The maximum severance allowance payment is to increase for long-serving employees under legislation tabled today.

Jason Hayward, the Minister of Economy and Labour, told the House of Assembly that the Employment Amendment Act 2024 would increase severance pay from 26 weeks to 32.

In the Throne Speech last week, the Government also outlined plans to remove the requirement to pay payroll tax on redundancy pay.

Addressing MPs, Mr Hayward said: “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 Hayward said increasing the maximum allowance could avert the need for people to rely on financial assistance and remove some of the stress and anxiety that stemmed from sudden unemployment.

He added that a Consultation on Retaining the Local Workforce Position Paper 2024 highlighted the challenges of Bermuda’s shrinking working population.

The minister said: “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.

“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 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.

“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.

“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.”

• To see the minister’s full statement, see Related Media

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Introducing the Employment Amendment Act 2024.pdf