What is a Redundancy in Jamaica?

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The term “redundancy” is not strange to many Jamaican workers, but do you really understand what is a redundancy? According to www.indeed.com, “redundancy refers to the process when employers have to let go of one or more employees due to circumstances unrelated to job performance or behaviour” e.g., poor economic conditions or an employer reducing their workforce because one or more jobs are no longer needed.

N.B. For this article, the focus will be on non-seasonal employees. Seasonal employees (their service is predictably interrupted) are entitled to redundancy, however the method to calculate their redundancy is different.

How to Calculate Redundancy Pay

Based on the Employment (Termination and Redundancy Payment) Act of Jamaica, an employee is entitled to the minimum of:

• 2 weeks’ pay for the first ten years of employment (i.e., 2 weeks for each of those years), and
• 3 weeks’ pay for each year after the 10th year of employment/service.

N.B. This is the minimum required by law; therefore, your employer can always offer more than the minimum if they so wish.

Therefore, an employee who has worked for 11 continuous years at a company, is entitled to at least 23 weeks basic pay: 23 x Your gross weekly salary = Your gross redundancy payment.

Feel free to use our Redundancy Calculator to see how much money would be owed to you.

N.B. For an employee who earns commission, this is considered when calculating their weekly salary. According to an article in The Jamaica Observer, entitled “How to calculate redundancy payments”, written by Gavin Goffe, a partner at Myers, Fletcher & Gordon, for these employees, “the weekly salary is defined as the normal wages earned in the last normal week of employment before redundancy or the average normal wages earned in the last 13 normal weeks of employment before redundancy, whichever is greater.” 

Do You Qualify for Redundancy?

According to a publication by Jamaica’s Ministry of Labour & Social Security, entitled “On Termination of Employment: Some Facts you Should Know”:

A) An employee is considered to be dismissed by reason of redundancy if:

• the employer ceases to carry out work that he/she was hired to do;

• the kind of work that he/she was hired to do has been reduced;

• the employer’s business has been shut down;

• he/she has suffered personal injury as a result of an accident or developed a disease because of the nature of the job.

B) An employee is NOT entitled to redundancy:

• if he/she ends the contract. However, if the employee is forced to end the contract without notice by reason of the employer’s conduct, then he/she is entitled to redundancy payment;

• where termination is by reason of retirement in circumstances where he/she is entitled to pension, superannuation or other retirement benefits than benefits under the National Insurance Act;

• where his/her employer terminates his contract of employment without notice because of the employee’s conduct;

• if he/she unreasonably refuses a contract in writing, offering renewal or re-engagement in the same place, position and under the same term and conditions of employment, effective within two (2) weeks of the termination date;

• if he/she unreasonably refuses a contract in writing offering suitable employment not more than 10 miles from the previous place of employment within two (2) weeks of the terminal date;

• if an employee who has a contract of employment for a fixed term of two (2) or more years agrees in writing before the contract expires, to exclude any right to redundancy payment.

C) An employee is NOT entitled to redundancy payment unless within six (6) months after his/her dismissal:

• the payment is agreed to by his/her employer; or

• he/she gives written notice of his redundancy payment claims to his/her employer; or

• proceedings have begun to determine his/her right to redundancy payment or the amount of payment.

Other Important Points to Know about Redundancy

• To qualify for redundancy, you must be working at least 104 weeks (or 2 calendar years) continuously (uninterrupted service).

• You must be provided with a written statement indicating how the redundancy payment is calculated.

• Redundancy payment must be calculated using earnings received in the last week of employment.

• Redundancy payments are taxable however, some portion is exempted from tax.

• When calculating length of service of an employee, the law allows one to round up or round down:
  • If the time between an employee’s work anniversary date and the effective date of the redundancy has not exceeded 13 weeks, then the company can round down – so if the employee has been working at X company for 10 years and 12 weeks as of the effective date of the redundancy, then the company can round down the years of service to 10years.
  • If the time between an employee’s work anniversary date and the effective date of the redundancy exceeds 39 weeks, then the company can round up – so if the employee has been working at X company for 10 years and 40 weeks as of the effective date of the redundancy, then the company can round up the years of service to 11 years.
  • Anything in between 13 weeks and 39 weeks can be treated as a half year of service.

We hope this article has been helpful. Use our Redundancy Calculator to see what your redundancy payment may look like and let us know if you have any questions.

Take care…and know yu rights...nuh mek dem tek yu fi eeidiot!

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