Notice and Severance
Notice Requirement
In case of resignation before the expiry of the contract or dismissal on the basis not provided under the law, the party initiating the termination has to pay an indemnity equivalent to the remuneration for the remaining contract period, along with the other compensation which must be paid.
An indefinite term (open ended) contract may be terminated by either of the parties by serving a notice or paying in lieu of notice. The employment may be terminated for legitimate reasons.
The Labour Code does require an employer to serve a contract termination notice to the workers except when they are dismissed due to serious or gross misconduct. In the case of gross misconduct, the party terminating the contract must notify the other party of the evidence of gross misconduct specifying the grounds for contract termination within 48 hours of the occurrence of misconduct.
The termination notice must be in writing and contain the reasons for termination.
For terminating an indefinite term contract, the required notice period depends on the worker’s length of service as follows:
- 15 days for a worker who has worked for less than a year; and
- 1 month for a worker who has worked for more than a year.
Notice is not required in case of mutual agreement between parties or in case of gross negligence or if the employment contract is terminated during the probationary period.
Payment in lieu of notices, by either party, is equivalent to the salary and other benefits from which the worker would have benefited during the notice period that has not been effectively respected.
Source: §24-30 of the Law regulating Labour in Rwanda, 2018 (No. 66/2018)
Severance Pay
In accordance with the Labour Code, a worker is entitled to severance pay (dismissal compensation, terminal benefits) upon dismissal, provided that they have completed at least one year of continuous service with the employer. The termination of employment contract must have been triggered by economic reasons, technological transfer, or sickness. The severance pay is payable at the following rates, depending on a worker’s length of service with the same enterprise:
(i) 2 months’ salary for less than 5 years of service;
(ii) 3 months’ salary for 5 to 10 years of service;
(iii) 4 months’ salary for 10 to 15 years of service;
(iv) 5 months’ salary for 15 to 20 years of service;
(v) 6 months’ salary for 20 to 25 years of service; and
(vi) 7 months’ salary for more than 25 years of service.
The average monthly salary is calculated by dividing by twelve the total salary the worker has received for the last twelve (12) months exclusive of allowances allocated to the worker to enable him/her to discharge his/her duties.
An employer may terminate workers on individual or collective basis due to economic reasons, internal organization or consecutive restructuring for economic difficulties or technological transfers with the aim of protecting the competitiveness of the enterprise. The terminal benefits must be paid within seven working days of dismissal. Under the 2018 law, the terminal benefits are raised from one month salary to a minimum of two months’ salary for workers with less than five years of service with the same employer.
A retiring employee receives retirement benefits in the same manner as terminal benefits. However, retirement benefits are not payable cumulatively with terminal benefits.
Source: §31-32 of the Law regulating Labour in Rwanda, 2018 (No. 66/2018)