What is the difference between retrenchment and dismissal, and how is severance calculated?

How retrenchment differs from dismissal

Retrenchment is "the termination of employment of a worker at the initiative of an employer for the reason of redundancy", and redundancy is "the existence of surplus labour in an undertaking for whatever cause" (Retrenchment and Severance Benefits Act (Chapter 88:13), s 2). Ending a job for "valid cause relating to the worker's conduct or job performance" is dismissal, which is allowed even during a retrenchment notice period (s 14(2)).

Who the Act covers

Only "workers" under the Industrial Relations Act (Chapter 88:01) are covered, so public officers, the protective services, the Teaching Service, staff whom the Registration Recognition and Certification Board considers responsible for policy or for controlling a department, domestic staff in private homes who are paid by the householder, and some others are not (Industrial Relations Act, s 2(3)). Section 3(1) then excludes:

• "workers who have not had more than one completed year of service", a completed year being "continuous service over a period of twelve successive months" (s 2);
• workers serving "a known pre-determined probationary or qualifying period";
• casual workers, and seasonal workers unless employed in the regular work force for at least three consecutive seasons with the same employer, for at least 100 days each season;
• fixed-term and specific-task workers who were told this when engaged, but not task workers moved from project to project, even with short breaks between projects (s 3(2));
• independent contractors.

The 45-day notice for five or more retrenchments

An employer proposing to retrench five or more workers must give formal written notice to each worker involved, to the recognised majority union and to the Minister of Labour (s 4(1)). It must state (s 4(2)):

• the names and classifications of the workers involved;
• their length of service and current wage rates;
• the reasons for the redundancy;
• the proposed termination date;
• the criteria used to select them; and
• any other relevant information.

The notice must be given at least 45 days before the proposed date of retrenchment (s 6) or, if unforeseen circumstances make that impracticable, the maximum notice the employer can reasonably give, and the employer must prove the circumstances were unforeseen (s 7). A registered collective agreement may instead set its own retrenchment procedure, but it must stipulate a period of notice and the Minister must still be notified in writing (s 17). Putting any part of the retrenchment into effect during the notice period is an offence (s 14(1)). With fewer than five retrenchments this procedure does not apply. But notices given to further workers within the period of an earlier notice are counted together, so staggering the notices does not avoid it (s 4(3)). Severance is due whatever the size of the employer's work force (s 18(5)).

How severance is calculated

Unless a registered collective agreement or other terminal benefits give at least as much (s 18(2), (6)), the minimum for service "without a break" is (s 18(3)):

• Service of "between more than one but less than five years": for each completed year, "two weeks' pay at his basic rate" (hourly, daily or weekly-rated) or "one half month's pay" (monthly-rated).
• Service of "five years or more": in addition, "three weeks pay" or "three quarters month's pay" respectively "for the fifth year and for each succeeding completed year of service".

The first 4 years stay at the lower rate. A part year is paid "on a pro rata basis" (s 18(4)). There is no cap. The Minister may vary these amounts by Order (s 20), but none has been made.

Example. A monthly-rated worker on a basic rate of TT$8,000 a month, retrenched after exactly 10 completed years' continuous service, is owed at least $16,000 for years 1 to 4 (4 × $4,000) plus $36,000 for years 5 to 10 (6 × $6,000). That is $52,000, or 6.5 months' basic pay.

Proposed changes. The Retrenchment and Severance Benefits (Amendment) Bill 2026 would raise these rates and change the notice rules. It passed the Senate on 24 April 2026 but, as at 22 September 2026, had not been passed by the House of Representatives. If it is passed, it will come into force only on a date fixed by Proclamation. This page states the law now in force.

When severance is paid, withheld or disputed

Severance is payable when "any part of the employer's retrenchment proposals is eventually put into effect" (s 18(1)).

• Absorption. If the proposals provide for absorbing the worker into another business of the employer or its successor, the employer may withhold severance and instead pay 50% of basic salary, for up to 3 months or until the worker is absorbed or finds other work. Those payments are deducted from any severance later due (s 19).
• Refusal. Severance "may be withheld" if the worker "unreasonably refuses" an offer of "comparable and suitable employment without any break in service" from the employer or its successor (s 21).
• Non-payment. If severance is unpaid 30 days after the notice expires, the worker may apply to the Industrial Court through the recognised majority union or, if there is none, "through the Minister or through any union" (s 22). Unpaid severance is also deemed a trade dispute (s 23(2)), so to be safe act within 6 months of the due date.
• Other disputes, such as a claim that the retrenchment was really an unfair dismissal, may be reported to the Minister as a trade dispute (s 23) by the employer, the recognised majority union or, where there is none, a union of which the worker is a member in good standing, but not more than 6 months after the issue first arose unless the Minister extends the time (Industrial Relations Act, s 51(1), (3)).