What Severance Pay Rules Must Employers Follow in Guernsey?

Which Employees Qualify for Severance Pay?

• Employees with at least two years of continuous service generally qualify for statutory redundancy pay if dismissed by reason of redundancy.
• Fixed-term employees may qualify if their contract ends early for redundancy reasons and they meet the service requirement.
• Employees dismissed for misconduct or other fair reasons unrelated to redundancy usually do not qualify for statutory redundancy pay.
• Workers genuinely engaged as self-employed contractors are not covered by statutory redundancy provisions.
• Employees with enhanced severance terms in contracts, policies, or collective agreements qualify for those higher benefits.
• Employees settling claims via a compromise or settlement agreement may receive negotiated severance even where statute does not require it.

What Are the Legal Timelines for Paying Severance?

In Guernsey, statutory redundancy payments should be made promptly once employment ends, and in practice your company should aim to pay on or shortly after the final working day. The effective date of termination under the Employment Protection (Guernsey) Law, 1998 is the reference point for calculating service and entitlement. Any contractual or enhanced severance should follow the payment timing set out in the employment contract or settlement agreement. To reduce dispute risk, confirm the calculation and payment date in writing before termination takes effect. Where there is a disagreement about entitlement, you should still pay any undisputed minimum amount while the dispute is resolved.

What Penalties Apply if Severance Is Not Paid Correctly?

If your company fails to pay statutory redundancy or agreed severance correctly, you risk claims before the Guernsey Employment and Discrimination Tribunal. The Tribunal can order you to pay the unpaid redundancy amount, plus any other sums due on termination such as notice pay or holiday pay. Mishandled severance can also support unfair dismissal claims if the redundancy process or payments are defective.

• You may be ordered to pay the full statutory redundancy sum that should have been paid.
• Additional awards can be made for unfair dismissal where redundancy is not genuine or fairly handled.
• Interest or uplift-like consequences may arise through delayed payment or settlement negotiations.
• Legal and advisory costs increase when employees challenge underpayments or process failures.
• Reputational damage can affect hiring and employee relations if terminations are seen as unfair.

Does Outsourcing Employment via an EOR Change Severance Liability?

Using an Employer of Record (https://www.playroll.com/employer-of-record) in Guernsey does not remove the need to comply with local redundancy and severance rules. Typically, the EOR is the legal employer on paper and is responsible for administering statutory redundancy payments and contractual severance. However, your company, as the client, usually funds these costs and can be exposed to commercial or indemnity claims if you instruct the EOR to act unlawfully. You should ensure your EOR contract clearly allocates responsibility for calculating service, managing consultation, and paying any redundancy or severance due. Good coordination between your HR team and the EOR is essential to avoid inconsistent treatment and potential Tribunal claims.

Be 100 Percent Compliant in Offering Severance with Playroll

Playroll helps your company navigate Guernsey terminations by mapping out who qualifies for statutory redundancy, what your contracts promise, and how to align both. Your team gets clear guidance on service calculations, redundancy triggers, and how to document business reasons and selection criteria. That means fewer surprises at the end of employment and a lower risk of disputes about what someone is owed.

When you use Playroll as your global employment partner, we coordinate timing of final salary, holiday pay, and any redundancy or severance so payments are made cleanly and on time. We also help you structure fair, well-documented exit packages and settlement agreements where appropriate, keeping you aligned with Guernsey law while protecting your budget and your reputation as an employer.