Notice and Severance

Notice Requirement

The employment contract can be written or oral. The oral employment contract terminates at the end of notice period and no specific grounds are required for its termination. However, specific procedural requirements are followed in case of summary dismissal and redundancy, as provided by the law. The written employment contract terminates by the expiry of the term for which it is expressed to be made; or by the death of the employee before such expiry; or in any other manner in which a contract of service may be lawfully terminated or deemed to be terminated whether under the provisions of this Act or otherwise. In case of sickness or accident, due to which an employee is unable to fulfill a written contract of service, the contract may be terminated on the report of a registered medical practitioner.

Where a contract is terminated at the initiative of the employer, employer is required to give reasons to the employee for termination of employment. An employment contract cannot be terminated unless there is a valid reason for termination connected with worker’s capacity or conduct or the operational requirements of the undertaking. The following have been specified as reasons for unfair dismissals:


  1. Union membership or participation in union activities outside working hours or within working hours with the consent of the employer;
  2. seeking office as an employees’ representative;
  3. the filing of a complaint, the participation in proceedings against an employer involving alleged violation of laws or recourse to administrative authorities;
  4. race, colour, sex, marital status, family responsibilities, pregnancy, religion, political opinion or affiliation, ethnicity, tribal affiliation or social status of the employee; or
  5. absence from work during leave or a rest period in accordance with a written law.

Either party can terminate a contract by serving a notice or paying in lieu thereof. According to the Employment Act, notice period for terminating an oral employment contract is as follows unless an agreement specifies longer notice duration:

a. 1 day (24 hours) when the contract is for a period of less than a week;

b. 14 days when the contract is a daily contract under which wages are payable at intervals not exceeding 1 month (and not on daily basis); and

c. 30 days when the contract is for a period of one week or longer

Notice to terminate the contract may be written or oral and may be given at any time.

In the case of economic dismissals/redundancies, employer has to provide notice of at least 30 days to the employee representative on impending redundancies and informing the representative on the number of employees affected by redundancy and the time period during which such contract termination would be carried out.

Source: §20, 21 & 26(B) of the Employment Act, 1965; §36 of the Employment (Amendment) Act 2015

Severance Pay

Severance Pay is at least 2 months' basic pay for each completed year of service in the event of medical discharge. If an employer summarily dismisses an employee (without notice or paying in lieu of it) and the Labour Commissioner or Labour Officer finds it to be unfair, the employer would be required to pay severance benefit of at least 2 months' basic pay for each completed year of service.

In the event of economic dismissals/redundancy, workers are entitled to two months' basic pay for each completed year of service.

Source: §9, 10 & 12(3) of the Minimum Wages and Conditions of Employment (General) Order, 2011 (amended in 2012); §9, 10 & 11 (3) of the Minimum Wages and Conditions of Employment (Shop Workers) Order, 2011 (amended in 2012)