TERMINAL BENEFITS UPON DEATH OF AN EMPLOYEE

Published by Kemilembe D. Barongo

Protection of the rights and interests of employees throughout the enforcement of their contracts has been a key pillar of international labor and employment law all over the world. However, there are instances whereby employment contracts may be terminated automatically time due to unforeseen circumstances such as death or grave illness.

In such instances, the employees shall be entitled to their statutory benefits and the benefits should be disbursed by the employer to the administrators of the deceased’s estate as according to the law.

An employer has to provide the following terminal benefits of the employee to the administrator of the deceased’s estate:

a)    Any unpaid remuneration for work done by the deceased before the termination;

If any unpaid remuneration is due, it shall be disbursed by the employer as a terminal benefit.

b)    Any annual leave pay due to the deceased for leave that the deceased has not taken; as provided for in section 31 (7) of the Employment and Labor Relations Act R.E. 2019 which states,

“an employer shall pay the employee one month salary in lieu of annual leave”

c)    Any annual leave pay accrued during any incomplete leave cycle; as provided for in section 31(8) of the Employment and Labor Relations Act R.E. 2019 which states

“An employer shall pay an employee a pro rata amount for annual leave accrued- at the termination of employment”

d)    Severance pay and transport allowances that were due to the employee.

As provided for under rule 26 of the Employment and Labor Relations (Code of Good Practice) Rules 2007 which states that when an employment contract terminates,

“the employer shall pay the employee severance pay at least equal 7 days basic wage for each completed year of continuous service with that employer, up to a maximum of 10 years.”

 

Compassionate benefits

The employer may also grant any compassionate benefits that are due under the policy of the company regarding terminal benefits upon death. Each company has different policies on how they handle the death of their employees. Thus, depending on the company policy, the employer may be required to grant some funeral benefits or survivor benefits subject to the rates described in the policies. If the policy does not prescribe a specific benefit or rates, then any other terminal benefits the employer may decide to give shall be subject to the employer’s discretion.

Other Statutory Entitlements

But also, the employer has the obligation to notify all benefit providers (i.e., retirement, health, welfare) such as the NSSF, WCF of the employee’s death and ensure that all benefits due from the employer are terminated as of the deceased employee’s last day.

NSSF benefits

After the employer notifies the benefit providers of the death of the deceased, the dependent relatives of the employee shall be entitled to an NSSF funeral grant as provided for in section 38 of the National Social Security Fund Act R.E. 2018 which provides that,

“A funeral grant shall be paid as reimbursement to a family member who incurred expenses for the burial of a deceased insured person. The amount payable as funeral grant shall be determined by the Board from time to time having regard to the general economic conditions.”

Apart from this the NSSF provides a special lump sum payment to the dependents where a deceased insured person does not satisfy the qualifying conditions for a survivor’s grant.

A survivor’s grant is specifically for deceased persons who were already receiving the old age or invalidity pension fund, and thus the dependents are entitled to survivors' benefit. This means that this specific grant is limited to the deceased having attained old age or permanent invalidity.

Employers should always ensure that all the benefits due to the employee are disbursed as provided for under the labor laws but also that the right parties are given the benefits that are due.

Most times the dependents of the deceased may request for the benefits before the administrator of the estate but the legal disadvantage of this is that if the transactions are not documented the client may be in danger of disbursing the funds to the administrator again once the administration of the estate begins.