What Severance Pay Rules Must Employers Follow in Georgia?

Which Employees Qualify for Severance Pay?

Employees in Georgia qualify for severance pay if their employment ends due to any of the following circumstances:

• The employer’s decision to liquidate the company or downsize the workforce.
• The employer’s economic, technological, or structural changes that make the employee’s role redundant.
• Health-related incapacity that prevents the employee from performing their job.
• Termination for reasons not related to employee misconduct, such as operational restructuring.
• Fixed-term contract employees whose employment ends early for reasons beyond their control.

Employees dismissed for cause—such as misconduct, violation of company policy, or poor performance—do not qualify for severance pay.

What Are the Legal Timelines for Paying Severance?

Under Georgian law, employers must pay all owed compensation, including severance pay, on or before the final day of employment, unless otherwise stated in the employment agreement. This ensures that employees receive their due entitlements immediately upon termination and prevents potential disputes.

In practice, many employers align the severance payment with the final payroll cycle if operationally necessary, provided it does not exceed a few days after termination. Late or delayed payments can expose the employer to additional legal action, including claims for unpaid wages or breach of contract. Timely payment demonstrates compliance and maintains the employer’s reputation with both employees and local labor authorities.

What Penalties Apply if Severance Is Not Paid Correctly?

Failing to pay severance correctly or on time can expose employers in Georgia to serious legal and financial consequences. These include:

• Employee lawsuits for unpaid wages or wrongful termination.
• Court-ordered compensation requiring payment of the severance owed plus statutory interest.
• Fines or penalties imposed by the Labor Inspection Service for violating the Labour Code.
• Reputational risks, which may affect the company’s ability to hire and retain employees.

Ensuring accurate calculation and prompt payment of severance helps businesses avoid these risks and demonstrate good faith in employee relations.

Does Outsourcing Employment via an EOR Change Severance Liability?

Yes, using an Employer of Record (EOR) in Georgia transfers the legal responsibility for severance pay to the EOR. Under this arrangement, the EOR becomes the employee’s legal employer in Georgia and assumes all compliance duties, including severance payments, payroll, and tax obligations.

For global employers, this setup significantly reduces administrative and legal exposure. The client company directs the employee’s day-to-day work, but the EOR ensures that all employment practices, including terminations and severance, fully comply with Georgian labor law. This model simplifies compliance while allowing businesses to focus on operations, not legal paperwork.

Be 100% Compliant in Offering Severance with Playroll

Severance rules, like all aspects of local employment law, can vary widely across countries. In Georgia, even small details such as when to pay, how to calculate average salary, or which termination grounds qualify can make a big difference in compliance. Missing these nuances can lead to unnecessary risk, disputes, or unexpected costs.

Playroll makes global employment simple and compliant from day one. Our platform ensures every severance payment is calculated accurately, aligned with the Georgian Labour Code, and processed on time. Whether you’re downsizing a team, restructuring, or ending a fixed-term contract, Playroll guarantees your business meets every legal obligation without stress.

Partner with Playroll to manage international employment confidently. We handle the complexity of local severance laws so you can focus on growing your global team, knowing your compliance is in expert hands.