(CMR) The Department of Pensions and Labour is reminding employers of their legal obligations under the law when paying employees; even on a temporary basis during the COVID-19 pandemic.
Employers terminating or temporarily laying off workers as a result of the coronavirus pandemic must upon termination pay severance pay of one weeks’ wages, at the employee’s latest basic wage, for each completed twelve-month period of employment. The employment period is to reflect any time during which the employee worked for any previous owners of the same business.
Employees are also entitled to any earned vacation leave, sales commission owed, as well as gratuities earned.
In the cases of temporary termination, employers do not need to pay severance to their employees.
Exceptions to this include:
- Where the date of recall is thirty days or more in the future,
- If no date of recall is given at the time of termination. (Severance pay shall be payable thirty days from the termination of the employee has not been recalled. Interest at ten percent per annum on the amount of severance pay due shall be payable for the interval between the original termination date and the date of actual payment).
For employees in agriculture and construction, the exceptions above apply after six months.
The Department of Labour and Pensions will make every effort to work with employers and employees during this time to ensure the proper observance of the Labour Law (2011 Revision) and its Regulations.
For assistance with labour or pension enquiries, call 945-8960 or email [email protected].
Persons can also visit the website www.dlp.gov.ky/ to view labour and pensions legislation, FAQs, or use the minimum wage calculator.
The Department also accepts anonymous reports via a confidential hotline at 945-3073.
What does the law say about severance pay?
Section 42 of the Labour Law (2011), which addresses severance pay provides the following guidance:
- (1) Subject to subsections (2), (3) and (4), simultaneously upon the termination of the employment of any employee entitled to severance pay, the employer shall pay to that employee severance pay calculated in accordance with this Part.
(2) If the termination is stated to be temporary, no severance pay need be paid to the employee at the time of such temporary termination except-
(a) where the date of recall, if one is given at the time of termination, is thirty days or more in the future, severance pay shall be payable on the date of termination; or
(b) if no date of recall is given at the time of termination, severance pay shall be payable thirty days from the termination if the employee shall not then have been recalled; in which case, interest at ten percent per annum on the amount of severance pay due shall be payable for the interval between the original termination date and the date of actual payment.
(3) Subsection (2) shall apply to employees in agriculture and construction with the words “six months” substituted for the words “thirty days” in both places where they occur in that subsection.
(4) Where payment of severance pay has been made, with interest where due under paragraph (b) of subsection (2), and the employee is subsequently recalled to his former or substantially equivalent employment or is again hired by the same employer, he shall be considered to be newly hired and his term of employment, for subsequent severance pay purposes, shall be considered to have commenced on the date of his recall or rehire.