Notice Requirement
A contract of employment (for a specified task) is terminated when the work specified in the contract is completed or the period of time for which the contract was made has expired. An indefinite term employment contract is deemed to run until lawfully terminated.
An indefinite term employment contract may be terminated by either employer or employee where the wages are payable for a period not exceeding a day, at the close of any day's work without notice. Where the wages are payable in respect of any period exceeding a day, the employment contract may be terminated at any time as long as notice has been given to the other party. Where the wages are payable for a period exceeding one day but less than a week, then notice has to be at least of one day. Where the wages are payable for period more than one week but less than two weeks but the employee has been in continuous service for 2-5 years, then the minimum length of notice is to be two weeks. Where the wages are payable in respect for a period exceeding one week but not more than a month and the employee has been in continuous employment for 5-10 years, then the minimum length of the notice is to be one month. Where wages are payable in respect for a period exceeding a day and the employee has been in continuous employment for 10 years or more, the minimum length of notice is to be six weeks.
The employer can terminate the contract of employment without giving notice of his intention to do so or making any payment where the employee is guilty of serious misconduct during the course of his employment.
An employee whose contract of employment is for an indefinite term or whose contract is for a specific task can terminate the contract of employment without giving notice of his intention to do so or making any payment on the basis that the nature of work is different than for which he was engaged for, his employment requires change in residence which is not stated in the employment contract, being transferred to lower grade work, bad treatment by employer or employer’s representative, or possibility of violence or disease resulting from employment which was not stated in the employment contract.
There is a possibility to pay compensation in lieu of notice. Either party may terminate an indefinite term contract by paying the other party the wages that would have accrued to the worker during the minimum legal period of notice. Where such notice has already been given, the employment contract can be terminated without waiting for the expiry of the period of notice, by paying to the other party a sum equal to the amount of basic pay which would otherwise have accrued to the employee during the balance of the period of notice.
Source: § 17, 18, 19 & 26 of the Employment Act, 2010
Severance Pay
Upon termination of a contract of employment, whether by reason of the death or retirement of the employee or for any other reason, the employer is to pay to an employee who has been in continuous employment with him for 60 months or more, a severance benefit. Severance benefit is to be payable at the conclusion of each period of 60 months continuous service by the employee, or at the termination of his employment, at the option of the employee.
The employer in case of termination of a contract of employment before an employee has served a continuous period of 60 months, pay to the employee a severance benefit at a rate proportionate to that employee's length of service.
Severance is paid at the rate of 1 day per month of service (12 days per year) up to 5 years of employment and 2 days for each month worked (24 days per year) beyond 5 years.
Source: § 27 of the Employment Act, 2010
