What Severance Pay Rules Must Employers Follow in St Kitts and Nevis?

Which Employees Qualify for Severance Pay?

• Employees with at least one year of continuous service who are dismissed because their role is redundant.
• Employees whose employment ends due to the employer’s business closure or downsizing, not related to misconduct.
• Employees on indefinite or fixed-term contracts where early termination by the employer triggers statutory severance rights.
• Employees who are not dismissed for serious misconduct or other legally recognized grounds that forfeit severance.
• Employees who have not already received a severance payment or similar terminal benefit for the same period of service.
• Employees who meet any additional eligibility criteria set out in their contract or a collective agreement, where these are more favorable than the statute.

What Are the Legal Timelines for Paying Severance?

In St Kitts and Nevis, severance should be paid as soon as reasonably practicable after the termination date, and in practice employers aim to settle it at the same time as final wages and accrued benefits. The Protection of Employment Act expects prompt settlement, and delays can be treated as non-payment of wages or benefits. Your company should target payment within days, not months, once the amount is agreed and all statutory deductions are confirmed. Where there is a dispute about the calculation, you should still pay the undisputed portion quickly while the parties or the Labour Department resolve any balance. Always document the payment date and method in the employee’s termination letter and payroll records.

What Penalties Apply if Severance Is Not Paid Correctly?

If your company fails to pay severance correctly in St Kitts and Nevis, you risk statutory claims, orders from the Labour Commissioner or Tribunal, and reputational damage. Non-compliance can also trigger additional wage claims, interest, and legal costs, especially if the employee seeks assistance from the Labour Department or the courts.

• You may be ordered to pay the outstanding severance plus any other unpaid terminal benefits.
• The Labour Department can require you to correct records and practices and may escalate repeat breaches.
• Courts or tribunals can award interest, costs, or additional compensation where the employee has been prejudiced.
• Persistent non-compliance can damage your ability to defend future terminations and harm your standing with regulators.
• Disputes can consume management time and delay planned restructurings or business changes.

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 obligation to follow St Kitts and Nevis severance rules. In most EOR models, the EOR is the legal employer on paper and is responsible for calculating and paying severance in line with the Protection of Employment Act. However, your company usually bears the commercial and financial risk, because the EOR will recharge severance costs and any penalties back to you under the service agreement. If you instruct or pressure the EOR to terminate outside the law, you can still face indirect liability, disputes, or contract termination. Clear allocation of responsibilities, data sharing, and approval workflows with the EOR are essential to keep severance decisions compliant and defensible.

Be 100 Percent Compliant in Offering Severance with Playroll

Getting severance right in St Kitts and Nevis starts with accurate employment data: hire dates, contract type, salary history, and reasons for termination. Your company should maintain clear redundancy and dismissal procedures, aligned with the Protection of Employment Act, and train managers not to promise severance terms that conflict with the law. Before any termination, have HR or legal confirm eligibility, calculate the statutory minimum, and compare it with any enhanced package you want to offer.

Playroll helps your team operationalize this by standardizing severance workflows across countries while still respecting local rules in St Kitts and Nevis. With centralized records, clear approval steps, and expert support, you can document the reason for termination, confirm the correct formula, and pay on time through compliant payroll channels. That reduces the risk of disputes, inspections, or unexpected liabilities and gives both you and your employees clarity about what they are owed.