Payroll and Benefits Guide Gibraltar

Termination Process

Employees with at least a year of continuous service can only be dismissed for fair reasons, which include reasons related to capability, conduct, redundancy, inability of employee to continue working without contravening the law or some other substantial reason of a kind to justify the dismissal. The employer has the burden of proving the reason for dismissal.

When due to redundancy, the must relate to the employer is closing down the business, the employer is closing down the business in the place where the employee is employed or the employer no longer needs the employee’s skills. Where 5 or more workers are being dismissed under redundancy at one establishment within a period of 90 days or less, the employer must consult about the dismissals all the persons who are appropriate representatives of any employees who may be affected by the proposed dismissals or by measures taken in connection with those dismissals. The consultation must begin at the earliest opportunity and, in any event, at least 60 days before the first of the dismissals takes effect.

Notice Period

The length of notice depends on the length of service and payroll frequency.

When wages are paid Monthly:

• Employers must give 1 month notice for service of less than 8 years, 2 months notice for service up to 10 years and 3 months notice for service above 10 years.
• Employees must give 1 months notice.

When wages are paid Weekly or Fortnightly:

• Employers must give 1 week notice for service of less than 2 years, 2 weeks notice for service up to 5 years, 4 weeks notice for service up to 8 years, 8 weeks notice for service up to 10 years and 13 weeks notice for service above 10 years.
• Employees must give 1 weeks notice.

It is possible to utilise payment in lieu of notice.

Severance

For dismissals due to redundancy, workers are entitled to severance pay where they have at least 2 or more years of continuous service. The pay must be as follows:

• For each of the first five completed years of service = 2 weeks pay
• For each of the next five completed years of service = 3 weeks pay
• For each additional completed year thereafter = 4 weeks pay
• For an employee age 41 years or over, for each completed year of service = 2 weeks pay

The total amount of the redundancy payment must not exceed the amount of one year’s salary. No payment should be made to an employee who has not completed 1 year of service.

Probation Period

The first week of  employment under contract of service is deemed to be probationary period and can be terminated at the end of such week by either party without notice.

It is common, though not mandatory, to include a trial period of 3 to 6 months in the employment contract.