Employees should know entitlements

Claris Ogangah

Thank you for the question seeking clarification on service pay. The law applicable in all employment issues is The Employment Act 2007, which came into force on June 2, last year after the Employment Act Chapter 226 was repealed.

Therefore, note that in all the issues herein we shall be making reference to this Act at all times.

Service pay, as discussed in an earlier article, basically refers to the payment given to an employee for years worked when the contract of employment is terminated.

Section 35 in the Employment Act deals with service pay and specifically sub-section 5. I, however, implore you to read the whole section.

Sub-section 1 of Section 35, before dealing with an employee’s entitlement, provides for the period of notice to be given by either party of intention to terminate employment.

The period of notice determines whether one is entitled to service pay or not. So depending on how often one was paid, then the termination notice is commensurate with payment period. If one is paid weekly, then the notice period is a week.

Sub-section 5 provides for what one is entitled to upon termination of contract and it says, ‘An employee whose contract of service has been terminated under sub-section 1(c) shall be entitled to service pay for every year worked, the terms of which shall be fixed notice.’

So the Act is clear that either party may give notice and if the terms of employment are such that either party is required to give a month’s notice, then the employee is entitled to service pay.

The law recognises that service pay should be paid out to the employee and is not payment given out on humanitarian grounds.

An earlier issue differentiated between termination of employment and being declared redundant. When one is declared redundant, then service pay does not arise as the employee who has been declared redundant is entitled to severance pay instead. It is important that we do not confuse the two terms or situations.

Service pay can also be paid out to retiring employees, especially long serving ones. However, that kind of pay is dealt with differently from termination of employment.

It is important that employees know their entitlements otherwise they may be deprived of the same upon termination of contracts.