Termination, severance and redundancy in Rwanda: legitimate reasons, the 15-day and 30-day notice periods, protected employees, gross misconduct and the 48-hour notice, dismissal for economic or technological reasons, terminal benefits of two to seven months' salary, unfair-dismissal damages, final pay and the certificate of rendered services

How employment ends under the Labour Law

Termination is governed by Section 2 of Chapter II of Law N° 66/2018 of 30/08/2018 regulating labour in Rwanda (the Labour Law), as amended by Law N° 027/2023 of 18/05/2023, and by the Ministerial Orders of 17 March 2020 made under it. The Law recognises only two kinds of contract, fixed-term and indefinite (Employment contracts and probation), and the ways in which each can end differ. A fixed-term contract ends automatically on its expiry date; before then it may be ended by mutual consent or by a party with legitimate reasons, and an employee who keeps working after expiry without a written renewal is paid for the days worked (Article 28). An indefinite contract may be terminated by either party 'for legitimate reasons' (Article 27).

The Law does not list what counts as a legitimate reason. It defines unfair dismissal as termination by the employer 'without legitimate reasons or respecting procedures provided for by law' (Article 3(17)), so a dismissal can be unfair either because the reason is inadequate or because the procedure was not followed. In practice the recognised reasons are the employee's conduct or performance, documented through the employer's disciplinary process; gross misconduct; the employer's economic or technological circumstances; prolonged sickness after the six-month period in Article 55; and retirement. Other endings are expiry of a fixed term, resignation by the employee with notice, mutual agreement, an unsuccessful probation evaluated in writing (Article 13), and death.

Two points distinguish Rwandan law from many other systems. First, there is no statutory pre-dismissal hearing: the Law requires written notice with reasons, and the employer's rules of procedure and the disciplinary sanctions in Article 42 (warning, reprimand, suspension of up to eight days without pay, and dismissal) supply the internal process. Some summaries describe an 'opportunity to respond' as a legal requirement; it is good practice and often written into rules of procedure, but it is not in the Law. Second, the Law applies the same procedure to individual and collective economic dismissals, with no headcount threshold that triggers a separate collective process.

Notice and pay in lieu

Subject to a collective agreement, the rules of procedure or the contract, Article 24 sets the minimum notice for either party at 15 days where the employee has served less than one year and 30 days where the employee has served more than one year. Notice must be given in writing and must state the reasons for termination (Articles 24 and 29), and the parties continue to perform the contract during the notice period. During notice given by the employer, the employee may be absent one day a week to look for a new job. Notice is not required where the parties so agree (Article 29), which is the basis for a negotiated exit.

A party that terminates without notice, or without observing the full notice period, must pay the other the compensation in lieu of notice provided for by the Law (Article 25), in practice the salary for the notice period not worked. The rule applies to employees as well as employers: an employee who walks out without notice owes compensation. Notice periods longer than the statutory minimum, common for senior managers, are lawful and should be written into the contract.

No notice may be given during the probation period, and the employer may not terminate the contract while the employee is suspended or on leave (Article 24). An employee whose probation is unsuccessful leaves without notice or terminal benefits, but only on the basis of a written evaluation (Article 13).

When dismissal is barred

Several protections cut across the general rules. An employer may not terminate an employee's contract while the employee is suspended or on leave, including annual, sick, maternity and circumstantial leave (Article 24). Article 24 bis, inserted by Law N° 027/2023, prohibits dismissal of a female employee on the ground of pregnancy, and no notice may run during maternity leave, after which the employee returns to the same post (Article 61). An employee may not be dismissed as a result of an occupational accident unless a recognised doctor declares him or her unfit to resume the previous job; if the employee can work again in another capacity, the employer must offer suitable alternative employment and, failing that, terminates with the benefits the Law provides (Article 19). It is prohibited to dismiss an employee for having reported or testified on sexual harassment by a supervisor, and where there is tangible evidence that an employee resigned because of a supervisor's sexual harassment, the resignation is treated as unfair dismissal (Article 8). Discrimination in dismissal on any ground in Article 9 is prohibited.

Employee representatives, members of the occupational health and safety committee and trade union representatives dismissed because of their representative role receive enhanced damages of up to nine months' net salary (Article 30). A lawful strike does not entitle either party to terminate the contract (Article 107), whereas an illegal strike is itself gross misconduct (Workplace rules, unions and labour disputes).

Suspension is not termination but often precedes it. During an administrative investigation the employer may suspend the employee in writing for up to 30 days without pay, with the salary calculated and retained and paid if the employee is cleared (Article 20). Article 18 lists other grounds of suspension, including a disciplinary lay-off of eight working days, a prison sentence or provisional detention of up to six months, and suspension of the enterprise's activities for force majeure. For economic or technical reasons the employer may lay employees off for up to 90 days in any one year; when that period expires the employee is considered dismissed and receives terminal benefits (Article 21).

Gross misconduct: the 48-hour rule and the Ministerial list

Article 26 allows the employer to terminate without notice for gross misconduct, but the employer must notify the employee in writing, specifying the grounds, within 48 hours of the evidence of the misconduct coming to light. A dismissal letter sent later is vulnerable to challenge as unfair even if the misconduct is proved. Ministerial Order N° 002/19.20 of 17/03/2020 establishing the list of gross misconduct lists fifteen acts: theft; fraud; fighting at the workplace; drinking alcohol at the workplace; being on duty under the influence of alcohol or drugs; falsification; any form of discrimination at the workplace; sexual harassment; soliciting, offering or receiving bribes or illicit benefits; embezzlement; unlawfully obtaining or disclosing confidential professional information; behaviour that may endanger the health and safety of others at work; gender-based violence at the workplace; illegal strike; and intentional destruction of equipment.

Article 3 of the Order allows an employer to add further acts suited to the nature of its business, but only if the Minister in charge of labour approves them before implementation; the approved list is then incorporated in the rules of procedure and notified to employees in writing. An employer that simply writes 'repeated lateness' or 'breach of IT policy' into its handbook as gross misconduct, without approval, cannot rely on Article 26 for those acts and must give notice. A dismissal for gross misconduct carries no notice and no Article 31 terminal benefits, but accrued annual leave and other final dues remain payable.

Dismissal for economic reasons or technological transfer

Under Article 21 the employer may, after informing the employees' representatives in the enterprise, carry out individual or collective dismissals for internal reorganisation or restructuring for economic reasons, or for technological transfer, with the aim of preserving the enterprise's competitiveness, and must inform the competent labour inspector in writing. The employees to be dismissed are placed on a list according to four criteria: performance, professional qualification, experience in the enterprise and legally recognised dependants. The Law sets no minimum consultation period and no headcount threshold, but the inspector can examine the selection and the representatives' information, so the file should show how each criterion was weighed.

A worker dismissed for economic or technical reasons is entitled, for six months after dismissal, to be re-engaged without competition when the employer seeks to fill a position for which he or she has the required profile (Article 22). Before closing or relocating an enterprise, the employer must also declare it to the labour inspector at least 15 days in advance (Article 116). Where the enterprise's legal status is modified, contracts in progress remain valid between the new employer and the existing employees and may be terminated only under the Law (Article 15), but an employment contract cannot be transferred from one employer to another without the employee's consent (Article 16), which matters on an asset sale (Acquiring a Rwandan company).

Terminal benefits and retirement benefits

Article 31 gives an employee who has served at least 12 consecutive months a right to terminal benefits when the contract is terminated for economic reasons, technological transfer or sickness. The scale in the table is a floor; a collective agreement or contract that is more favourable prevails. The same benefits are due to an employee whose contract ends after six months of sickness because he or she cannot resume work, and to an employee deemed dismissed after 90 days of economic lay-off (Article 21). A retiring employee receives retirement benefits calculated in the same way, but retirement and terminal benefits are not cumulative (Article 32).

Terminal benefits are not due on dismissal for gross misconduct, on an unsuccessful probation, on resignation or on the expiry of a fixed-term contract, because none of these is a termination for economic reasons, technological transfer or sickness. Several commercial summaries quote a scale of one to six months; the Law's floor starts at two months. Older summaries also describe notice as rising steadily with service; it has two tiers only. The tax treatment of terminal benefits should be checked against the income tax rules in Personal income tax, PAYE and expatriates.

Unfair dismissal damages and the employee's own liability

Under Article 30 an unlawful termination gives rise to damages. For an employee who is the victim of unfair dismissal the damages may not be less than three months' salary or more than six months' salary; where the employee has more than ten years' service with the same employer, they may not exceed nine months' net salary, and the same nine-month ceiling applies to representatives dismissed for their representative role. The court fixes the amount within the band. Article 31 applies 'without prejudice to other provisions' of the Law, which supports the view that where an economic dismissal is found unfair because the procedure was not followed, the employee may claim both the terminal benefit and damages; the Law does not say so expressly.

The scale also runs the other way: the damages rules apply where an employee unlawfully terminates the contract. Other remedies sit alongside: compensation in lieu of notice (Article 25), illegal deductions bearing interest at the National Bank of Rwanda (BNR) average rate (Article 74), and one month's salary in damages if the employer fails to issue a certificate of rendered services within 15 days of a written request (Article 34). Claims lapse after two years from the date the dispute arose, interrupted by a written demand or a referral to the representatives, the labour inspector or the court (Article 104), and must normally pass through conciliation before the labour inspector first (Workplace rules, unions and labour disputes).

A lawful dismissal for economic reasons, step by step

1. Document the business caseRecord the economic, restructuring or technological reasons and why the post or posts are affected; the reason must preserve the enterprise's competitiveness (Article 21).
2. Check the protectionsExclude or treat separately employees on leave, suspended, pregnant, on maternity leave or recovering from an occupational accident (Articles 19, 24, 24 bis and 61).
3. Inform the employees' representativesExplain the reasons, the number of posts and the selection criteria to the representatives elected under Ministerial Order N° 003/19.20 before any notice is given.
4. Apply the four selection criteriaRank the affected employees by performance, professional qualification, experience in the enterprise and legally recognised dependants, and keep the scoring sheet.
5. Inform the labour inspector in writingSend the district labour inspector a letter with the reasons, the list and the criteria; keep proof of delivery.
6. Give written notice with reasonsServe each employee written notice of at least 15 or 30 days stating the reasons, or pay compensation in lieu (Articles 24, 25 and 29); allow one day a week for job-hunting.
7. Pay within seven working daysPay terminal benefits, accrued leave and final salary within seven working days of the dismissal (Article 31); and issue the certificate of rendered services.
8. Honour the six-month re-hire priorityOffer any vacancy that matches a dismissed employee's profile to that employee for six months (Article 22). For a foreign employee, inform DGIE in writing.