When an employee is considered redundant

An employee is considered redundant if he/she has been terminated:

a. because the employer has ceased or intends to cease to carry on the business in which the employee was employed;

b. because the employer has ceased or intends to cease to carry on business in the place in which the employee was employed;

c. because of the following other reasons concerned with the operation of the business:

· modernisation, mechanisation or any other change in methods of production or of organisation which reduces the necessary number of employees;

· change in the products or in production methods or in the skills needed on the part of employees;

· closing of departments;

· marketing or credit difficulties;

· lack of orders or raw materials;

· scarcity of means of production;

· contraction of the volume of work or business.

The employee is not entitled to redundancy payment even if the dismissal is due to redundancy:

a. if before termination, the employer makes the employee an offer of suitable alternative employment and he/she unreasonably refuses this offer;

b. if the dismissal was effected because of the transfer of the business as a going concern to a new employer who renewed the employment agreement;

c. if the employer is a company registered in accordance with the provisions of the Companies Act and transfers the employee to a suitable employment in another company which is connected/related to the company in which he is employed. Two companies are considered as connected, if the one is subsidiary of the other, or if both companies are subsidiaries of a third company; and

d. if before the termination of the employment, another employer who is a company in which the previous employer is a major shareholder or exercises effective control, offers the employee suitable employment.

The amount of redundancy payment is calculated on the basis of length of service and last wages of the claimant as follows: