End-of-service benefits are among the most important entitlements of private-sector employees, and one of the most common issues raised when an employment relationship ends. This article outlines the general framework and the factors that affect the amount.
What are end-of-service benefits?
An amount payable to the employee when the employment contract ends, calculated by reference to length of service and last salary. The private-sector Labour Law sets the method of calculation and the cap, and the parties cannot agree to reduce it.
Factors that affect the amount
- Actual length of service with the employer.
- The salary used as the basis of calculation, and which allowances it includes.
- The reason the relationship ended: termination by the employer, resignation or expiry of a fixed term.
- The type of contract: fixed-term or indefinite.
Resignation versus termination
Entitlement on resignation differs from entitlement on termination by the employer; on resignation the law links the proportion payable to length of service. An employee may also lose all or part of the benefit if dismissed for one of the reasons the law specifies.
Protecting your position
- Keep a copy of your contract and any amendments.
- Keep payslips or bank transfers that evidence your salary.
- Do not sign a final release before checking the amounts calculated.
- Be aware of the time limits for bringing a claim.
When to seek advice
If you disagree with your employer on the calculation or the reason for termination, or are asked to sign a release you do not accept, take legal advice before acting.
Content on this website is for general information only and does not constitute legal advice.