How is redundancy pay calculated in Jamaica?

A common basis under the Redundancy Payments Order 1971 is 2¼ × average salary (over the last three years) × years of service ÷ 33⅓. Entitlement depends on qualifying service. Always confirm an employee's specific entitlement and the current law with a qualified adviser or the Ministry of Labour.

Is redundancy pay taxed in Jamaica?

A portion of a genuine redundancy payment is tax-free; any amount above the tax-free portion is taxed in the normal way as part of the employee's emoluments. Brawta separates the tax-free part automatically when you process the payment.

Does redundancy go on the P45?

Process the redundancy payment in the employee's final pay; the tax-free portion is recorded separately and any taxable excess is included in emoluments, so the P45 reflects the full year-to-date position.

Redundancy Pay in Jamaica — How It's Calculated & the Tax-Free Portion (2026)

Important: redundancy entitlement and tax treatment depend on the specific circumstances and current law. This is general guidance — confirm an employee's entitlement with a qualified adviser or the Ministry of Labour and Social Security, and the tax treatment with TAJ.

The calculation

A common basis under the Redundancy Payments Order, 1971 is:

2¼ × average salary (last 3 years) × years of service ÷ 33⅓

Entitlement depends on qualifying service. The figure this produces is the redundancy payment; how much of it is tax-free is the next question.

The tax-free portion

A portion of a genuine redundancy payment is tax-free. Any amount above the tax-free portion is treated as normal emoluments and taxed in the usual way (PAYE and the other statutory deductions, as applicable).

Brawta separates the two for you: when you process a redundancy payment in the final pay, it keeps the tax-free part out of the tax base and taxes only the excess — so the payslip, the P45 and your returns all reflect it correctly.

Putting it on the final pay & P45

Process the redundancy in the employee's final pay run.
The tax-free portion is recorded separately; any taxable excess is included in emoluments.
Produce the P45 afterwards so it carries the complete year-to-date figures.

Handle redundancy correctly, the first time.

Brawta splits the tax-free portion from the taxable excess automatically and flows it through the payslip, P45 and your returns. Private on your own machine. Free to try.

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