Knowledge

15 years after the Employment (Jersey) Law came into force, the Bedell Cristin Jersey Employment team looks at the effect of the biggest stress test encountered yet by the Law: Covid-19.

With Jersey slowly embracing the 'new normal' in the coronavirus world, we are finally able to reflect on the challenges faced by the island's businesses throughout lockdown. Covid-19 put Jersey's employment laws under an extreme stress test and brought to light a number of problems, affecting employers and employees alike. Although the Employment (Jersey) Law 2003 (the "Law") was not designed with a pandemic in mind, it has fared reasonably well under pressure, but there is now a clear need for amendment. Despite the challenges, the Bedell Cristin employment team was able to identify a number of solutions for a variety of issues facing our wide range of clients. Below are some examples of the issues encountered and how we worked around these, all with the central focus of saving jobs:

Compulsory annual leave

Under the Law, all employees are entitled to a minimum of two weeks paid annual leave per year, as well as paid time off or time off in lieu on public and bank holidays. In certain instances, such as Christmas business closure, employers may contractually stipulate when employees are to take annual leave. Otherwise, the Law is silent on whether employers may direct when employees take annual leave.

With lockdown and widespread border closure, many employees did not want to use annual leave entitlement. Although understandable, this presented a real issue for employers, who did not want to be inundated with holiday requests in the latter part of 2020. This could present a problem for business continuity, and might result in requests being denied. As a result, employers were only able to encourage staff to take leave, or allow some entitlement to be carried over into 2021 and beyond.

Unlike Jersey, employers in the UK are able to compel workers to take annual leave (unless otherwise stipulated contractually), due to the Working Time Regulations 1998 ("WTR"). The WTR states that employers may order employees to take annual leave where they give sufficient notice. For the purposes of WTR, the notice period is twice the length of the holiday proposed. Therefore, where employers wish to make an employee take five days of annual leave, they must give ten days' notice. Although this is a legal reality on the other side of the channel, employers are reminded that this should only be used as a last resort as employees may not appreciate being forced to use annual leave at such short notice.

In Jersey, although employers are able to encourage their employees to use annual leave, the only alternative is including contractual provisions which grant employers the power to direct employees to use annual leave when they see fit. This variation must be clearly communicated in all company contracts, handbooks and policies.

Lay-off

Although this is a frequently used term colloquially, the Law in Jersey does not confer employers the automatic right to lay-off their employees. Nevertheless, the Jersey Employment and Discrimination Tribunal (the "Tribunal") has recognised its applicability when certain criteria are fulfilled. This is a useful employment concept, as it permits employers to send their employees home temporarily, without pay, when there is insufficient work, with the ultimate aim of avoiding redundancies.

At present, employees in Jersey may only be laid-off without pay, where this is an agreed, clear contractual term. In Ogden and Gregory v Cronin 1203-055/07, the Tribunal stated that "a provision that an employer may for a short time dispense with the services of an employee without pay would be a fundamental contractual term; such a term should be brought to the attention of the employee, not buried in a paragraph in the middle of a handbook". Where this is not present, or agreed, employers may lay-off employees, however this must be on full pay. Where employers lay-off staff without a contractual right to do so, they will have committed breach of contract, and employees may bring claims for breach of contract and unlawful deduction of wages, as appropriate.

Temporarily laying-off staff is a good way to avoid permanent redundancies, during unforeseen slow periods. On the other hand, it is a harsh measure against employees and its use should be kept to a strict minimum. Where an employer wishes to include lay-off provisions, contracts must be varied and agreed with employees. Moreover, where an employer wishes to invoke lay-off clauses, they must ensure that employee selection is fair, non-discriminatory and in accordance with the Discrimination (Jersey) Law 2013. The Tribunal has highlighted in recent judgments that any invocation of lay-off clauses must be clearly communicated to employees, as failure to do so may result in successful claims at Tribunal.

Short-time working

Another way of avoiding redundancies is by introducing 'short-time working', where an employee temporarily works less hours, for less pay. Just like lay-off, the Law is silent on short-time working. However, the Tribunal has not yet explored the issue. As a result, if employers wish to introduce short-time working provisions, envisaging situations such as those that have arisen as a result of the Covid-19 pandemic, this must be included as an express contractual term and clearly communicated to employees.

Early retirement

Under current Government of Jersey policy, the pensionable age is currently between 65 and 67 years old, dependent on the employee's year of birth. The Law does not stipulate an age of retirement, meaning employees may choose when they wish to retire. Moreover, the Discrimination (Jersey) Law 2013 grants protection against age-related discrimination. This mixture of issues may present a conundrum to employers who face an ageing workforce.

The key point to be made is that where there is no health and safety requirement for early retirement, an employer will not be able to force an employee to retire early. Even where this is a contractual term, it is unlikely that the Tribunal would uphold such a clause, given that age is a protected characteristic under the Discrimination Law. Employers must always err on the side of caution.

Sale of business as a going concern

Finally, it is clear that coronavirus will have an impact on the economic market for a long time after a cure or vaccine is created. One of the main consequences will be the closure and sale of many businesses. Whereas the UK benefits from the Transfer of Undertakings (Protection of Employment) Regulations 2006 ("TUPE"), Jersey does not have such legislation. TUPE acts to protect employees during the sale of a business and preserves their existing employment regime. Under this process, changes to terms of employment are only available in very limited situations. Moreover, where an employee is dismissed because their services are no longer required in the new organisation, this will amount to automatic unfair dismissal at the Tribunal. By comparison, the only protection afforded to Jersey employees when there is a change of employer is found in Article 58 of the Law. However, this Article is very limited in scope and only covers the continuity of the period of employment. It does not bind the purchaser to offer employment or grant any other protection for employees. As such, this opens the gateway to employees being treated as disposable assets, resulting in widespread job losses and instability.

Currently, the only way to preserve the employees' existing contracts upon sale of a business is by novation of contract across to the new employer. Unlike TUPE, where employees are transferred by operation of law, the novation method permits employees to decline the new job offer, thereby creating a legal fiction where the employee makes themselves 'redundant'. However, as confirmed in Armstrong v The Congregation of Little Sisters of the Poor – English Province [2019] TRE 131, where an employee is offered suitable alternative employment on identical terms and unreasonably refuses, pursuant to Article 60E(4) of the Law, they will not be entitled to a redundancy payment. Given that the employee's existing contract regime will be continuing, it is likely that any refusal is going to be deemed unreasonable.

By novating employees across to their new employer, there will be more protection for employees, as well as more job preservation, even where they are eventually made redundant. After the sale of the business, if redundancies are required, a redundancy consultation must be launched, and all necessary compensation paid.

Conclusions – time for reform?

In the 15 years since the Law's introduction, the world of employment has shifted significantly. Innovation has created jobs and working methods that were not envisaged at the beginning of the century, and will continue to do so. Widespread working from home was merely a pipe dream. Many processes have been streamlined, and many jobs continue to be lost to automation. As such, the Law is no longer adequate and leaves a lot to be desired in terms of clarity, certainty and consistency, which is resulting in larger numbers of Tribunal claims than ever before.

The coronavirus pandemic has shown that the Law has left many Jersey employers with little option but to make permanent redundancies. During the peak of the pandemic, it is estimated that Jersey unemployment figures doubled in just six weeks, to nearly 3000 islanders actively seeking work. Had the Law permitted employers to invoke measures such as temporary lay-offs, short time working and compulsory annual leave, many jobs could have been saved. Whilst these changes are not ideal for staff, it reduces the likelihood of widespread job losses and ensures that their role within an organisation will survive.

However, whilst the Law is under-developed and not as useful as it should be, there are ways to work around it, be it by contractual freedom, creative wording or ingenuity. Until the Government of Jersey reforms the Law, these will remain the only options. This will always be a delicate balancing act between the interests of the employer and the employee.

For all your employment law needs, contact the Bedell Cristin employment team.