What Severance Pay Rules Must Employers Follow in St. Vincent & Grenadines?

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 who are dismissed because of redundancy, including business closure, reorganization, or technological changes reducing the need for their role.
• Employees whose contracts are terminated by the employer (other than for serious misconduct) where the circumstances fall within the statutory severance provisions.
• Employees who have not reached the normal retirement age and are not receiving severance or similar benefits under another statutory scheme for the same termination.
• Employees who are not casual workers and who can show that their service has been regular and continuous as defined by the Protection of Employment Act, 2003.
• Employees who are not probationers and whose fixed-term contracts are ended early by the employer without a valid reason excluded from severance under the Act.

What Are the Legal Timelines for Paying Severance?

In St. Vincent & Grenadines, the Protection of Employment Act, 2003 expects severance to be paid within a reasonable time after termination, and in practice you should aim to pay on or very shortly after the employee’s final working day. Where notice is given, many employers calculate and agree the severance amount before the end of the notice period and pay it together with final wages and accrued vacation pay. If there is a dispute about entitlement or calculation, you should still pay any undisputed portion promptly and document the basis for any withheld balance. Delays can trigger complaints to the Labour Department and increase the risk of an order for payment plus interest. To stay safe, build a standard internal target of paying severance within 7–14 days of the effective termination date unless a written settlement sets a different schedule.

What Penalties Apply if Severance Is Not Paid Correctly?

If your company fails to pay severance correctly in St. Vincent & Grenadines, you risk statutory claims, orders from the Labour Department, and potential court proceedings. Non-compliance can also damage your reputation with regulators and employees, and may complicate future restructurings or redundancies.

• You may be ordered to pay outstanding severance plus interest or other monetary compensation.
• The Labour Department can issue directions and escalate matters to the courts if you do not comply.
• Employees can bring claims for unfair dismissal or breach of contract, increasing potential liability.
• Persistent non-compliance can attract closer regulatory scrutiny of your wider employment practices.
• Disputes over severance can delay reorganizations and increase legal and advisory costs for your company.

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 need to follow St. Vincent & Grenadines severance rules, but it can shift who is the legal employer on paper. Typically, the EOR is the formal employer responsible for calculating and paying severance in line with the Protection of Employment Act, 2003, while your company funds the cost under the service agreement. However, if you direct terminations or restructure in a way that breaches local law, you can still face commercial or even joint-liability exposure, especially if an employee challenges the arrangement. Your safest approach is to ensure your EOR contract clearly allocates severance responsibilities, requires compliance with local law, and gives you visibility into how severance is calculated and paid.

Be 100 Percent Compliant in Offering Severance with Playroll

Working with Playroll helps your company translate St. Vincent & Grenadines severance rules into clear, repeatable processes. Our team tracks statutory changes to the Protection of Employment Act, 2003 and related regulations, so your severance calculations, notices, and documentation stay aligned with current law. You get practical guidance on redundancy planning, consultation expectations, and how to structure terminations to reduce the risk of disputes.

Playroll also standardizes your workflows across countries while respecting local nuances like qualifying service, wage definitions, and customary market severance practices. With centralized records, audit-ready calculations, and coordinated payment timelines, your HR and finance teams can manage exits confidently. That means fewer surprises, smoother offboarding for employees, and a significantly lower risk of penalties or reputational damage for your company.