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The Jersey Law Review - February 2004
SOME EMPLOYEE PROTECTION AT LAST
Wendy Malorey
Introduction
1 Melanie Cavey's article Fair Play in the Workplace explained the background to the proposed changes in employee protection legislation in the Island. Since that time, further consultation and the law drafting process have been continuing. The Employment (Jersey) Law 2003 (the "2003 Law"), which starts the process of introducing into Jersey statutory law a number of core rights for employees, was debated and approved by the States in July 2003, has been approved by the Privy Council, and was registered on December 5th, 2003. The report accompanying the draft Bill indicated that the 2003 Law was part of a package of reform and would be brought into force at the same time as the Employment Relations Law (dealing inter alia with trade union issues). The Employment Relations Law is being drafted but it seems unlikely therefore that the 2003 Law will become effective until 2005.
The need for new employee rights
2 The 2003 Law gives basic employee protection that is commonplace in many other jurisdictions. Jersey must uphold its position as a reputable jurisdiction with which to do business. Many clients and lawyers from other jurisdictions find it incomprehensible that unfair dismissal, for example, is not a concept known to Jersey law.
3 Despite this, some people question the need for such protection in a small island, where there has been virtually full employment for a long time. But it is the writer's view that it is needed. Jersey needs to show that it is a responsible and reputable jurisdiction - that means having in place laws relating to fundamental, internationally recognised concepts. Employee protection in general, and unfair dismissal in particular, are among those concepts. Whilst in the past there has been full employment in Jersey, this position has recently started to change given the current global economic climate.
4 Experience has shown that there are employers who have, whilst paying lip service to the concept of treating their employees "fairly", abused the unprotected position of employees in Jersey.
5 However, the devil is in the detail. There are some areas of the 2003 Law which, it could be argued, go too far and move away from a balanced perspective of being fair to employees on the one hand whilst recognising the needs of employers to run their businesses efficiently within a regulatory framework on the other.
6 Others argue that the 2003 Law does not go far enough and certainly there is a long way to go before Jersey employees are protected in the same ways as employees within the European Union. For example, it has been suggested that there should be no qualifying period in order to bring a claim for unfair dismissal. The argument is advanced that a dismissal is no fairer because it is effected for example in the 25th week of employment than if it were effected in the 27th week. The writer is of the view, however, that a 26 week qualifying period is a suitable period in that it allows employers the opportunity fully to assess an employee's suitability and capability for a position whilst not unduly delaying the employee’s right not to be unfairly dismissed.
7 All that aside, once the 2003 Law is in force employers can expect enormous changes. Employers will need to look at all aspects of the employee/employer relationship, how they and their businesses currently operate and what they will need to do to comply. There will be an increase in the administrative burden placed upon businesses, not only in the early stages as employers bring their businesses into line with the 2003 Law, but also on an ongoing basis to ensure that they maintain detailed records of each employee's performance, disciplinary lapses and history of absenteeism. Without these records, defending any claim of unfair dismissal will be extremely difficult.
The establishment of an employment tribunal
8 The 2003 Law establishes a Jersey Employment Tribunal to hear employment-related claims, whether relating to statutory or contractual rights. The Tribunal is likely to comprise a legally-qualified chairperson and two lay members. A panel of Tribunal members will be needed to ensure adequate cover, taking into account matters such as conflict of interest which will inevitably arise. It remains to be seen whether a sufficient number of qualified Tribunal members will readily be found.
9 The subordinate legislation setting out the detail of the Tribunal's constitution and its workings is not yet available. The mechanics of the Tribunal (for example, who will sit on the Tribunal, how many panels there will be, the procedures to be followed by the Tribunal, the appeals procedure and whether the parties will have the right to be legally represented) have not yet been finalised. It is likely that legal representation will be permitted if, as the author would expect, the UK model is followed. It has been argued that a failure to allow legal representation would be an infringement of the convention right to a fair trial. If legal aid is made available for tribunal hearings, this will increase the legal aid burden significantly.
10 There has been some debate as to whether tribunals or courts are the best place to resolve employment disputes and what is the appropriate appeal process from tribunals. It is the author’s view that a dedicated employment tribunal will be able to deal with disputes speedily and will allow individuals to represent themselves in a less formal setting than the Royal Court. Employment disputes which are not resolved quickly will be damaging to both employees and employers. Employees may be unable to obtain employment until such disputes are resolved and employers may find lengthy court proceedings damaging to their reputation as well as extremely costly.
11 The UK experience has shown that the number of employees bringing claims before the employment tribunal is extremely high. The proposed tribunal will prevent any “clogging up” of the Royal Court’s list.
Clarification of current legislation
12 The 2003 Law consolidates and amends a number of pieces of existing legislation, all of which will be repealed when it comes into force. Current legislation lacks clarity in certain respects and this has caused difficulties of interpretation in the past. The opportunity has been taken to clarify some of these points and to change certain substantive provisions -
(1) there is now no requirement for notice to be given on or be effective from the next payday. Notice will start to run from the date on which it is given;
(2) it is now clear that certain of the particulars which are required to form part of an employee's written statement of employment can be included in documents other than the statement or contract. An employee handbook, for example, can contain the detail of policies such as disciplinary and grievance procedures;
(3) it is no longer necessary to say "not applicable" in the statement of employment terms or contract where a term does not apply to a particular employee or where the employer has no such policy or requirements. For example if there is no redundancy policy, the statement can be silent on that point;
(4) it is now clear that any contractual waiver of the statutory minimum notice periods is unenforceable. An employee can, however, waive his or her entitlement to such notice upon termination of the employment;
(5) the 2003 Law specifically allows for contractual notice periods that are greater than the statutory minimum. Taking into account the fact that the statutory minimum periods of notice to be given by employees are less than the periods required to be given to employees, this provision is particularly useful for an employer which wants its employees to give the same notice as it is required to give;
(6) the Payment of Wages (Jersey) Law, 1962 does not allow the employer and employee to agree contractual deductions from wages. The 2003 Law similarly does not allow the employer and employee to agree deductions on an informal basis but deductions may be lawfully agreed between the parties in writing, (either within the employment contract or in a separate agreement on the point). The likely rationale is to prevent unscrupulous employers from falsely claiming that their employees agreed orally to deductions being made. Unfortunately this lack of flexibility does not, however, reflect what often actually happens in practice between employers and employees.
Employment legislation unaffected by the 2003 Law
13 Certain pieces of legislation (and all related subordinate legislation) which impact upon the employment relationship are unaffected by the New Law and remain in full force and effect.
Differences between the 2003 Law and English employment statutes
14 The 2003 Law follows, to a large extent, English employment statutes, both in terms of some of the basic principles adopted and the wording used. This will give considerable assistance in future interpretation. There are, nevertheless, some fundamental differences which are described below.
‘Worker’ versus ‘employee’
15 The 2003 Law will afford protection to a wider category of individuals than is currently granted under English law. Article 1 defines "employ" in the following way -
“‘employ’ means to enter into and perform -
(a) a contract of service or apprenticeship, whether express or implied, and, if express, whether oral or in writing; or
(b) subject to Article 36, any other contract, whether express or implied and, if express, whether oral or in writing, whereby the other party to the contract undertakes to do, or perform personally, work or services for the first party to the contract, and the status of the first party to the contract is not, by virtue of the contract, that of a client or customer of any profession or trade or business undertaking carried on by the other party to the contract,
and other parts of speech, grammatical forms, words and expressions derived from the word "employ" shall have corresponding meanings.”
16 The first point to note in this definition is the rather unusual approach of not specifically defining "employee" despite using this word throughout the law. Whilst the final two lines of the definition indicate how "employee" should be defined, it is the writer's view that the English statutory approach of specifically defining that word would have been preferable.
17 The second point to make on the definition is more fundamental. Sub-clause (a) is the basis of the English definition of an employee (although different statutes adopt variations on this theme). Sub-clauses (a) and (b) together, correspond to the definition of the English concept of "worker". Workers under English statutes do not have all the same rights as employees, although this is currently under review by the Department of Trade and Industry. For example, protection from unfair dismissal and the right to be issued with an employment statement and a pay slip do not extend to workers. In the 2003 Law, however, there is no distinction between an employee and a worker (i.e. those falling within the definition at sub-clause (b) above) and all the statutory rights are granted to employees. From the position of having virtually no statutory protection at all, "workers" in Jersey are, under the 2003 Law, afforded greater rights and protections than their English counterparts. The Jersey Employment Tribunal may have difficulties getting to grips with the wide definition of "employ", especially when there can be no direct comparison with the position in England where there is a clear statutory distinction between employees and workers.
18 The English definition of “worker” has been the subject of considerable debate in the United Kingdom. Whilst it is not intended to cover the genuinely self-employed contractor there have been many cases where, despite the parties' original intentions to the contrary in entering a contract, a “worker” relationship has been held to exist. This has particularly been the case with consultants or contractors in, for example, the construction and IT industries.
19 In Jersey this will have an even greater impact upon the parties as the statutory protection is greater. Such persons will be entitled to all the rights afforded to employees under the 2003 Law including the right not to be unfairly dismissed, the right to a statement of employment terms, minimum holiday entitlement and rest days. In the case of the right to a statement of employment terms, this is particularly strange given that this statement must be provided within 4 weeks of the commencement of employment. If it is not intended or not known whether the individual is a “worker” or a genuinely self-employed consultant, for example, then it will be difficult to assess whether such a statement should be given. If such a statement is given then this is tantamount to accepting that the individual is a “worker” and entitled to all the rights of an employee under the 2003 Law.
20 In England the “worker” definition is relevant primarily in applying the Working Time Directives and legislation relevant to the minimum wage. More recent legislation involving part-time and fixed-term workers also applies to "workers". In England the practice has generally been adopted of ensuring that any self-employed individual who wants to work as a contractor is engaged through a company (perhaps incorporated specifically for this purpose), and not by contract directly between the individual and the company where he or she will be working. It is suggested that such a position should be adopted wherever possible by Jersey employers in order to avoid any uncertainty.
21 The Tribunal is likely to have referred to it, as in the UK, many cases concerning who exactly falls within the definition of an employee.
Unfair dismissal
22 Protection from unfair dismissal contained in the 2003 Law follows the basic English format. First, the principle is stated: the employee has the right not to be unfairly dismissed. The 2003 Law then describes what constitutes a dismissal and specifies a list of reasons which, if found to be the principal reason for the dismissal, will lead to the dismissal automatically being held to be unfair (the "automatic grounds"). The Law sets out the reasons for dismissal which must be shown to apply for the dismissal to be held to be a fair dismissal (the "dismissal reasons"). There are certain criteria that the employee must meet for the protection to apply ("relevant criteria"). Finally, the 2003 Law specifies the remedies for unfair dismissal.
23 The 2003 Law differs from English statute in the area of unfair dismissal in the following ways -
(1) Automatic Grounds - English law has a number of automatic grounds which are not replicated in the 2003 Law. The reason is that the English automatic unfair dismissal grounds follow statutory protection afforded to employees which is not currently available in Jersey (such as statutory protection for whistleblowers). The 2003 Law has no automatic grounds which are not contained in English statute;
(2) Relevant Criteria - English statute requires the employee to have been employed for a continuous period of one year before qualifying for protection from unfair dismissal. The 2003 Law qualification period is 26 weeks or, for fixed term employees, (and remember this covers "workers") the person must have worked two-thirds of the contract to qualify. The employee must bring the claim for unfair dismissal within eight weeks of termination of employment. The English limitation period is three months. In both cases, however, the tribunal has the discretion to extend the period. In the 2003 Law the employee must work for eight or more hours a week and be above school leaving age and below normal retirement age to qualify;
(3) the only remedy for unfair dismissal in the 2003 Law is damages, unlike in England where there is a right of reinstatement (although we understand that this is rarely awarded). The basis of calculation of damages under the 2003 Law is also very different from the English position, where there is a discretionary element to the award. Under the 2003 Law the award is likely to be calculated by reference to a fixed number of months' salary that increases according to length of service. This will be covered in the subordinate legislation.
24 The legislature has attempted to address specifically local issues such as the heavy reliance in some industries on fixed term contracts which would in many cases be too short to entitle the employee to bring a claim for unfair dismissal.
Minimum holidays
25 The 2003 Law grants to all employees (whether full or part time and regardless of the number of hours worked per week) a minimum of two weeks’ paid leave (or such other period of leave as is specified in a relevant agreement, whichever is longer) per leave year and, in addition, all public and bank holidays or time off in lieu. The English statutory right is to four weeks’ paid holiday, with no separate provision for public or bank holidays. Given the number of public and bank holidays in the UK and Jersey, there is no significant difference between these substantive provisions.
English employment rights not being introduced in Jersey
26 The 2003 Law is only the first phase of the review of the employment laws in Jersey. Statutory protection available to English employees or workers but which is not included within the 2003 Law covers -
(1) redundancy pay
(2) maternity leave and pay
(3) parental and paternity leave
(4) maximum working hours controls
(5) employee protection on transfer of businesses
(6) protection for whistleblowers.
27 These and other employee rights are likely to be debated over the next few years. Indeed some of these have already been approved in principle by the States. Other aspects of the law of the workplace which are under consideration are -
(1) trade union legislation
(2) anti- discrimination legislation
(3) human rights legislation
28 The Jersey Advisory and Conciliation Service was established by the Jersey Advisory and Conciliation (Jersey) Law 2003 and is now providing important services in the employment field.
Areas of concern with the 2003 Law
29 Notwithstanding various amendments to the original proposals that have been incorporated in the 2003 Law, improvements are, in the writer’s view, needed.
(1) Maternity leave - The 2003 Law provides that dismissal on grounds relating to maternity or pregnancy will be automatically unfair (once brought in by Order). The Law does not however give statutory maternity rights. If an employee announces that she is pregnant and that she is going to take six months’ leave (unless her contract specifically allows her to do so) and if her employer dismisses her, will it be an automatic unfair dismissal? It should not be unfair because there is a breach of contract by the employee, but the Law does not make this clear. The Order will need to provide that the dismissal will only be automatically unfair if the employee does not otherwise breach or intend to breach the contract by reason of the pregnancy (so that she could take off the holiday entitlement and return to work after the baby). Without this qualification, maternity leave will be brought in by the back door. The alternative is not to bring in the Order until statutory maternity leave is brought in. This does not seem equitable or consistent with the introduction of unfair dismissal: if an employee has a contractual right to maternity leave and is sacked for exercising this right, then the dismissal should be automatically unfair.
(2) Fixed term contracts - The two thirds qualifying period for a claim for unfair dismissal has been discussed above. The 2003 Law does not state a minimum length of fixed term contract to which the "two thirds rule" may apply. It follows that if someone is employed for three days under a fixed term contract, he or she will be able to bring a claim for unfair dismissal after two days.
(3) Minimum periods of notice - There is a change in the drafting of the notice periods which has two effects: (i) there is no requirement for employees to work for more than eight hours in order to qualify for the statutory notice periods once employees have worked for more than 26 weeks; and (ii) an employee who has been employed for less than 26 weeks is not required to give any notice to an employer if he or she wish to terminate the employment. This differs from the current position where the notice period on either side where an employee has been employed for less than 26 weeks is one week. It is not clear to the author whether these are policy decisions or whether they are errors in drafting.
(4) Computation of period of continuous employment and the right not to be unfairly dismissed - The 2003 Law provides that the right not to be unfairly dismissed does not apply unless an employee has been employed for a continuous period of not less than 26 weeks, computed in accordance with article 57. However, there is no reference to article 58 by which an employee whose employment has been transferred may have his or her continuity of employment protected.
It is submitted that the effect is, therefore, that an employee whose employment has been transferred will have to work for the qualifying period (i.e. 26 weeks) in order to be able to claim protection from unfair dismissal. This will be the case even though article 58 states that continuity of employment is protected and that the employee may have worked for a considerable period of time for the transferring employer prior to the transfer. This would seem to be contrary to the intention of article 58. It should be borne in mind that employees are particularly at risk from dismissal in Jersey following a transfer from one employer to another given that there is no TUPE type legislation.
Conclusion
30 It is the author’s view that the 2003 Law will be beneficial both to Jersey and to employees. In reality, the 2003 Law is a reflection of good employment practice which reputable employers should follow in any event. However, the drafting is not without problems in some areas and it is hoped that some of the points mentioned above will be resolved before the 2003 Law is in force in order to avoid uncertainty and consequential unnecessary applications to the tribunal.
31 In order to bring Jersey’s employment legislation into line with many other comparable jurisdictions it will be necessary to move forward with the next phase of employee protection laws in a timely manner. Jersey is a long way behind those jurisdictions with which it does business from an employment law perspective.
Wendy Malorey is a solicitor of the Royal Court and a partner of Mourant du Feu & Jeune, 22 Grenville Street, St Helier, Jersey, JE4 8PX.
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