Redundancy pay and death in service benefits are the most substantial components of terminal benefits in Zambia - both use the generous formula of two months' basic pay for each completed year of service. This explainer covers exactly what the law requires, who qualifies, and what exemptions exist.
Use our terminal benefits calculator to compute redundancy or death in service payments for any salary and tenure.
Redundancy pay under Section 55
Section 55 of the Employment Code Act No. 3 of 2019 provides for redundancy pay when an employee's position is abolished - meaning the employer no longer needs the role, regardless of the employee's performance.
What counts as redundancy?
Redundancy occurs when your employer terminates your employment because:
The business is closing down or reducing its workforce
Your specific role is being abolished due to restructuring
Technological changes have made your position unnecessary
The employer is relocating and you cannot move with them
It is not redundancy if you are dismissed for poor performance, misconduct, or if your fixed-term contract simply expires without renewal.
The redundancy pay formula
The statutory formula is straightforward:
Redundancy pay = Basic monthly pay x 2 x Completed years of serviceThis means an employee who has worked for 5 years at K15,000 basic pay receives:
Redundancy pay = K15,000 x 2 x 5 = K150,000Key point: Only completed years count. If you have worked for 4 years and 11 months, the calculation uses 4 years. Partial years are not pro-rated for redundancy pay.
Notice requirements for redundancy
The Employment Code imposes specific notice requirements on employers declaring redundancies:
30 days to the employee: The employer must give the affected employee at least 30 days' written notice of the redundancy
60 days to the Labour Commissioner: The employer must notify the Labour Commissioner at the Ministry of Labour at least 60 days before the redundancy takes effect
If the employer fails to give 30 days' notice to the employee, they must pay notice pay in addition to the redundancy pay.
When must redundancy pay be paid?
The employer must pay all redundancy benefits on or before the employee's last working day. Failure to pay on time entitles the employee to lodge a complaint with the Labour Commissioner, who can order payment plus interest.
Death in service benefits under Section 54(1)(e)
If an employee dies during the course of their employment, the employer must pay severance to the deceased employee's estate. This applies regardless of whether the death was work-related.
The formula
Death in service severance uses the same formula as redundancy:
Death in service pay = Basic monthly pay x 2 x Completed years of serviceExample: An employee earning K20,000 basic pay who dies after 7 years of service:
Death in service = K20,000 x 2 x 7 = K280,000Who receives the payment?
The payment goes to the deceased employee's estate. In practice, this means:
If a will exists - the named executor handles the funds
If no will exists - the Administrator General or a court-appointed administrator distributes the estate according to the Intestate Succession Act
The employer cannot pay directly to a spouse or family member without proper legal authority
Additional entitlements on death
In addition to the two months per year severance, the estate is also entitled to:
Any outstanding leave pay (accrued but untaken leave)
Pro-rata gratuity if the contract provided for it
Any unpaid salary up to the date of death
NAPSA survivor benefits (separate from the employer's obligation)
Exemptions and exclusions
Not all employees qualify for redundancy or death in service benefits. The Employment Code excludes:
Casual employees: Workers engaged on a day-to-day basis without a continuous contract
Probationary employees: Workers still within their probation period (typically 3-6 months)
Bankruptcy situations: If the employer is declared bankrupt, redundancy claims rank as preferential debts but payment depends on available assets
Fixed-term contract employees do qualify for redundancy pay if they are made redundant before their contract expires. The expiry of a fixed-term contract itself is not redundancy.
Worked example - redundancy with all components
An employee made redundant after 8 years, earning K18,000 basic pay with K4,000 in regular allowances (K22,000 total), with 40 days of outstanding leave:
Redundancy pay = K18,000 x 2 x 8 = K288,000
Notice pay (30 days) = K22,000 / 26 x 30 = K25,384.62
Leave pay (40 days) = K22,000 / 26 x 40 = K33,846.15
Gross total = K288,000 + K25,384.62 + K33,846.15 = K347,230.77Note: Redundancy pay uses basic pay only. Notice pay and leave pay use the full remuneration (basic + allowances). This distinction is important and often misunderstood.
Frequently asked questions
Can my employer offer me a lower redundancy package than the statutory minimum?
No. The two months per completed year formula is the legal minimum. Your employer cannot offer less, even if you sign an agreement accepting reduced terms. Any such agreement would be void under the Employment Code. However, employers can and do offer more generous packages - particularly for senior employees or as part of voluntary redundancy programmes.
What if the company cannot afford to pay redundancy?
The employer's financial difficulties do not extinguish the obligation. If they cannot pay immediately, you can file a claim with the Labour Commissioner. If the company enters liquidation, redundancy claims are treated as preferential debts - meaning they are paid before ordinary creditors. However, if assets are insufficient, you may not receive the full amount.
Does death in service pay apply if the death was not work-related?
Yes. Section 54(1)(e) applies regardless of the cause of death. Whether the employee dies from illness, an accident outside work, or any other cause, the two months per year severance is owed to the estate. The only requirement is that the employment relationship was still active at the time of death.
For the full picture of all terminal benefit components including tax calculations, see our guide to calculating terminal benefits in Zambia. For notice and leave pay specifics, read Notice pay and leave pay in Zambia.