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Termination and Severance Policies

Learn about the legal processes for employee termination and severance in Bermuda

Notice period

In Bermuda, the law mandates a minimum notice period that employers must adhere to when terminating an employee's contract. This provision safeguards employees from abrupt job loss, providing them with a buffer period to secure new employment.

Minimum Notice Periods

The Employment Act 2000 outlines the minimum notice periods that employers must give when terminating an employee's contract, unless the employment contract or collective bargaining agreement stipulates a longer period. The minimum notice period is contingent on the employee's pay frequency:

  • One week's notice: This applies if the employee is paid weekly.
  • Two weeks' notice: This applies if the employee is paid bi-weekly (every two weeks).
  • One month's notice: This applies in all other cases, including monthly salaries.

It's important to note that the Act does not apply to employees reaching retirement age.

Exceptions to Minimum Notice Periods

There are certain exceptions where the minimum notice periods may not apply:

  • Probationary Period: During the probationary period, both the employer and employee can terminate the contract without notice.
  • Serious Misconduct: If an employee commits serious misconduct, the employer may dismiss them summarily (without notice).

Employer Obligations During Notice Period

Employers are not allowed to give notice while an employee is on certain types of leave, including annual vacation, maternity leave, bereavement leave, or sick leave (unless the sick leave exceeds four weeks).

Employers have the option to pay the employee in lieu of notice, effectively ending their employment immediately.

Additional Considerations

  • An employment contract may specify a longer notice period than the statutory minimum. In such cases, the longer contractual notice period takes precedence.
  • If an employer fails to provide the required notice, they may be liable to pay the employee for the outstanding notice period.

Severance pay

In Bermuda, severance pay is a legal entitlement for employees whose employment is terminated due to redundancy or other qualifying factors. This is primarily governed by the Employment Act 2000.


Employees are generally eligible for severance pay if they have completed at least one year of continuous employment with their employer. The termination of employment must be due to redundancy or other factors outside the employee's control. Resignation or voluntary departures usually do not qualify.


The severance pay calculation under the Employment Act 2000 is as follows:

  • For the first 10 years of employment, employees are entitled to two weeks' wages for every completed year.
  • After 10 years of employment, employees are entitled to three weeks' wages for every completed year.
  • The maximum severance pay entitlement is capped at 26 weeks' wages.

For example, an employee with 15 years of continuous service who is made redundant would be entitled to 20 weeks' wages for the first 10 years (2 weeks' wages x 10 years) and 15 weeks' wages for the remaining 5 years (3 weeks' wages x 5 years), totaling 35 weeks' wages.

Additional Entitlements

Employees are also entitled to notice pay as required by the Employment Act or by contractual terms. However, notice pay is separate from severance pay. Employment contracts or collective bargaining agreements may provide for higher severance pay amounts than stipulated in the Employment Act 2000.

Termination process

Termination of employment can occur in several ways. These include termination with cause, where the dismissal is due to misconduct, poor performance, breach of contract, or operational reasons. The employer must have substantial grounds for this action. Termination without cause is another type, where the employer or employee can end the employment relationship within the probation period or by giving the required notice. Lastly, constructive dismissal occurs when an employee resigns due to the employer's significant breach of contract or unreasonable conduct. This is legally considered a termination by the employer.

Termination Procedure

The termination procedure involves several steps. First, the employer must provide the employee with a written termination letter outlining the reason for termination (if applicable), the effective termination date, and details about the notice period or payment in lieu of notice.

Secondly, the employer must ensure the employee receives all outstanding wages, accrued vacation, and any other due benefits within 7 days of termination, or at the next regular pay period.

Lastly, for work permit holders, employers must notify the Department of Immigration of the termination in writing, including the reason for the termination.

Unfair Dismissal

An employee may file an unfair dismissal claim if they believe their termination was without just cause or did not follow due process. Grounds for unfair dismissal include discrimination, pregnancy, union membership, or filing a complaint under the Employment Act 2000.

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