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Employer beware!

On 1st January 2011 a significant amendment to the Employment (Jersey) Law 2003 came into force, which granted greater protection to redundant employees. The key changes were the introduction of statutory redundancy pay, revised periods of notice and the provision of time off work for redundant employees to seek alternative employment or undertake training.

A further amendment to the Employment Law is currently awaiting the approval of the Privy Council. This will include a change to the qualifying requirements for claiming a statutory redundancy payment. In addition, it is proposed that there will be no entitlement to a statutory redundancy payment where an employee unreasonably refuses an offer of suitable alternative work, and an obligation on the employer to consult with an employee representative in certain redundancy situations. Should the employer not meet this obligation, the employee representative will have the right to claim a protective award.

Qualifying requirements for claiming statutory redundancy pay

Statutory redundancy pay is calculated as one weeks’ pay per year of service. There is an upper limit on the value of a weeks’ pay, which is based on the average weekly earnings in Jersey as published by the States of Jersey Statistics Unit, which is presently £630 per week.

Currently, to qualify for a statutory redundancy payment an employee must have a minimum of two years’ service and must have worked eight hours per week or more. The proposed amendment will remove the latter requirement so that those who have two years’ continuity of service would be entitled to claim a statutory redundancy payment, regardless of the number of hours worked per week.

Offer of suitable alternative work

Essential to the fairness of a redundancy process is that the employer has considered whether it can find suitable alternative employment for the redundant employee. Otherwise the employee may have a claim for unfair dismissal against the employer.

Since 1st January 2011 where an employer, before termination of employment, offers to renew the redundant employee’s contract of employment or to re-engage the employee under similar terms, to commence within four weeks of termination of employment, the employee is not entitled to a statutory redundancy payment. The employer or employee may terminate the new contract where either party consider the work unsuitable for the employee.

Under the proposed amendment an employee who “unreasonably refuses” an offer of “suitable” alternative employment would forfeit their right to a statutory redundancy payment.  In disputed cases it would be for the Employment Tribunal to decide whether the employment offered to the employee was suitable for the employee and whether the employee unreasonably refused the offer.

In considering the issue of suitability, the Tribunal is likely to consider factors such as the employee’s skills and aptitude and how the terms of the new job offer differ from the old job in terms of status, job description, pay, hours and responsibility. When considering whether the employee’s refusal of the offer was unreasonable, the Tribunal is likely to consider the circumstances under which the offer is made, the duration of the employment offered and the employee’s personal circumstances.

Collective consultation

Where an employer fails to consult individually with employees in a redundancy situation this may render a dismissal by reason of redundancy unfair. The proposed amendment to the Employment Law will go a step further and place a statutory obligation on employers to consult with employee representatives where the employer is “proposing” to make 12 or more employees in “one establishment” redundant in 30 days or less.

Employee representatives may either be union representatives, or where there is no union recognised, the amendment sets out a procedure for electing an employee representative and the information that the employer must provide to the employee representative.

Where an employer fails to consult collectively, the employee representative may apply to the Tribunal for a protective award of nine weeks’ wages, per employee.

We are likely to see further amendments to the Employment Law in the not too distant future.  In particular, the £10,000 limit on claims to the Employment Tribunal, other than in respect of unfair dismissal, is likely to be increased.  In the meantime, it seems possible that redundancy claims which exceed the Employment Tribunal £10,000 limit may be dealt with by the Royal Court, however, the first claim has yet to be brought.

As employment relationships in Jersey become more regulated, there is an ever-increasing need for employees and employers to take advice on their rights and obligations through JACS and/or their legal advisers.

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