Redundancy Compensation In Gibraltar

• Published date: 02 April 2024
• Subject Matter: Employment and HR, Contract of Employment, Unfair/ Wrongful Dismissal, Redundancy/Layoff
• Law Firm: ISOLAS
• Author: Mark Isola KC and Nick Isola

ISOLAS Partner Mark Isola KC and Senior Associate Nick Isola, experts in employment law, provide a comprehensive analysis of statutory redundancy compensation in Gibraltar highlighting both the similarities and key differences to England and Wales.

In the lead-up to the last General Election on 12th October 2023, the Gibraltar Chronicle published an article on the election wish list of Unite the Union ("Unite"), which Unite said was to benefit members, workers and employers alike in delivering a better-paid, supported, motivated and trained workforce and which would ultimately aid the economic growth of Gibraltar.

Whilst there may be wide support, and even cross-party political support, for certain initiatives (in parts or in full) in the wish list such as amending the laws on maternity and paternity leave which many in the community will consider to be outdated or inadequate, other proposals may be viewed with real concern by employers, particularly businesses in the private sector, that are still recovering from the dual effects of the Covid-19 pandemic, and the continuing uncertainties of the post-Brexit era in the absence of any treaty with the European Union.

One proposal on Unite's wish list is to increase the statutory redundancy payment ("SRP") ceiling from 52 weeks' pay to 78 weeks' pay, which employers would naturally view as materially increasing their costs and negative to economic growth in Gibraltar.

It is important to highlight the protections and advantages that Gibraltar's employees already enjoy on redundancy which provide them with greater statutory redundancy packages than their counterparts in England & Wales, and the cost of such redundancies, always an important factor when outside businesses consider the competitiveness, and attraction, of setting up in Gibraltar rather than competitor jurisdictions. There are material differences between Gibraltar and England & Wales when considering entitlements to SRP and which are already far more favourable to employees in Gibraltar than their counterparts in England & Wales for the following reasons:

Eligibility for SRP

1. The qualifying period to be entitled to claim SRP for eligible employees in Gibraltar is only 1 year's continuous employment whereas in England & Wales it is 2 years' continuous employment.

Calculation of SRP

Length of service and age

2. The amount received in SRP depends on length of service and, in Gibraltar, an employee is entitled to 2 weeks' pay for each of the first 5...