Employment Disputes
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C. Termination of employment and the relevant payments

Regardless of whether you are an employer or employee, you should give either formal advance notice or wages in lieu of notice to your existing employer/ employee for the termination of an employment contract.

The length of advance notice (or the amount of wages in lieu of notice) for termination of a continuous contract of employment is determined as follows.

 

Length of notice  

Wages in lieu of notice

With an expressed agreement

As per the agreement, but not less than seven days

A sum equivalent to the amount of wages for the notice period

Without an expressed agreement

Not less than one month

A sum of not less than one month's wages


If you are in a probation period, the required length of notice or the amount of wages in lieu of notice is determined as follows.

Probation Period

Length of Notice

Wages in lieu of Notice

Within the first
month of probation

Not required

Not required

After the first month of probation

With an expressed agreement

As per the agreement, but not less than seven days

A sum equivalent to the amount of wages for the notice period

Without an expressed agreement

Not less than
seven days' notice

A sum of not less
than seven days' wages


For a fixed term contract without an expressed agreement on the length of the termination notice period, these requirements are also applicable on the condition that such a contract is a continuous contract of employment.

The items and amount of payments that are payable to an employee on termination of employment or the expiry of a employment contract depend on a number of factors such as the length of service, the terms of the employment contract and the reason for the termination of the contract. For quick reference, termination payments usually include:

  • outstanding wages;
  • wages in lieu of notice, if any;
  • payment in lieu of any untaken annual leave, and any pro rata annual leave pay for the current leave year;
  • any outstanding sum of end of year payment, and pro rata end of year payment for the current payment period;
  • where appropriate, long service payment or severance payment;
  • other payments under the employment contract, such as, gratuity or provident fund payments.

Time of Making Termination Payments

An employer must pay all termination payments, except for severance payments, to the employee as soon as practicable and in any case not later than seven days after the date of termination or expiry of the contract.

For severance payments, an employer must make payment not later than two months from the receipt of a notice from an employee who is claiming a severance payment.

Offences and Penalties
Employers who fail to pay termination payments when they become due are liable to prosecution and, upon conviction, to a fine of $200,000 and to imprisonment for one year.

    A) Dismissal or variation on employment terms
  1. I suspect that my sales executive has repeatedly sent client details to a rival company and I want to dismiss him. Can I terminate his employment contract immediately without giving him advance notice or wages in lieu of notice?
  2. I am an office clerk and my boss always orders me to move heavy goods inside the warehouse. I think that this is not commensurate with my job duties because my boss did not specify it during the job interview. Can I resign without giving him prior notice or wages in lieu of notice?
  3. What constitutes unreasonable dismissal?
  4. I am going to dismiss a staff member with one of the valid reasons for dismissal. Am I required to give him advance notice or wages in lieu of notice?
  5. What constitutes an unreasonable variation of the terms of an employment contract?
  6. If I (as an employee) am facing unreasonable dismissal or unreasonable variation of the terms of my employment contract, then what can I do to protect my rights?
  7. What constitutes unreasonable and unlawful dismissal?
  8. If I am unreasonably and unlawfully dismissed by my boss, then what can I do to protect my rights?


  9. B) Termination payments, severance payment and long service payment

  10. When is an employer required to pay a severance payment to an employee?
  11. When is an employer required to pay a long service payment to an employee?
  12. I am going to terminate the employment contract of one of my staff members. Can I use my previous contribution to his Mandatory Provident Fund (MPF) to offset part of the severance payment/long service payment payable to him?
  13. My employee has tendered his resignation and his last day of employment is the 30 September. He has 10 days of untaken annual leave. If he takes all the annual leave continuously from the 21 to the 30 September as final leave, when should I make the termination payments?

 

 

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