In Papua New Guinea, the Employment Act 1978, Part III, Division 2 - General, Section 14 Notice of terms and conditions of employment, stipulates the notice periods for employment termination. The minimum notice periods, applicable to both employers and employees, are as follows:

• For less than four weeks of service, one day's notice is required.
• For four weeks to one year of service, one week's notice is necessary.
• For one year to five years of service, two weeks' notice is required.
• For five years or more of service, four weeks' notice is needed.

Exceptions to Standard Notice Periods

There are situations where the standard notice periods may not apply, as per the Employment Act. These include:

• Mutual Agreement: The contract of service between the employer and employee can stipulate longer or shorter notice periods by mutual agreement.
• Breach of Contract: In cases of serious misconduct or a fundamental breach of the employment contract, immediate termination without notice may be justified.

Payment in Lieu of Notice

If either party decides to end the employment relationship without fulfilling the required notice, they may be obliged to make a payment to the other party. This payment should be equivalent to the salary or wages that would have been earned during the notice period.

Severance pay, also known as redundancy pay, in Papua New Guinea is primarily outlined in the Employment Act 1978. An employee is generally entitled to severance pay when their employment is terminated due to redundancy. Redundancy, as defined in the Employment Act, is when a position is no longer required by the employer, and not due to any fault of the employee.

Calculating Severance Pay

Severance pay in Papua New Guinea is calculated based on the employee's length of continuous service with the employer. The Employment Act stipulates the following payment scale:

• At least 1 year but less than 2 years of service: 4 weeks' pay
• At least 2 years but less than 3 years of service: 6 weeks' pay
• At least 3 years but less than 4 years of service: 7 weeks' pay
• At least 4 years but less than 5 years of service: 8 weeks' pay
• At least 5 years but less than 6 years of service: 9 weeks' pay
• At least 6 years but less than 7 years of service: 10 weeks' pay
• At least 7 years but less than 8 years of service: 11 weeks' pay
• At least 8 years but less than 9 years of service: 13 weeks' pay
• At least 9 years but less than 10 years of service: 16 weeks' pay
• At least 10 years of service: A maximum of 12 weeks' pay

The severance pay is calculated based on the employee's ordinary rate of pay for their usual hours of work. There may be situations where an employee is not entitled to severance pay, such as cases of casual employment or if the termination is due to the employee's misconduct.

Taxation of Severance Pay

Severance payments in Papua New Guinea may be subject to taxation. Specific income tax laws and regulations will determine the taxability and applicable rates.

Additional Considerations

Review your employment contract for any specific provisions on severance pay that may exceed the legal minimums. Certain industries may have registered industrial awards that outline additional severance pay entitlements.

In Papua New Guinea, the termination process of employees is governed by legal requirements. There are three types of termination: Termination with Notice, Termination without Notice (Summary Dismissal), and Termination by Mutual Agreement.

Types of Termination

Termination with Notice: This is the most common form of termination, where either the employer or the employee must provide notice of their intention to end the employment relationship.

Termination without Notice (Summary Dismissal): In cases of serious misconduct or breach of contract, the employer may terminate the employee's employment immediately. Grounds for termination without notice include willful disobedience, misconduct, fraud, neglect of duty, and imprisonment.

Termination by Mutual Agreement: Employers and employees can mutually agree to terminate the employment relationship at any time. This agreement should ideally be in writing and clearly state the terms of separation.

Procedure for Termination with Notice

1. Written Notice: The party who wishes to terminate the employment must provide written notice to the other party. The notice should explicitly state the intention to terminate and the date on which the termination will take effect.

2. Observing the Notice Period: Both the employer and employee must observe the legally mandated notice period. During this time, the employee is entitled to continue working and receiving their usual pay and benefits.

3. Final Payment: Upon termination, the employer is obligated to settle all outstanding payments owed to the employee, which includes accrued wages and unused annual leave entitlements.

Additional Considerations

Right to Challenge Termination: Employees have the right to challenge a termination if they believe it was unfair or unjustified.

Constructive Dismissal: This occurs when an employee resigns due to the employer's actions creating an intolerable work environment. This may be treated as a termination initiated by the employer.

Best Practices

Review the Employment Contract: Always refer to the specific terms of the employment contract for provisions regarding termination procedures and entitlements.

Documentation: Keep clear written records of all communications and actions related to the termination process.

Professionalism and Fairness: Both the employer and employee should conduct themselves professionally and fairly throughout the termination process. Upholding the legal requirements ensures a smoother process.