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Termination and Severance Policies

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

Notice period

In Guam, there are no specific legal requirements for notice periods in the event of employment termination. This implies that, in most situations, neither the employer nor the employee is obligated to provide notice before terminating the employment relationship.

However, there are a few exceptions to this rule:

Employment Contracts

If there is an employment contract between the employer and the employee, it may specify a notice period for termination. Both parties should adhere to this notice period.

For Cause Termination

Even in the absence of a contract, if an employee is terminated "for cause" (for example, due to misconduct or habitual neglect of duties), Guam law does not require the employer to provide notice.

Key Points from Guam Code Annotated (GCA) Title 18

Chapter 55 of Title 18 of the Guam Code Annotated (GCA) deals with "Service with Employment".

  • Section 55405 discusses termination by the employer for specified term employment (longer than one month) in cases of employee misconduct or incapacity.
  • Section 55406 covers termination by the employee for specified term employment due to employer breach of obligations.
  • Sections 55407 and 55408 address the compensation owed to employees upon termination, depending on whether the employment was for a specified term or not.

While Guam law does not mandate notice periods for employment termination, it is always advisable to have a clear written agreement between employers and employees outlining the terms of termination, including any required notice period. This can help prevent misunderstandings and potential legal disputes.

Severance pay

In Guam, there is no legal requirement for employers to provide severance pay upon termination of employment. However, there are certain circumstances where severance pay may be required.

Employment Contracts

Severance pay may be required if it is specifically guaranteed under the terms of an employment contract. In such cases, the employer is legally obligated to abide by these contract terms.

Company Policies

Some employers may have internal policies that provide for severance pay. If such a policy exists, employers are expected to adhere to it.

Collective Bargaining Agreements

If an employee is covered by a collective bargaining agreement, the agreement might contain provisions for severance pay. These terms of the agreement must be honored.

Guam Severance Pay Act

The Guam Severance Pay Act (Bill No. 031(EC)) is a proposed legislation that aims to establish severance pay as a right for certain qualifying employees in the private sector. This bill is still under consideration by the Guam legislature. If passed into law, it would significantly impact severance pay entitlements.

It's essential for employers and employees to thoroughly understand any severance obligations arising from contracts, company policies, or collective bargaining agreements. If the Guam Severance Pay Act is passed, additional requirements will come into effect.

Termination process

In Guam, the termination process for employees can vary depending on the circumstances and whether there are contractual agreements specifying termination procedures. Here's a general outline of the key considerations and legal obligations:

At-Will Employment

Guam follows the principle of at-will employment. This means employers can terminate employees for any reason (or no reason at all), provided the termination doesn't violate any laws against discrimination or retaliation. Similarly, employees may leave their jobs without giving a reason.

Termination for Cause

Employers may terminate an employee "for cause" if the employee engages in misconduct, neglects their duties, or demonstrates an inability to perform their job responsibilities. Guam law permits termination for cause without notice to the employee.

Examples of Termination for Cause can include repeated instances of tardiness or absenteeism, insubordination or violation of workplace rules, criminal activity connected to the workplace, or serious performance issues.

Steps in the Termination Process

  1. Documentation: Employers should thoroughly document any issues or performance concerns leading up to termination. This includes written warnings, performance improvement plans (PIPs), and records of any disciplinary actions.
  2. Termination Meeting: It's best practice to hold a termination meeting with the employee. Clearly state the reason for termination and provide any relevant documentation.
  3. Final Paycheck: Guam labor law outlines deadlines for the final paycheck, depending on whether the termination is initiated by the employer or the employee. Employers should ensure they adhere to these timelines.

Guam Code Annotated (GCA) References

GCA Title 18, Chapter 55: Service with Employment, covers the general employment relationship and termination.

Additional Considerations

Employees might have grounds for a wrongful termination claim if the termination is based on discrimination, retaliation, breach of contract, or violation of public policy. Terminated employees may be eligible for unemployment benefits, which are administered by the Guam Department of Labor.

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