Notice and Severance

This page was last updated on: 2021-03-17

Notice Requirement

Employment relationship may be terminated by either party. Statutory written notice period is provided under the Labour Code, which states that unless otherwise stipulated in collective agreement, the notice period will be as follows:

  1. 07 days’ notice for less than 6 months of service;
  2. 14 days’ notice for less than 1 year of service;
  3. one-month notice for more than 1 year of service;
  4. three-month notice for more than 10 years of service;

Above notice periods are also applicable where the employee initiates contract termination. In addition, the employer can also terminate the contract without notice, where the employee is found in serious breach of the obligations under the contract (gross misconduct).

The notice period starts on the day following the one on which the notice was given. Payment in lieu of notice is also allowed. In such a case, either party is required to pay the other a sum equal to all wages (the employee was entitled to receive) up to the expiration of any notice of termination which may have been given. If the employee continues working after the expiration of the notice period, the termination notice is regarded as redundant and the employee is treated as having resumed his employment.

Dismissal must be objectively justified on the basis of circumstances relating to the operational requirements of the undertaking or connected with the employee (capacity or conduct). Employers are required to provide a written statement for the reasons of dismissal to a dismissed employee. The prohibited grounds for dismissal include marital status; pregnancy; maternity leave; family responsibilities; filing a complaint against the employer; race; color; sex; religion; political opinion; social origin; nationality/national origin; trade union membership and activities; lawfully taking leave (authorized absence from work) and HIV status.

Source: §05, 63, 64, 65, 66 and 67 of the Labour Code, 1992; §235 of the Labour Code Amendment Act 2006

Severance Pay

The Labour Code has made provisions for a severance pay that is directly linked to the length of service of the employee.

For any employee who has completed more than one year of continuous service with the same employer, a severance payment equivalent to two week’s wages is paid for each completed year of service. Amount of severance pay is capped at a certain level and the amount is updated regularly by the Minister in consultation with the Wages Advisory Board.

Severance pay is not paid to employees who have been dismissed by the employer for misconduct.

If the termination of employment has been initiated by the employee, the employer has the option of either making an immediate severance payment or holding it on trust for a maximum period of 12 months. On completion of such period, employer is required to pay the sum of severance payment plus the interest at fair market rate.

In the event of violation of above provisions, employer is liable on conviction to a fine of six hundred maloti or imprisonment for six months or both.

Source: §79 of the Labour Code, 1992