What Severance Pay Rules Must Employers Follow in Belize?

Which Employees Qualify for Severance Pay?

• Have completed at least five years of continuous employment with the same employer.
• Are terminated by redundancy, retirement, or death.
• Resign after ten or more years of continuous employment.
• Are dismissed for reasons other than misconduct or abandonment.
• Are contract or permanent employees under a continuous employment relationship.

What Are the Legal Timelines for Paying Severance?

Under the Labour Act, severance must be paid promptly upon termination, ideally within the employee’s final pay cycle. While the law does not prescribe a fixed number of days, best practice in Belize is to pay severance at the time of termination or within the next scheduled payroll period. This ensures full compliance and minimizes the risk of disputes or penalties.

In practice, employers often include severance in the employee’s final settlement, alongside outstanding wages, unused vacation pay, and any other accrued entitlements. Keeping clear records of employment duration and termination reasons is essential to calculate the correct amount and demonstrate compliance if audited.

What Penalties Apply if Severance Is Not Paid Correctly?

Employers who fail to pay severance in Belize face legal and financial consequences under the Labour Act. The Labour Department may investigate complaints and order payment of the outstanding amount plus applicable penalties.

• Fines and back payments ordered by the Labour Commissioner.
• Accrued interest on unpaid severance amounts.
• Court action brought by the affected employee.
• Damage to employer reputation and potential restrictions on future business licensing.

Timely and accurate payments are the best safeguard against these penalties.

Does Outsourcing Employment via an EOR Change Severance Liability?

Yes, when an employer uses an Employer of Record (EOR) in Belize, the EOR becomes the legal employer of record, responsible for complying with local labour laws. This means the EOR, not the client company, is legally responsible for calculating and paying severance according to Belizean regulations.

The client company still funds the cost as part of the overall employment arrangement, but the EOR ensures the payment is handled correctly and on time. This structure helps reduce compliance risk and administrative burden for international employers unfamiliar with Belize’s labour laws.

Be 100% Compliant in Offering Severance with Playroll

Severance rules vary widely across countries, and getting them wrong can lead to costly penalties or strained employee relationships. In Belize, where the Labour Act tightly regulates entitlements and timing, Playroll ensures your global team stays fully compliant.

Playroll takes care of the complex local calculations, documentation, and timelines, guaranteeing that your employees receive exactly what they’re owed. Whether you hire directly or through our EOR model, we manage every detail, from notice periods to severance pay, so you can focus on growing your business.

With Playroll, compliance isn’t a guessing game. It’s built into every payroll, everywhere you hire.