Explainer: Understanding Severance Pay Under Liberian Law

 Days ago, we received a request from one of our "Tipline" users to verify what Liberian law is on Severance pay. 

Please see full text of the request below: "Hello sir, please can you tell me what the Labor of Liberia says about severance pay after long-term service with an NGo Or organization? This is a thing that is suffering many Liberians. Jobs are terminated without cause, but severance is not paid. Please, the Liberian people want, we need proper information on this.  Can you check for us?"

Severance pay is a critical aspect of employment rights and protections, especially during times of economic uncertainty or organizational restructuring.

In Liberia, the rules governing severance pay are set out in the Decent Work Act of 2015, which provides clarity on when, how, and to whom such payments are owed. This article breaks down the essentials of Liberian law on severance pay, referencing authoritative sources and guiding readers to further information.

Severance pay is primarily mandated for employees whose employment is terminated due to economic reasons, such as redundancy, restructuring, downsizing, or closure of the business or department. 

Employees dismissed for serious misconduct or who resign voluntarily are generally not entitled to severance pay. 

The standard formula for severance pay in Liberia is: four weeks' salary for each completed year of service. This calculation is based on the employee's regular wage at the time of termination, which may include basic salary and certain allowances. Severance pay is not required for terminations due to misconduct or voluntary resignation.

Liberian law requires employers to provide written notice before termination, with the notice period depending on the employee's length of service. Alternatively, employers can pay regular wages equivalent to the notice period instead of providing notice.

 

The main legal framework governing severance pay and termination in Liberia is the Decent Work Act of 2015.  This law outlines the requirements for notice, grounds for termination, and severance entitlements. Section 14.5 of the act specifically addresses severance pay, requiring at least two weeks of wages per year of service, though in practice, four weeks per year is the commonly applied standard.

The act also gives an exception: 

 

Please see below a table of severance pay rules in Liberia.

The MoL position: 

Stage Media-Liberia seeks clarification on the current procedures and enforcement mechanisms regarding severance pay under Liberian law. Specifically:

• How does the Ministry of Labour ensure that employers comply with severance pay requirements, especially in redundancy or business closure cases?

• What steps should an employee take if they believe they have not received the severance pay owed to them?

• Are there any recent updates or changes to the severance pay provisions that employers and employees should be aware of?

In response, the Ministry of Labour, through its communications director, gave comprehensive guidance on employee rights and complaint procedures under the Decent Work Act, which has remained unchanged since coming into effect in March 2016.

Joseph Nyandibo, director of communication and public affairs, outlined the process for employees seeking redress for unpaid wages or severance pay.

"When an employee believes their rights have been violated, they must submit an official written complaint to the Minister of Labour," explained Nyandibo.

Nyandibo added that,  "this initiates a structured resolution process designed to protect workers' rights while providing fair hearing opportunities for employers."

Multiple Pathways for Resolution  

The Ministry detailed two primary methods for addressing workplace disputes:

The first approach involves the Division of Labour Standards, which conducts a "social dialogue conference" where both parties attempt to reach an amicable agreement. If unsuccessful, the case advances to a formal hearing with a designated officer.

Alternatively, employees may engage the Division of Inspectorate, which dispatches inspectors to conduct on-site workplace investigations.

"This often results in immediate resolution, particularly in straightforward severance calculation cases," Nyandibo said. 

No Time Limitations, But Follow-Through Required  

While emphasizing that no statutory limitations exist for filing complaints, the Ministry clarified important procedural rules. Cases may be declared "dormant" if complainants fail to pursue them, and rulings can be made "in default" after three unanswered summonses by either party.

"Our goal is resolution, not punishment," Nyandibo said, "however, we need engaged participation from both sides."

Free Legal Support Available  

The Ministry highlighted providing free legal representation through labour solicitors for financially disadvantaged workers.

"Unlike traditional courts, private attorneys cannot represent parties in Ministry hearings," explained Nyandibo. Our labour solicitors ensure that a lack of financial resources doesn't prevent workers from receiving fair treatment."

Enforcement Mechanisms  

For employers who refuse to comply with Ministry directives, cases are referred to the National Labour Court for enforcement. The Ministry emphasized that its quasi-judicial functions allow labor disputes to be addressed efficiently before escalating to the formal court system.

"While we prefer resolution through dialogue, we have effective enforcement mechanisms when necessary," Nyandibo affirmed, "cases can ultimately reach the Supreme Court if required."

The Ministry encouraged employees with workplace concerns to seek assistance promptly, reiterating that the Decent Work Act continues to serve as the foundation for fair labor practices throughout Liberia.