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Termination and Severance Policies

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

Notice period

In Grenada, the Employment Act, Act No. 14 of 1999, dictates the minimum notice periods required for employment termination. These periods apply to contracts of unspecified duration, following the completion of any probationary period.

Employer Obligations

The Act outlines the minimum notice periods an employer must provide an employee when terminating their employment without cause. These are as follows:

  • One Working Day: For employees with less than one month of service.
  • One Week: For employees with one month or more of service, but less than three months.
  • Two Weeks: For employees with three months or more of service, but less than one year.
  • One Month: For employees with one year or more of service.

The Act allows for immediate termination without notice in cases of misconduct or a serious breach of contract by the employee.

Employee Obligations

The Act also specifies the minimum notice an employee must provide to the employer when they intend to resign. Similar to employers, the required notice period is based on the employee's length of service:

  • Two Weeks: For employees with three months or more of service.
  • One Month: For employees with one year or more of service.

If an employee fails to provide the required notice without a legitimate reason, the employer may withhold wages for the notice period not served.

Severance pay

Severance pay, also known as termination allowance, is a payment that employers may be obligated to provide employees upon termination of employment under specific circumstances in Grenada. These entitlements are outlined in Part X of the Employment Act, Act No. 14 of 1999 ("the Act").

Eligibility for Severance Pay

According to the Act, an employee is entitled to severance pay if:

  • They have completed at least one year of continuous employment with the employer.
  • Their employment has been terminated by the employer without just cause.
  • They do not already have an entitlement to a gratuity upon termination (a gratuity may be included in the written employment contract).

Calculating Severance Pay

The calculation for severance pay is mandated by the Act as follows:

  • One week's wages for each complete year of continuous employment.

Important Notes

  • Fixed-Term Contracts: Employees with fixed-term contracts are generally not entitled to severance pay if the contract expires and is not renewed.
  • Resignation: Severance pay does not apply if the employee resigns.
  • Misconduct: Employers can terminate employment without severance pay in cases of misconduct or a serious breach of contract by the employee.

Termination process

Terminating an employee's contract in Grenada involves adhering to the provisions of the Employment Act, Act No. 14 of 1999 ("the Act").

Termination with Cause

An employer can terminate an employee's contract immediately, without providing notice or severance pay, in cases of:

  • Serious Misconduct: This includes willful disobedience of lawful orders, dishonesty, or conduct that seriously endangers the safety of others.
  • Habitual Neglect of Duty: Repeated failures to fulfill duties despite warnings.
  • Breach of Contract: The employee significantly violates the terms of their employment contract.

The employer must conduct a fair investigation and give the employee an opportunity to explain themselves before termination with cause.

Termination without Cause

When terminating employment without cause, the employer must comply with the following:

  • Notice Period: Provide the employee with written notice as per the minimums outlined in the Act. The length of the notice period depends on the employee's duration of service.
  • Severance Pay: If the employee has worked for at least one continuous year and is not entitled to a gratuity, calculate and pay the applicable severance amount as defined by the Act.

Constructive Dismissal

Constructive dismissal occurs when an employee resigns due to the employer creating an intolerable or hostile work environment. In this case, the employee may be eligible for severance pay as if they had been terminated without cause.

Documenting the Process

Throughout the termination process, it's crucial for the employer to:

  • Keep Thorough Records: This includes documentation of any misconduct or performance issues, as well as written warnings issued.
  • Termination Letter: Provide a formal termination letter outlining the reason(s) for termination, the effective date, and any applicable severance pay.
  • Final Payments: Ensure all outstanding wages, vacation pay, and severance pay (if applicable) are paid promptly to the employee.
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