Employees who have been employed for more than one year are entitled to a severance cheque upon the termination of contract.
9 June 2014
| Last updated on 29 June 2017
Employees who have been employed for more than one year are entitled to a severance cheque upon the termination of contract. In the case of dismissal or retirement the employer is not liable for paying the severance cheque. Similarly if the employee has made a contribution towards the unemployment insurance fund, he is not eligible to receive a severance cheque.
Severance cheques are not subject to Personal Income Tax (PIT) like wages and allowances are. Extra payments, on top of the severance payment are subject to PIT. However employers are required to withhold the severance cheque and pay off any outstanding PIT.
The statute of limitations runs one year from the date of the conduct that any party claims
breached its rights or benefits, where the claim arises from:
1. Disciplinary measures resulting in dismissal;
2. Unilateral termination of a labor contract; or
3. Compensation for loss and damage or payment of allowances.
