Redundancy

This section provides information pertaining to Redundancy Benefits. Please use the menu on the right to navigate to pages within this topic.

Redundancy benefit falls under the purview of the Protection of Employment Act (Volume 12, Chapter 89:02 of the Revised Laws of Dominica). Although it is currently administered by the Dominica Social Security, it is not a Social Security benefit.

What Is Redundancy?

Redundancy is an action taken by an employer to terminate one or more positions on his workforce on account that these particular positions are no longer needed.

Protection of Employment Act

All employees except the following categories listed below are covered by the Protection of Employment Act:

  • Government workers
  • Managerial staff (who have and actually exercise authority to hire and fire employees)
  • Stevedores, and Long-shore men
    Domestic workers
  • Any employee who is the father, mother, husband, wife, brother, sister, son or daughter of the employer.

By virtue of being exempt from coverage, Redundancy benefit contributions are not payable on their behalf, hence, they are not eligible for Redundancy Benefit. Employers are therefore required to contribute 6.75% in respect of those employees unlike the 7% payable on behalf of employees who are covered by the said Act.

Redundancy Benefit

Redundancy benefit is a benefit payable to an employee who suffers loss of employment arising out of the introduction of new methods of work, whether by automation, mechanization, rationalization or reorganization due to shortage of work in accordance with the Protection of Employment Act. In order to qualify for Redundancy benefit, an employee must have been employed for at least 3 years and must be Covered by the Protection of Employment Act.

Redundancy Reasons

The Protection of Employment Act provides several reasons for which an employer may terminate his employee(s)’ employment as follows:

  • Where the employer has modernized, automated or mechanized all, or part of his business
  • Where the employer has discontinued or ceased to carry on all, or part of his business
  • Where the employer has sold or otherwise disposed of all or part of his business
  • Where the employer has re-organized his business to improve efficiency
  • Where the employer’s need for employees in a particular category has diminished or ceased
  • Where it has become impossible or impracticable for the employer to carry on his business at its usual rate, or level, or at all, due to:
    • A shortage of materials
    • A mechanical breakdown
    • A force majeur
    • An Act of God
  • A reduced operation in the employer’s business has been made necessary by economic conditions – including a lack of, or change in, markets, contraction in the volume of work or sales, reduced demand, or surplus inventory

Qualifying for Redundancy

In order to qualify for redundancy benefit, an employee must have been continuously employed for a period of not less than three years, and the employment of that employee must have been terminated in accordance with one or more of the Reasons for which an employee may be made Redundant.

Determination Of Redundancy Benefit

The amount that should be payable as Redundancy benefit is determined as follows:

Where the employee has been continuously employed by the employer for a period:

  • Not exceeding five years, the Redundancy payable shall be an amount equal to one week’s pay for each year that the employee was so employed, plus two weeks pay for each year in excess of three years.
  • Exceeding five years, but not exceeding ten years, the Redundancy payable shall be an amount equal to nine weeks pay, plus two weeks pay for each year in excess of five years that the employee was so employed.
  • Exceeding ten years, the Redundancy payable shall be an amount equal to nineteen weeks pay, plus three weeks pay for each year in excess of ten years that the employee was so employed.

It is important to note that Redundancy Benefit payable to an employee shall not exceed an amount that is equal to 52 weeks pay for that employee.

Responsible for Redundancy Benefit Payment

The employer is responsible for paying redundancy benefit. Where an employee has been laid off by his employer for a period of six or more consecutive weeks, he may elect to make a claim in writing to his employer for a redundancy benefit.

Where an employee makes a claim for Redundancy benefit, the employer shall, in accordance with the Protection of Employment Act:

  • Pay the Redundancy benefit as claimed.
  • Serve on the employee a counter-notice offering to give the employee employment within four weeks.

Where the employer has refused or failed to pay Redundancy benefit to the employee subsequent to his claim for benefit from the employer, the employee may opt to make a claim for a Redundancy benefit to the Director of the DSS.

Upon being satisfied that the claim made by the employee is payable, the Director may advance the Redundancy benefit amount to the employee. Any such payment made by the Director is recoverable as a contract debt owed to the Board on behalf of the Fund, and the Director shall immediately take steps to recover the full amount from the employer.

It must be noted that where an employer pays Redundancy benefit, he then becomes entitled to a Rebate of 10%. However, if he fails to pay, and the benefit is advanced by the DSS, he is then liable to reimburse the entire amount paid. Employers who pay Redundancy benefit to their employees therefore realize a 10% savings.

Redundancy Benefit Application

A claim for Redundancy benefit must be submitted in writing to the Director DSS within 6 months of the date that the employee was made Redundant.

A person submitting a claim for Redundancy benefit must submit a written letter containing the following:

  • His name and Social Security number
  • His date of commencement and termination of employment on account of Redundancy
  • Proof or evidence that he has been made redundant

Proof that he has applied for the benefit from his employer and that his employer has failed to pay.

Redundancy Rebate Payment

Where an employer pays Redundancy benefit as provided by the Protection of Employment Act, he may submit a claim to the Director of the DSS for a Redundancy Rebate.

The Redundancy Rebate represents an amount refundable to the employer in respect of the amount paid to his employee as Redundancy benefit. The amount currently paid by DSS as Rebate is 10% of the amount payable as Redundancy benefit, or the amount paid by the employer, whichever is less.

Redundancy Rebate Claim

A claim for Rebate must be submitted in writing to the Director DSS within 6 months of the date that the employee was paid Redundancy benefit.

The claim shall stipulate the following:

  • The reason(s) why the employee(s) was made redundant
  • The dates of commencement and termination of the employee’s employment
  • How the employee’s Redundancy payment was calculated by the employer
  • Proof of the amount that has been paid to the employee(s)
  • Any other proof that the Director may require for determining the rights of the employee, or the amount of the rebate