Bill To Increase Severance Payment To 32 Weeks

Minister of Economy and Labour Jason Hayward introduced legislation to increase the “maximum severance allowance payment for long serving employees from 26 weeks wages to 32 weeks wages.”

Speaking in the House of Assembly, the Minister said, “The employees who will benefit from this bill are long serving employees who have been in continuous employment with an employer for 13 or more years. This new law will be accompanied by another legislative amendment to remove the requirement to pay payroll tax on redundancy pay. This will help provide stability and fairness for employees during a time of transition.”

The Minister’s full statement follows below:

Good morning, Mr. Speaker. I am pleased to introduce in the Honourable House today a bill entitled Employment Amendment Act 2024, which proposes to increase the maximum severance allowance payment for long serving employees from 26 weeks wages to 32 weeks wages.

Mr. Speaker, the Employment Act 2000 [the Act] sets the minimum requirements for employment relationships within Bermuda. However, there remain areas within the Act which require updating to strengthen labour policies that protect the rights of Bermudian employees, while ensuring that persons can meet their basic needs, and that assure accordance with international best practice.

Mr. Speaker, severance allowance provides employees with a level of financial stability when they lose their employment. It assists with covering essential expenses such as rent, food and healthcare, and gives employees the time and resources needed to seek new employment. This may result in better job opportunities as employees will not feel forced to take the first opportunity that arises out of financial necessity.

Mr. Speaker, increasing the maximum severance allowance may help to avert the need for persons to rely on financial assistance. It may also reduce the stress and anxiety that undoubtedly follows the uncertainty that comes from being faced with sudden unemployment and loss of income.

Mr. Speaker, the Consultation on Retaining the Local Workforce Position Paper 2024, which was tabled earlier this year by the Ministry of Economy and Labour, highlights the challenges of Bermuda’s shrinking working population. It sought, among other initiatives, to put in place targeted measures to encourage and motivate working age Bermudians to remain in Bermuda. One such proposal was to increase the maximum severance allowance payable from 26 weeks wages to 52 weeks wages.

Mr. Speaker, the consensus of industry and our union partners to this proposal was that, while an increase is necessary, the rising costs of doing business in Bermuda should be taken into consideration along with the fact that the purpose of the Act is to set a minimum standard. As such, the Act should not include provisions that may been considered as progressing beyond a minimum standard.

Mr. Speaker, consultation on the Position Paper began on 15 March 2024 and ended 15 April 2024 and was open to the public via an online forum. Additionally, meetings were held with various stakeholder groups and a total of 57 responses were received. As a result of the feedback received and discussions held with our industry and union partners regarding increasing severance allowance, an increase from 26 weeks wages to 32 weeks wages was supported as fair and equitable to both employees and employers.

Mr. Speaker, the employees who will benefit from this bill are long serving employees who have been in continuous employment with an employer for 13 or more years. This new law will be accompanied by another legislative amendment to remove the requirement to pay payroll tax on redundancy pay. This will help provide stability and fairness for employees during a time of transition.

Mr Speaker, it is envisioned that the impact of the bill will continue to build upon the values of the Ministry of Economy and Labour which are to maintain a healthy, thriving, and equitable community. The bill will also create a more stable workforce within Bermuda by encouraging employers to engage in fair and responsible employment practices and aid in the retention of employees and the reduction of employee turnover.

Thank you, Mr. Speaker.

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