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Severance Payment and Long Service Payment

Severance Payment and Long Service Payment

Severance Payment and Long Service Payment

1.When does an employer have to pay severance payment to a helper?

An employer must pay severance payment to a helper when:

a. The helper is dismissed by reason of redundancy; or the employment contract is not renewed after expiry for reason of redundancy; and

b. The helper has been employed continuously by the same employer for not less than 24 months prior to dismissal/expiry.

2.When does an employer have to pay long service payment to a helper?

If a helper has been employed continuously by the same employer for not less than 5 years, the employer must pay long service payment when the helper:

a. Is dismissed or does not have his/her contract renewed (other than for gross misconduct or redundancy);

b. Resigns on ground of ill-health with a medical certificate;

c. Resigns at the age of 65 or above on ground of old age;

d. Dies in service.

If the employer has offered in writing renewal of contract/re-engagement not less than 7 days before the expiry/termination date and the helper unreasonably refused the offer, the helper is not entitled to long service payment.

3.Can a helper receive both severance payment and long service payment at the same time?

No. A helper can only receive either severance payment or long service payment at any one time. A helper dismissed by reason of redundancy is entitled to severance payment, not long service payment.

4.How are severance payment and long service payment calculated?

The following formula applies to both severance payment and long service payment:

[(Last month wages x 2/3) x Reckonable years of service*]

Incomplete years are calculated on a pro rata basis.