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Jersey & Guernsey Law Review – June 2007

SHORTER ARTICLES AND NOTES

VOISIN v BROWN IN CONTEXT

Vicky Milner

Introduction

1       The Royal Court's judgment in Voisin v Brown[1](the "Voisin case"), of February 2007, is an important milestone in the development of Jersey’s employment law.  The Voisin case was the first in which a judgment of the Jersey Employment Tribunal (“the Tribunal") had been formally appealed to the Royal Court since the Employment (Jersey) Law 2003 (“the Law") came into force on 1 July 2005.  The judgment of the Deputy Bailiff underlined some fundamental issues about employment law and procedure.  The timing of the decision, as we approach the second anniversary of the implementation of the Law, makes it a useful starting point for a brief review.  This article sets out the legal background, and then deals with a number of current issues facing the Tribunal, before looking at the Voisin case itself.

The Jersey context

2       Jersey has, of course, had employment legislation for decades, regulating aspects of working life such as information to be set out in contracts of employment,[2] minimum notice periods[3] and health and safety matters[4].  There have also been a number of employment law cases, which have largely followed English precedent.  These have covered issues including summary dismissal (i.e. dismissal without notice),[5] mitigation of loss in breach of contract claims,[6] constructive dismissal[7] and restrictive covenants.[8]  

3       The Law introduced significant changes.  It consolidated and reformed existing employment legislation.  More fundamentally, it ushered in a raft of new measures to safeguard employees, including protection from unfair dismissal, the minimum wage, the right to statutory rest days, paid holidays and paid time off on bank and public holidays.  It also established the Tribunal, a statutory body to hear cases brought in relation to these and other matters, such as employment-related breach of contract[9] cases.

The first Tribunal case

4       On 24 October 2005 the Tribunal heard the first case brought under the Law, Almeida v Steak House Restaurant (2005).[10]  Almeida, a waiter, was summarily dismissed after asking his employer to provide him with written information about his pay and hours, so that he could assess whether or not he was being paid the minimum wage.  In some ways this case may be considered fairly typical of the matters passing through the Tribunal to date, and demonstrates the strength of the system.  It does provide a relatively quick, easy and cheap way for an employee who has been seriously wronged to receive compensation and public recognition that his dismissal arose through no fault of this own. 

Impact on an employer and costs

5       This does, of course, cut both ways.  A finding against an employer that he has unfairly dismissed a member of staff can have an overwhelming impact in a number of respects, including adverse publicity and damage to morale within the business.  As with most litigation, though, the most obvious impact for the employer is financial, both in respect of legal fees and management time spent in preparing for and attending at Tribunal hearings.  An employer does not need to be legally represented at a Tribunal hearing but many employers do seek representation, while most employees are litigants in person.  The Tribunal process itself imposes burdens on the employer.  For example, para. 3.2 of the Jersey Employment Tribunal Procedures[11] states that "where the claimant is not represented by a lawyer but the employer is, the employer shall be required to compile the bundle".  Six "good quality" copies of the bundle are required, paginated and indexed.

6       The Tribunal issued some practice directions entitled the Employment Tribunal Regulations (“the Regulations") which came into force on 1st October 2005.  These Regulations originally stated, at para. 15.1 -

"The Tribunal may order one party to make a payment towards the costs incurred by another party in relation to proceedings.  Such order shall only be made if the Tribunal decides that the conduct of the paying party has been frivolous or vexatious."

7       The Regulations have since been amended (although no details are given within the re-drafted Regulations found on the Tribunal's website as to the date of the amendment) so that they now read as follows -

"Once an Order under the Law is made the Tribunal may order one party to make a payment towards the costs incurred by another party … Until the Order is made there is NO power to award costs."[12]

8       Thus the current position is that there is no power to award costs.  This means that any aggrieved employee can pursue a claim against his employer with minimal risk to the employee. 

9       The Voisin case is a prime example of the unfair effect of this provision upon an employer.  Understandably, the business chose to be legally represented at the Tribunal hearing, which ran for four days.  The Tribunal's judgment went against the employer (the employee being awarded £32,468.80 by way of unfair dismissal compensation), and the employer appealed to the Royal Court.  The appeal succeeded on the basis that the Tribunal had committed an error of law (see below) and the case has now been remitted to the Tribunal to be reheard.  The costs to date and the ongoing costs of this case must run to many thousands of pounds, which the employer will never recover, even if he eventually succeeds in having the judgment overturned. 

Procedures

10     It is worthy of note that other changes have been made to the documentation relating to the Tribunal's procedures, without any formal notification to practitioners or members of the public.  In October 2005 the Tribunal issued a User's Guide.  This stated that "The parties will be advised of the date, time and place of hearing at least 21 days before."  At some date in 2006 the User's Guide was amended so that the time for minimum notification of a hearing date was reduced from 21 days to 14.  Again, there is nothing in the User's Guide on the website which indicates when this change was made (or indeed that it has been made at all).[13]

11     While it is vital that matters relating to the operation of the Tribunal continue to be managed by the Tribunal in a practical and cost-effective way, it is considered that it would be helpful to individuals and employment practitioners if there were a greater formality in relation to the issuing and revision of Tribunal procedures and guidance.[14] 

12     In addition, in certain areas there is little or no procedural framework that indicates how matters should be progressed and it is suggested that this needs to be remedied.  Again, the Voisin case is a useful example in the context of the appeal process, which is set out at article 94(1) of the Law as follows -

"An appeal on a question of law shall lie from a decision or order of the Tribunal to the Royal Court with the leave of the Tribunal or of the Royal Court."

13     Save for a provision about vexatious litigants and information about an internal Tribunal power to review certain limited judgments and decisions, the article quoted above is the entirety of the current Tribunal procedure on appeals.  As a consequence, parties who wish to make a formal appeal against a decision or order of the Tribunal are feeling their way in the dark in relation to how they should proceed.[15]

Damages

14     Another area which may be reviewed in the next few years is the question of quantification of damages for unfair dismissal.  At present damages for unfair dismissal are assessed in accordance with the table set out in the Employment (Awards) (Jersey) Order 2005.  The award is calculated taking into account length of service and weekly pay, up to a maximum of 26 weeks' pay for an employee with more than five years' continuous service.  No deductions can be made by the Tribunal for failure to mitigate or by way of set-off, e.g. for a redundancy payment an employer may have made.  A separate and additional award can also be made by the Tribunal for breach of contract, up to a maximum of £10,000.

15     The great benefit of this system is that it is clear and straight forward.  The parties know from the outset what the award will be if the dismissal is found to be unfair.  This assists in terms of quantification of risk of proceeding to a full Tribunal hearing.  It also saves time at the Tribunal itself, as there will be no argument on the quantum of the award.  The downside is that, once a dismissal is found to be unfair, the award is automatic and cannot be reduced even if the employee may have been at fault in relation to the circumstances leading to the dismissal.

16     This is very different from the English system[16].  In England damages for unfair dismissal are calculated on a two-step basis.  The first element is the basic award.  This is comparatively low  and is calculated by taking into account length of service and weekly pay, with a current limit on a week's pay of £310 and a maximum  award of £9,300.  The second element is the compensatory award, which looks at the actual loss suffered by the individual as a result of the unfair dismissal, which can be reduced, at the Tribunal's discretion.  The maximum compensatory award is £60,600.

17     The Guernsey Tribunal previously operated on a similar basis to the Jersey Tribunal but with a set award of three months’ pay, regardless of length of service, and with no discretion to reduce the award.  Under recent amendments to Guernsey employment legislation,[17] the set award has been increased to an automatic award of six months’ pay.  Now, however, the Guernsey Tribunal has discretion to reduce the set award where it would be "just and equitable" to do so.  The Guernsey Tribunal has no power to make a separate award for breach of contract and/or to make a separate award for failure to give notice.

18     It is understood that in a number of Jersey cases in which the employee has clearly been at fault, but the dismissal has nonetheless been found to be unfair overall, the Tribunal has felt uncomfortable with the fact that no reduction to the award can be made.  This is noted in the case of Sousa v Hotel Revere Limited (2006),[18] which concerned a hotel employee who took just under four weeks' absence without leave, because of family illness.  The absence caused great inconvenience at a busy time for the employer, who had no idea whether or not the employee intended to return.  The Tribunal noted in its judgment that it was "not unsympathetic" to the employer's position and that "Mrs Sousa was not blameless".  According to the criteria applied though, the dismissal was unfair and thus the employee was automatically entitled to the set award, which in this case amounted to eight weeks' pay.  The Tribunal expressly noted that it was "unable to use Mrs Sousa's contributory fault as a means of reducing her Award."

19     Perhaps when the legislation is next reviewed, the introduction of a "just and equitable" reduction provision, similar to that in the Guernsey system, may be debated.  In some circumstances it may be fair for the Tribunal to have a discretion to reduce the automatic award, where the employee has been at fault.  It is suggested that the English system should not be replicated, however, as it is unnecessarily complex for this jurisdiction.

The Voisin case

20     Mr Brown was the General Manager of Voisins Department Store, of which Mr Gerald Voisin was the proprietor, being a sole trader.  In 2005 there was concern that the business was not achieving its projected sales targets and profits, and redundancies were made of a number of staff. 

21     The financial performance of the business was still unsatisfactory and it was decided that further cuts needed to be made.  Mr Voisin reviewed the remaining workforce.  At that time Mr Voisin was a States' member.  He decided that if he resigned from the States he could take back the management of the business, replacing Mr Brown as General Manager and thus saving the expenditure on Mr Brown's salary, which was the highest employment cost.  He considered offering Mr Brown the role of store operations manager, but as this would have involved a demotion and a 55% cut in salary he did not think Mr Brown would accept it.

22     Mr Voisin therefore had a meeting with Mr Brown and told him that he would be made redundant.  The terms of the redundancy were discussed and were agreed, albeit not on the terms for which Mr Brown had hoped.  Six days after the termination of his employment, Mr Brown issued unfair dismissal proceedings before the Tribunal.

23     The Tribunal held that the dismissal was unfair because the employer had failed to follow the essential steps it had previously outlined in the case of Goguelin v Stuart Banks (Carpenters & Builders) Limited (2006),[19] following English precedent.  The Tribunal stated that, in order to make a dismissal by reason of redundancy fair, an employer must -

(a)           consult with the employee;
(b)           warn the employee of the redundancy;
(c)           establish fair selection criteria; and
(d)           explore alternatives to redundancy.

24     Mr Voisin appealed to the Royal Court.  In his judgment Birt, Deputy Bailiff, referred to English law and guidance, including Harvey on Industrial Relations and Employment Law, widely considered as the authoritative practitioners’ text.   He stated -

"The key principle which emerges… is that it is not for the Tribunal to substitute its own opinion for that of the employer.  Rather, its job is to determine whether the employer has acted in a manner in which a reasonable employer might have acted, although the Tribunal, left to itself, might have acted differently."[20]  ("[T]he band of reasonableness test".)

25     The Deputy Bailiff held that "the Tribunal wrongly elevated the four duties referred to above into mandatory requirements of law so that any failure to comply with any of them necessarily renders a dismissal unfair."[21]  As a consequence, the Tribunal's decision was found to be wrong in law.

26     Following English precedent and noting the position of the English Employment Appeal Tribunal, the Deputy Bailiff held that he could not overturn the decision of the Tribunal unless the decision was perverse.  Where there was a possibility that, even though the Tribunal had erred in law, it could have reached a decision that the employee had been dismissed unfairly had it applied the law properly, his only option was to remit the case to a reconstituted Tribunal to re-hear the matter, with a direction as to the law.  His concluding words were as follows -

"…I have no alternative but to remit the matter.  I do so with regret.  It seems to me a pity that the parties must be put to the time, expense and worry of a new hearing before a newly constituted Tribunal.  However this is a necessary consequence of the decision on the part of the States to confine rights of appeal to questions of law.  The States might have provided for an appeal along the lines of that which exists in planning matters i.e. that the decision was unreasonable.  This confers a considerable margin of discretion upon the original decision making body but allows this Court to intervene and make its own decision where it is satisfied that something has clearly gone wrong so that the original decision is unreasonable.  This is a lower threshold than the need to find a decision to be perverse…"[22]

27     The Deputy Bailiff's decision, to remit the matter to the Tribunal was, it is respectfully submitted, correct under our law and in accordance with English precedents.  It will be interesting to see how matters develop and whether or not the States contemplate amending the Law in line with the Deputy Bailiff's comments.  One of the challenges of a small jurisdiction is to find sufficient competent and appropriately qualified men and women to sit as members and officers of the Tribunal.  At present there is only one Chair and one Deputy Chair.  This means that convening a completely new Tribunal is always difficult and it will not be possible to find a new Tribunal without  knowledge of the original decision and the judgment on appeal of the Royal Court. 

Conclusion

28     For some years to come, the Tribunal and the Royal Court will face new challenges in implementing this vital legislation.  Law-makers, practitioners (including those working in bodies such as JACS), the Tribunal, judges and independent persons must continue to keep the operation of the Law under scrutiny to ensure that it is workable. The right balance will have been achieved when we have an employment law system which is acknowledged as one that affords both employees and employers a fair, practical and independent forum for dealing with disputes, recognising that we cannot import legislation from other jurisdictions without first adapting it to our own particular requirements.

29     The introduction of the Employment Relations (Jersey) Law 2007 and legislation to protect employees from discrimination is currently awaited. Compared with the UK and other jurisdictions within the EU, Jersey's current employment legislation is not excessive.  In the longer term, in order to ensure that our legislative framework remains competitive and efficacious, we may want to bear in mind a sentence in the UK Company Law Review Steering Group report in 1999.  While that report related to company law and not employment law, with a minor amendment to remove the reference to incorporation, it is considered relevant -

"We have to recognise that it is increasingly possible that, if we make our law unduly prescriptive, inflexible, inaccessible or onerous, businesses will choose to [go] elsewhere."[23]

Vicky Milner is an English barrister working at Mourant du Feu & Jeune.

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