What Severance Pay Rules Must Employers Follow in Jamaica?

Which Employees Qualify for Severance Pay?

• Employees who have at least 104 weeks (2 years) of continuous employment with your company.
• Employees whose roles are made redundant, including closure of business, reduced workforce, or reorganization eliminating their position.
• Employees who are dismissed for redundancy and not for misconduct, poor performance, or other disciplinary reasons.
• Employees who are not offered suitable alternative employment on terms that are reasonable in the circumstances.
• Employees who accept redundancy and do not unreasonably refuse a comparable role offered by your company.
• Employees who are classified as “workers” or “employees” under Jamaican law, rather than genuinely independent contractors.

What Are the Legal Timelines for Paying Severance?

Under the Employment (Termination and Redundancy Payments) Act, redundancy payments should be made as soon as reasonably practicable after the termination date, and in practice employers in Jamaica usually pay on or shortly after the final working day. You should aim to settle all statutory redundancy pay together with outstanding wages, vacation pay, and other terminal benefits in one consolidated payment. Where there is a consultation period or notice period, plan the cash flow so that severance is ready by the end of notice. If there is any dispute about the amount, pay the undisputed portion promptly and document your calculations. Always keep written records of how you arrived at the figure and when payment was made, in case the Ministry of Labour or a court reviews the termination.

What Penalties Apply if Severance Is Not Paid Correctly?

If your company fails to pay redundancy entitlements correctly in Jamaica, you risk statutory claims, orders for back payment, and additional financial exposure. Employees can complain to the Ministry of Labour and Social Security or bring claims before the courts, which may scrutinize your redundancy process, calculations, and timelines.

• You can be ordered to pay outstanding redundancy plus interest or other monetary awards.
• You may face claims for unfair dismissal or wrongful dismissal if redundancy is used improperly.
• Legal disputes can trigger legal fees, management time, and reputational damage with staff and unions.
• Persistent non-compliance can attract closer scrutiny from labour authorities and unions.
• Poorly handled redundancies can damage employee relations and increase the risk of collective action.

Does Outsourcing Employment via an EOR Change Severance Liability?

Using an Employer of Record (EOR) such as https://www.playroll.com/employer-of-record can shift day-to-day HR administration and payroll obligations, but it does not remove the need to respect Jamaican redundancy rules. In law, the EOR is typically the formal employer responsible for calculating and paying statutory redundancy where applicable. However, your company, as the client, usually bears the commercial and financial risk under the service agreement, including funding severance. You should ensure the EOR’s contract clearly allocates who calculates service, who approves redundancies, and how disputes with workers are handled. Align your internal workforce planning with the EOR’s processes so that any role eliminations are compliant and properly documented.

Be 100 Percent Compliant in Offering Severance with Playroll

Playroll helps your company navigate Jamaica’s redundancy rules by standardizing how you track service, classify workers, and document termination decisions. Our workflows prompt you to confirm eligibility, check for suitable alternative roles, and apply the correct statutory formula before you finalize a termination. You get clear visibility into estimated severance costs in advance, so you can plan restructures without breaching local law.

Beyond calculations, Playroll coordinates timing of final pay, including accrued vacation and other terminal benefits, so employees are paid correctly and on time. When you use Playroll as your global employment partner, you gain access to local legal insight, compliant documentation, and auditable records that reduce the risk of disputes, penalties, and reputational damage when making tough workforce decisions in Jamaica.