respect of the unexpired notice period. If contract termination notice has been served by the employee, an employer may allow the worker to continue work or, at any time during the currency of notice, pay the worker wages that would have been payable in respect of the unexpired period of notice.
The contract termination notice for both worker and employer depends on the length of worker's continuous service with the employer and is one week for one to six months of employment; two weeks for six months to twenty-four months (two years) of employment; four weeks for twenty-four (two years) to forty-eight months (four years) of employment; and eight weeks for forty-eight (4 years) to eight-four months (seven years) of employment. For more than seven years of service, an additional week of notice is added for every subsequent year of service or part thereof however the maximum length of notice period is 12 weeks. Longer notice periods may be agreed by the parties in the case of technical, administrative, executive and managerial posts.
Notice of termination may not be served if an employee is pregnant, has recently given birth or is breastfeeding. A termination notice may not be served during the period of incapacity for work.
If an employee with an indefinite contract fails to give notice, he is liable to pay the employer half wages that would be payable in respect of that notice. If an employer fails to give required notice, he is liable to pay the employee wages that would be payable to the worker in respect of that notice.
If a fixed term contract is terminated by the employer before its expiry, employer must pay the employee half of the wages that would have accrued to the worker in respect of the remainder of time agreed in a fixed term contract. If a fixed term contract is terminated by the worker before its formal expiry, he is also liable to pay the employer half of the wages that he would be entitled to if he kept working for the remaining period of fixed term contract.
During the probationary period, employment contract may be terminated at will by either party without assigning any reason provided that a week’s notice of the termination is given to the other party in the case of an employee who has been in the employment of the same employer continuously for more than one month.
The provisions of unfair dismissal are now also applicable to the fixed term contracts.
Sources: §36 of the Employment and Industrial Relations Act
Severance Pay
No severance payment is guaranteed by the law. However, a collective agreement may provide for redundancy pay in the event of collective redundancies.
