Severance payments may take the form of:

  • Marriage Gratuity
  • Contract Gratuity
  • Compulsory Retirement
  • Retirement due to ill health / medical grounds


Contract Gratuity arises where a person was employed on contract for a specific period. Where this employment is terminated in accordance with the terms and conditions provided in the contract, a gratuity may arise. This payment must be provided for in the contract.


Payments of these sums can only be made by the Accountant General after approval has been received from the Inland Revenue Department.


Where an individual is due to receive payment in respect of compulsory retirement, early retirement or seeks permission for medical reasons approval in respect of payment benefits must be granted by the Inland Revenue Department.




Prior to making the payment the relevant Ministry sends the necessary information to the Accountant General whose responsibility it is to request the Income Tax Clearance. The approval from the Department can only be granted where an individual has filed all his or her Income Tax Returns and cleared all outstanding liabilities.


Individuals are therefore requested to bring in all outstanding Returns and pay all outstanding sums. Where these payments cannot be made, a Garnishee Order will be issued to deduct such sums prior to the payment of any sums due to the individual.


Provided that Income Tax Returns are filed and all liabilities are cleared, the Inland Revenue Department will issue an Income Tax Clearance authorizing payment and indicating how much tax is to be withheld in accordance with the PAYE Regulations.

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Ⓒ2013 Inland Revenue Department, Government of Saint Lucia.