I have to make an employee redundant.

What do I need to know about redundancy?

Here are a few things to consider.

Many employers and employees are unaware of the circumstances in which the laws of Jamaica require the employer to make a payment to their employees upon termination of their employment for non-disciplinary reasons.

Many believe that our laws require a payment to be made once the employment is coming to an end under any circumstance. 

Contrary to popular belief, there is no requirement in law to make a severance or redundancy payment to employees who are retiring, who can no longer work due to medical conditions unrelated with their employment, or who were engaged on fixed term contracts of employment which have come to their agreed end date.

In fact, there are only three specific circumstances where an employer is required to make a redundancy payment: 

1. where the business no longer has need for the services that worker provides (e.g. the role is obsolete due to technological advancements or one employee can perform a function previously undertaken by multiple employees); 

2. where the business is closing; or 

3. where the employee has developed a specified illness that relates to their employment. 

Once a redundancy event has in fact occurred, the employer must then be certain that they have accurately applied the statutory formula for calculating redundancy payments while taking into account the income tax implications of making such payments. Employers and employees may utilize our redundancy calculator as a general guide.

The employer must also be sure that they have conducted the necessary consultation process to avoid a successful challenge before the Industrial Disputes Tribunal. 

Our MFG Labour and Employment Law Practice Group advises local and international clients concerning large scale, organisation-wide employee restructuring processes, calculating the statutory requirement for redundancy payment, and defending claims for unjust dismissal that arise from redundancy exercises before the Industrial Disputes Tribunal.