Managing employment relationships in Papua New Guinea requires a clear understanding of the legal framework governing termination. Both employers and employees have rights and obligations that must be respected when an employment contract comes to an end. Navigating these requirements correctly is essential to ensure compliance and avoid potential disputes.
Proper termination procedures involve adhering to specific notice periods, understanding the valid grounds for dismissal, following due process, and correctly calculating any applicable severance entitlements. Employers must be diligent in documenting each step of the process to demonstrate fairness and adherence to the law.
Notice Period Requirements
The minimum notice period required for terminating an employment contract in Papua New Guinea depends on the employee's length of service. These minimums are generally stipulated by law, although individual employment contracts or collective agreements may provide for longer periods.
| Length of Continuous Service | Minimum Notice Period |
|---|---|
| Less than 4 weeks | 1 day |
| 4 weeks to less than 1 year | 1 week |
| 1 year to less than 5 years | 2 weeks |
| 5 years or more | 4 weeks |
Notice must typically be given in writing. Payment in lieu of notice is permissible, meaning the employer can pay the employee their regular wages for the duration of the notice period instead of requiring them to work.
Severance Pay
Severance pay, also known as redundancy pay, is generally applicable when an employee's position is terminated due to redundancy. Redundancy occurs when the employer no longer requires the employee's job to be performed, or requires fewer employees for that type of work. Severance is typically not payable in cases of termination for cause (e.g., misconduct).
The calculation of severance pay is often based on the employee's length of continuous service. A common formula involves a certain number of weeks' pay for each year of service, often capped at a maximum number of years or weeks. Specific rates can vary based on employment contracts, collective agreements, or industry standards, but a common benchmark is two weeks' pay for each year of continuous service.
- Calculation Example: An employee with 7 years of service made redundant might be entitled to 7 years * 2 weeks/year = 14 weeks of their ordinary pay as severance.
Severance pay is usually calculated based on the employee's ordinary rate of pay at the time of redundancy.
Grounds for Termination
Employment contracts in Papua New Guinea can be terminated on various grounds, broadly categorized as termination with cause and termination without cause (redundancy).
-
Termination With Cause: This occurs when an employee's conduct or performance provides a valid reason for dismissal. Valid grounds may include:
- Serious misconduct (e.g., theft, fraud, insubordination, violence).
- Repeated or persistent poor performance after warnings and opportunities for improvement.
- Breach of contract terms or company policies.
- Incapacity due to illness or injury, subject to specific conditions and procedures.
- Abandonment of employment. Termination for cause often requires a fair investigation and disciplinary process.
-
Termination Without Cause (Redundancy): This occurs when the termination is due to operational requirements of the business, such as restructuring, downsizing, or closure of a specific department or the entire business. Redundancy is not related to the employee's fault or performance.
Certain grounds are considered unlawful or discriminatory, such as termination based on an employee's race, gender, religion, political opinion, or union membership.
Procedural Requirements for Lawful Termination
Regardless of the grounds for termination, employers must follow a fair and lawful procedure. Failure to do so can result in a finding of wrongful dismissal, even if a valid reason for termination exists. Key procedural steps typically include:
- Investigation: For termination with cause, conduct a thorough and impartial investigation into the alleged misconduct or poor performance.
- Notification: Inform the employee in writing of the specific reasons for potential termination.
- Opportunity to Respond: Give the employee a reasonable opportunity to respond to the allegations or reasons for termination, often in a meeting. The employee may have the right to have a representative present.
- Consideration: Fairly consider the employee's response before making a final decision.
- Final Decision & Notice: If the decision is to terminate, provide written notice of termination stating the effective date and the reason for termination. Ensure the correct notice period is given or payment in lieu is made.
- Final Payments: Calculate and pay all final entitlements, including outstanding wages, accrued leave, and any applicable severance pay.
- Documentation: Maintain detailed records of the entire process, including investigation findings, meeting minutes, warnings, and the final termination letter.
Common procedural pitfalls include insufficient investigation, failing to give the employee a chance to be heard, not providing clear reasons for termination, or failing to pay all final entitlements correctly and on time.
Employee Protections Against Wrongful Dismissal
Employees in Papua New Guinea are protected against wrongful dismissal. A dismissal may be considered wrongful if:
- There was no valid reason for the termination.
- The employer failed to follow a fair procedure.
- The termination was based on discriminatory grounds.
Employees who believe they have been unfairly or wrongfully dismissed can seek recourse. This often involves lodging a complaint with the relevant labor authorities or pursuing the matter through the court system. Potential remedies for wrongful dismissal can include reinstatement, compensation for lost wages, or other damages. Employers must therefore ensure both the substantive reason for termination and the process followed are legally sound and fair.
