Redundancy: paid through DSS, but it belongs to the Protection of Employment Act

Dominica handles redundancy in a way that trips people up, and understanding it explains a number that appears on employer contribution schedules.

The key distinction

Redundancy benefit falls under the Protection of Employment Act, Volume 12, Chapter 89:02.

Although it is currently administered by Dominica Social Security, it is not a Social Security benefit.

It is an employment entitlement that DSS happens to administer.

The 0.25% that funds it

Here is where that distinction becomes concrete. Employer contribution rates differ:

• 7.75% for employees covered by the Protection of Employment Act
• 7.50% for employees not covered

That 0.25% difference is the redundancy contribution. Employees whose employers pay 7.50% are not eligible for redundancy benefit, because no contribution was made on their behalf.

Who is not covered

The exclusion is specific: any employee who is the father, mother, husband, wife, brother, sister, son or daughter of the employer.

Family members working in a family business are outside the Act, and therefore outside redundancy benefit.

The three-year qualifying period

To qualify for redundancy benefit, an employee must have been employed for at least three years and must be covered by the Protection of Employment Act.

Three years is a longer threshold than most of the region.

What counts as redundancy

The Act identifies four situations where an employer may terminate on account of redundancy:

• Where the employer has modernised, automated or mechanised all or part of the business
• Where the employer has discontinued or ceased to carry on all or part of the business
• Where the employer has sold or otherwise disposed of all or part of the business
• Where the employer has re-organised the business to improve efficiency

The maximum

The maximum redundancy benefit is 52 weeks' pay.

What to check

Whether your employer pays 7.75% or 7.50%, whether you have three years of service, and whether your situation matches one of the four qualifying reasons.