What Severance Pay Rules Must Employers Follow in Guyana?

Which Employees Qualify for Severance Pay?

• Employees engaged under a contract of service who have completed at least one year of continuous employment with your company.
• Employees whose employment is terminated because of redundancy, including closure, downsizing, or technological change reducing the need for their role.
• Employees dismissed for reasons other than serious misconduct, such as incapacity due to illness or injury where the law treats them as eligible for severance.
• Employees who resign with justification that would amount to constructive dismissal under Guyanese law, such as fundamental breaches of contract by the employer.
• Employees on indefinite or fixed-term contracts where the contract is not renewed and the non-renewal is treated as redundancy under TESPA.
• Employees who were temporarily laid off or placed on short-time and then terminated in circumstances that qualify as redundancy.

What Are the Legal Timelines for Paying Severance?

In Guyana, severance pay should be settled as soon as reasonably practicable after the termination date, and in practice you should aim to pay it at the same time as the final paycheck. While TESPA does not set a single fixed number of days for all cases, delays can be challenged as an unlawful withholding of wages or benefits. Your company should document the calculation, communicate the amount in writing, and obtain the employee’s acknowledgment when payment is made. Where there is a dispute about entitlement or quantum, you should still pay any undisputed portion promptly while the matter is being resolved. Building internal processes to calculate severance before the last working day helps you avoid late payments and related claims.

What Penalties Apply if Severance Is Not Paid Correctly?

If your company fails to pay severance correctly in Guyana, you risk statutory claims, orders for back payment, and potential criminal liability for responsible officers. Disputes may be taken to the Ministry of Labour, the Labour Officer, or the courts, which can investigate your records and compel payment with interest. Non-compliance can also trigger inspections, reputational damage, and strained relations with unions or staff representatives.

• Courts or tribunals can order payment of outstanding severance plus interest.
• You may face fines or other sanctions for breaching TESPA or related labour regulations.
• Persistent non-compliance can lead to closer scrutiny and more frequent inspections by labour authorities.
• Employees may bring wrongful dismissal or breach-of-contract claims, increasing legal costs.
• Public disputes over unpaid severance can harm your employer brand and make hiring harder.

Does Outsourcing Employment via an EOR Change Severance Liability?

Using an Employer of Record (EOR) such as https://www.playroll.com/employer-of-record does not remove the underlying requirement to comply with Guyana’s severance rules. In a typical EOR model, the EOR is the legal employer on paper and is responsible for administering terminations and calculating statutory severance. However, your company usually directs the decision to end the assignment, so you remain the economic decision-maker and will often bear the financial cost under your service agreement. You should ensure your EOR contract clearly allocates responsibility for severance calculations, funding, timelines, and dispute handling. Even when the EOR manages the process, your team should understand TESPA requirements so your business decisions do not trigger unexpected liabilities.

Be 100 Percent Compliant in Offering Severance with Playroll

Managing severance in Guyana can be complex, especially when you are balancing TESPA requirements, internal policies, and the realities of business restructuring. Playroll helps your company translate legal rules into clear workflows, from tracking continuous service to standardizing severance formulas and approvals. With centralized records and automated reminders, your HR and finance teams can prepare accurate severance calculations before termination decisions are finalized.

Playroll’s Employer of Record and global payroll solutions give you a single source of truth for contracts, pay history, and termination documentation. Your company can rely on local legal expertise while still controlling strategy, headcount, and budgets. By partnering with Playroll, you reduce the risk of late or incorrect severance payments, support fair treatment of employees, and keep your Guyanese operations aligned with both statutory rules and your global compliance standards.