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New year, no job? Redundancy and compromise agreements

The loss of one’s job can be a stressful event.

Even where this is through no fault of your own there may be feelings of bewilderment and loss of self-esteem. The three most common reasons for job losses are redundancy, misconduct and the incapability of the employee.

Redundancy Law in Jersey at present

As Jersey law stands there is no statutory entitlement to redundancy pay, though this is likely to change later in 2010. Therefore, an employee will not receive redundancy pay unless their contract of employment entitles them to it or the employer exercises its discretion to make a redundancy payment.

Notwithstanding this, employers must follow a fair and reasonable redundancy procedure, indentifying the basis upon which employees are selected for redundancy and ensuring that an appropriate consultation has taken place. Failure to do so may entitle an employee to bring a claim before the Employment Tribunal for unfair dismissal.

What employers need to ensure

In cases of employee misconduct the employer is required to follow a disciplinary procedure including a number of warnings (save in cases of gross misconduct). In situations where the employee may be incapable of performing the contract of employment either due to sickness related absence or lack of competence or skill a capability procedure must be followed.

These procedures can take months to complete. The employer will be keen to resolve matters quickly and efficiently. The employee may feel that it is time to move on. Generally the relationship of confidence and trust between the parties may have broken down. In such situations a Compromise Agreement may be the solution.

Compromise Agreement

A Compromise Agreement is an agreement between the employer and employee whereby the employer agrees to make a compensation payment to the employee in return for the employee undertaking not to bring certain claims against the employer, usually including a claim for unfair dismissal.

To be legally valid the Agreement must comply with the requirements of Article 79 of the Employment (Jersey) Law 2003. It should be in writing, specify the claims that the employee is agreeing to compromise and the employee must have obtained advice from an independent legal adviser as to the terms and effect of the Agreement, including the effect on the employee’s right to pursue claims before the Employment Tribunal.

Whilst the above is intended to be an accurate, albeit limited guide, it is no substitute for seeking proper legal advice or alternatively, you may seek advice or assistance from Jersey Advisory and Conciliation Service telephone: +44 1534 730503

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