Severance Pay Entitlement

Q: A few questions on this topic have come through recently.

A: Severance pay is usually only paid to workers who have been made redundant or retirees, and in very rare cases, people who resign can also qualify. An employer is not required to pay severance to workers if everyone is being severed, owing to the fact that the business is being closed down; however, the employer must pay severance if only a portion of the workforce is being made redundant. 

Firstly, according to Section 6 of the Retrenchment and Severance Benefits Act 1985, the employer is required to give the employees 45 days notice in writing.

Secondly, your rights (if you qualify): 

Severance Benefit Entitlements in Trinidad and Tobago

18(1) Where any part of the employer's retrenchment proposals is eventually put into effect, severance benefits shall be payable by the employer to the retrenched worker in accordance with this section.

(2) Where the retrenched worker is covered by a registered Collective Agreement, the terms of which with respect to severance benefits are no less favourable than those set out in this Act with respect to severance benefits, the provisions of the said Collective Agreement shall apply.

(3) Where the retrenched worker is not covered in the manner set out in subsection (2), the minimum severance benefits payable by the employer are as follows-

(a) where he has served the employer without a break in service for between more than one but less than five years, he is entitled for each such completed year of service to two weeks' pay at his basic rate if he is an hourly, daily or weekly rated worker, or one half month's pay at his basic rate if he is a monthly rated worker;

(b) where he has served the employer without a break in service for five years or more, he is in addition to his entitlement under paragraph (a), entitled for the fifth year and for each succeeding completed year of service to three weeks pay at his basic rate if he is an hourly, daily or weekly rated worker, or three-quarters month's pay at his basic rate if he is a monthly rated worker.

(4) For each period of service amounting to less than a completed year of service and in respect of workers who qualify under section 5(1)(d), payment shall be calculated on a pro-rata basis.

(5) Every worker to whom this Act applies retrenched on or after 1st January, 1985, is entitled to the severance benefits contemplated by this section regardless of the number of workers in his employer's work force.

(6) This section shall not apply to a retrenched worker who is eligible to receive from his employer terminal benefits that are no less favourable than those set out in this section.

---In order to qualify for this benefit the employee must fall within the definition of ‘worker' in the Industrial Relations Act 1972, as amended, which says:

“worker”, subject to subsection (3), means— (a)any person who has entered into or works under a contract with an employer to do any skilled, unskilled, manual, technical, clerical or other work for hire or reward, whether the contract is expressed or implied, oral or in writing, or partly oral and partly in writing, and whether it is a contract of service or apprenticeship or a contract personally to execute any work or labour;

(b)any person who by any trade usage or custom or as a result of any established pattern of employment or recruitment of labour in any business or industry is usually employed or usually offers himself for and accepts employment accordingly; or

(c)any person who provides services or performs duties for an employer under a labour only contract, within the meaning of subsection (4)(b
 

The following are exceptions to the IRA's definition of a worker:

• workers with less than one year continuous service;
• workers on probation;
• casual workers;
• seasonal workers;
• fixed term workers;
• independent contractors

 

 The Retrenchment and Severance Benefits Act is one of a few pieces of legislation that allows the non-unionized individual worker who alleges non-compliance with the Act, to take his or her matter to the Industrial Court. The worker may take his or her complaint to the Minister of Labour where it is reported as a trade dispute and dealt with as such according to the provisions of the IRA.

 An employer who contravenes the Act is guilty of an industrial relations offence and liable to a fine of $10,000.