Union rejects proposal to scrap severance pay, shift burden to VNPF
October 9, 2025 10:17 pm | Posted in Business News | Share now TwitterFacebook
By Stella Leo.
The Vanuatu National Workers Union (VNWU) has strongly opposed the latest proposal by the Vanuatu Chamber of Commerce and Industry (VCCI) to amend the VNPF law by eliminating severance pay and instead increasing employer contributions to the Vanuatu National Provident Fund (VNPF).
Describing the proposal as irresponsible, misleading, and dangerous, VNWU spokesperson Mr. Joe Harry Karu said the union will not support any strategy that undermines workers’ rights by trading away hard-earned benefits under the guise of reform.
“If changes are needed, they must also be made in the Employment Act,” explained Mr. Karu.
“Severance pay is not a privilege. It is a legal right. What the Chamber is proposing is not reform. It is a betrayal of the workers of this country,” he said.
Severance is not negotiable
The union argues that severance pay, as mandated under Section 56 of the Employment Act, exists to protect workers upon termination, whether through redundancy, resignation, or dismissal, and must not be replaced or reduced by any increase in VNPF contributions.
“VNPF is a long-term retirement fund. Severance is immediate compensation for loss of employment. The two are not interchangeable, and confusing them is either a mistake or a deliberate attempt to cheat workers out of what they are owed,” Karu said.
The VNWU insists that severance pay must remain intact as a direct form of compensation to employees who lose their jobs, particularly in a country where job security is fragile and the informal economy is growing. The idea that employers can simply pay more into VNPF and avoid their severance responsibilities is, according to Karu, deeply flawed and unethical.
“You cannot erase a worker’s legal entitlements by shifting the burden into a retirement fund they might not access for decades. That is not fairness. It is exploitation dressed up as policy,” he said.
The VNWU believes the Chamber’s proposal is not only about reducing costs for employers but also a veiled attempt to legitimise years of noncompliance with existing severance laws.
“Let’s be honest. This is about covering tracks. For too long, some employers have paid illegal ’13th month salaries’ and called it severance. Now they want to legalise that practice by rewriting the law. We will not let them get away with it,” Karu warned.
He further challenged VCCI to be transparent with its motives and engage in real dialogue with workers rather than pushing policies that benefit only the private sector.
Workers must stand firm
The VNWU is now calling on all workers, unions, and civil society to reject any attempt to eliminate severance pay and warns that such a move could lead to widespread labour unrest and increased inequality.
“We will fight this, not just in the media or behind closed doors, but in Parliament, in the streets if necessary, and wherever workers need a voice. Severance is a promise this country made to its workers. That promise must be kept.”
Severance pay is justice, not a bargaining chip
The VNWU says severance pay is not a financial burden. It is a moral and legal obligation. The Union believes any attempt to erase it by increasing VNPF contributions is an attack on worker dignity. It is drawing a clear line, saying workers are not disposable, and their rights are not for sale.
