Redundancy
Redundancy is a shadow which now hangs over all employees, from the top of the organisation to the bottom. The word figures prominently in the media and in general conversation, yet in the many years of full employment, which could come so abruptly to an end, it was hardly heard, so its meaning and consequences may not be widely understood.
The consequence of redundancy may not be grave where it is due to an organisation failing within a thriving economy; those declared redundant find jobs elsewhere. But, the consequence of redundancy in a recession, which we face now, is grave, for the redundant employee will find it hard to secure another job and he or she may become unemployed for a long time, which is damaging to them and to their families.
Locally, the closure of Woolworths and the redundancy of its staff has raised a political question about redundancy, which is whether the States should legislate to provide compensation to those who are made redundant. In the UK, an employee who is made redundant has a statutory entitlement to redundancy compensation, payable by the employer or by the government if the employer is bankrupt. By contrast, in Jersey there is no such statutory entitlement,.
There is plenty of room for debate on whether or not the States should legislate to provide some assistance for those made redundant, and if so, what assistance should be provided: should the payment come from the employer, or from the States? Should the amount be fixed, or dependent upon variables such as length of the employment and earnings, and so on?
The view may be taken that in Jersey this is too small a problem to require legislation, but such a view may only be justifiable if there is a social security package sufficient to ensure that those made redundant do not suffer catastrophic consequences, such as loss of their home. The reality is that redundancy compensation normally only provides some short-lived reduction in the unhappy consequences of redundancy; and can relieve the short term financial impact.
Unemployment and redundancy are unfamiliar problems in Jersey, and, not surprisingly, we are ill-prepared for them. It will be interesting to see, in the next few months, how the States deals with these issues. As we have seen from the media, redundancy is a fact of life now, and if anything is to be done to require employers to provide redundancy compensation, urgent action may have to be taken. If it is not, the majority of redundancies may happen without any provision for compensation, before the necessary legislation has been passed. If the States does legislate, it is probably too late for the companies which already have declared redundancies to be made to pay compensation, so the States will have to decide whether to step in to provide the compensation in those cases. If action is to be taken requiring employers to compensate for redundancies it will have to be implemented swiftly, before too many more redundancies occur.
The Employment (Jersey) Law 2003 deals with redundancy, but only in the context of unfair dismissal. Essentially, what the law does is describe what is and what is not a genuine, or fair, redundancy. If an employee is dismissed for redundancy and it is not a genuine redundancy, it is an unfair dismissal, and the law provides for a fixed scale of compensation for unfair dismissals, depending upon the length of the employment.
The maximum compensation to be paid by the employer is 26 weeks pay if the employment has been for more than five years. An order for compensation is made against the employer, and unlike in the UK, there is no provision for the States to step in if the employer goes bankrupt and is unable to pay the statutory compensation. If the redundancy is genuine and the employer has acted reasonably, it is, under the Law, a fair dismissal, so the employee who genuinely is made redundant in Jersey is not entitled to any statutory compensation, but only to proper notice for the termination of his employment, or payment in lieu of notice.
Article 61(1) of the Law states "An employee shall have the right not to be unfairly dismissed by his employer." What the Law does in its redundancy provisions is to prevent an employer pretending that its dismissal of an employee is due to redundancy when in fact it is for some other reason which under the law would be unfair, and would attract a compensation payment. Not only does the employee have the right not be unfairly dismissed, but when an unfair dismissal claim comes before the Employment Tribunal, it is for the employer to show what the reason was for the dismissal, and to show that it is a reason defined by the law as fair. One of the reasons defined in the Law as a fair reason for dismissal is redundancy.
Redundancy is defined in article two of the Law and broadly it occurs when the business ceases, or where the business continues but the requirement for a particular type of work to be done comes to an end (for example, it might concern a furniture salesman when a department store stops selling furniture).
In normal circumstances the Law does well in protecting employees from unfair dismissal, and that includes protecting them from ’false’ redundancies. If the employer does not satisfy the Tribunal as to the reason for the dismissal, the dismissal will be unfair. If it does satisfy the Tribunal that the reason was genuine redundancy, the employer still has a hurdle to jump. Article 64(4) of the Law provides that, once a genuine redundancy has been shown, the determination of whether the dismissal was fair or unfair depends upon (a) whether the employer acted reasonably in treating it as sufficient reason for dismissal and (b) the equity and substantial merits of the case.
It is in relation to article 64(4) that the requirements for a fair redundancy procedure arise. These requirements simply require that in the process of determining whether there has to be a redundancy, and if so, who will be the unfortunate employee, the employer must be fair. An example might be: if a large building contractor found that it did not have enough shopfitting work to keep its shopfitters fully employed, it should see what else they could do, and if redundancies are inevitable, it must use a fair system for choosing which employees are to be made redundant, taking into account factors such as length of service, competence, and so on. The requirements which would apply to a large employer might not apply to a small one: a garage which stops spraying cars almost certainly will have no choice but to declare its one sprayer redundant, unless there is some other job he can do.
The employer who believes that it may have to make staff redundant must think and plan carefully before acting, to ensure that it acts in accordance with the Law and with a view to protecting its employees as far as possible given the shortcomings in the Law.
A sensible first step for an employer who does not have access to professional human resources advice is to consult the Jersey Arbitration and Conciliation Service (JACS). Redundancy should be something of a last resort, not just because of the Law, but as a matter of human decency. More often that not, it is a terrible blow for the employee and his family, and that blow can be slightly softened if proper redundancy procedures are followed, so the employee is consulted and informed, and so he (or she) knows that there was no alternative.