ACCOMPANYING REPORT
EMPLOYMENT (AMENDMENT NO. 4) (JERSEY) LAW 200-
INTRODUCTION
The purpose of this Proposition is to amend the Employment (Jersey) Law 2003 to extend the Employment Tribunal’s jurisdiction in relation to unfair dismissal claims in two ways;
- Power to reduce an unfair dismissal award where an employee is found to have contributed to their own dismissal.
- Discretion to consider whether it would be appropriate for an unfairly dismissed employee to be re-employed by their employer (whether reinstatement or re-engagement), and the power to award additional compensation if the employer does not comply with a direction for re-employment.
BACKGROUND
Reduced Unfair Dismissal Award
In it’s December 2001 recommendation on unfair dismissal1, the Employment Forum, stated that, “on occasions the Tribunal may be of the opinion that the employee contributed to their dismissal (e.g. through poor conduct), and recommends that discretionary powers be given to the Tribunal to reduce the award on such grounds in order that natural justice will prevail.”
The report that accompanied the draft Employment Law to the States noted that "detailed legislation regarding financial awards will be set out in subordinate legislation. It is recognised that on occasions an employee may have contributed to their dismissal through inappropriate behaviour which falls short of fully justifying a dismissal. If the Tribunal believe than an employee has contributed to their dismissal it will have the power to reduce the value of the compensatory award."
The former Employment and Social Security Committee’s intention was that, as in other jurisdictions, the Employment Tribunal should have the power to reduce an unfair dismissal award on a discretionary basis. It had been anticipated that this could be achieved by Order, under article 77 of the Employment Law. However, that was not possible and it was intended to bring an appropriate amendment to the Employment Law in future.
The Minister received a number of representations from interested parties during 2007 regarding the bringing forward of such an amendment and the Minister was concerned that the absence of this provision was causing discontent for employers and frustration for the Tribunal.
Right to re-employment
The Forum’s 2001 unfair dismissal recommendation stated that, “research has shown that in other jurisdictions, there is provision for Tribunals to order that the dismissed employee should be reinstated to their previous employment after a decision of unfair dismissal has been determined. Having carefully considered this issue the Forum is of the opinion that there is nothing to be gained by having such a provision present in Jersey legislation. Of course, should both parties wish to enter into a new contract of employment there would be nothing to prevent this.”
This was considered to be a sensible approach at that time; it was not intended to restrict the powers of the Tribunal and was recommended in the interests of avoiding unnecessary complexity. However, following further consideration, the Forum was of the view that Jersey is a more restricted employment market than the UK, making the option of an award for re-employment more relevant and necessary, even if it would be rarely used, and the Forum therefore reassessed its earlier recommendation.
The first draft amendment
The Minister asked the Forum to consider these two potential powers in detail and in 2007, the Forum issued its recommendation to the Minister.
A draft amendment to the Employment (Jersey) Law 2003 was prepared accordingly, however the Minister became aware that further consultation on the particulars of the draft amendment would be necessary prior to debating the proposition in the States.
The Minister therefore asked the Forum to issue a public consultation on the draft amendment so that comments from the public could be considered more widely on the provisions as drafted. Having undertaken the necessary consultation with the public, the Forum issued its further recommendations to the Minister and the draft amendment has been revised accordingly. The following summarises the effect of the proposed amendment and the revisions that have been made to the draft following consultation.
REDUCED UNFAIR DISMISSAL AWARD
Currently, the Tribunal must order compensation to be paid to an employee who is found to have been unfairly dismissed in accordance with a scale based on length of service (up to a maximum of 26 weeks pay for an employee with 5 years service).
The proposed amendment to the Employment Law provides that the Tribunal may reduce the amount of unfair dismissal compensation awarded to the employee. The first draft of the amendment provided a limited set of circumstances that the Tribunal may take into account in deciding whether or not to reduce an award, to summarise;
- Where the employee has unreasonably refused an offer which would have effectively reinstated them in their former position;
- Where the employee’s conduct before dismissal (or before notice was given) makes a reduction just and equitable;
- Where the employee has agreed to receive a payment by way of settlement;
- A contractual or statutory redundancy payment has been awarded.
Revisions
In accordance with the Forum’s recommendations following consultation, the circumstances to be taken into account by the Tribunal when deciding whether to reduce an unfair dismissal award have been revised:
- Article 77F(5) clarifies that, when considering whether it would be just and equitable to reduce an award, the Tribunal will take into account any conduct of the employee that contributed directly to the dismissal so that it does not become a debate about the employee’s general conduct or attendance record, for example.
- Article 77F(9) specifies that the Tribunal has the power to reduce an award where, in advance of the Tribunal hearing, the employee has rejected an offer from the employer for the maximum amount that the Tribunal could award if it found the dismissal to be unfair.
- Article 77F(10) provides that the circumstances leading to a reduced award should not be exhaustive. The Tribunal may take into account other just and equitable circumstances that merit a reduced award. By comparison, the Employment Protection (Guernsey) (Amendment) Law, 2005, provides that the Employment and Discrimination Tribunal may take into account any circumstances in which it considers that it would be just and equitable to reduce the award of compensation, to whatever extent it sees fit.
RIGHT TO RE-EMPLOYMENT
The Employment Law currently provides that the Tribunal must award financial compensation if an employee is found to have been unfairly dismissed; it may not award that the employee must be re-employed by their former employer. This is the case irrespective of the reasons for the dismissal, which might, for example, have been on the grounds that the employee asserted their right to the minimum wage or written terms of employment.
The proposed amendment makes provision for the Employment Tribunal to consider two different options for re-employment as an alternative to financial compensation for unfair dismissal; reinstatement, and the more flexible option of re-engagement;
Where reinstatement is awarded, the employee must be treated as though the dismissal had not occurred, with no loss financially, or of seniority.
Where re-engagement is awarded, the employee must be re-employed but not necessarily in the same job or on the same terms and conditions of employment; however, as far as possible, the terms must be as favourable as if the employee had been reinstated, unless the employee was partly to blame for the dismissal. In this case, the employee may be put into a job which is comparable, possibly with an associated or successor company.
When an employee wishes the Tribunal to consider re-employment instead of financial compensation, in deciding whether or not to make such an order, the Tribunal will take into account the practicability of the employee returning to work for the employer (or a successor company); and in cases where the employee was partly to blame for the dismissal, whether or not it would be just to make such an order.
If the employer fully or partially fails to comply with an order for re-employment, the Tribunal may award additional compensation up to a maximum of 26 weeks’ pay, unless the employer can satisfy the Tribunal that it was not reasonably practicable to comply with the order.
Revisions
In accordance with the Forum’s recommendations, the following provisions have been amended since the draft was consulted upon;
- Article 77G clarifies that where the Tribunal has ordered that an employee must be re-employed (whether reinstatement or re-engagement), the employee’s continuity of employment must be preserved for the period between the dismissal and the order to re-employ and the interim period counts as a period of employment.
- Articles 77B and 77C have been amended on the grounds that the Forum recommended that the Tribunal should not have the power to compensate an employee for financial losses, such as arrears of pay, for the period between the dismissal and the order for re-employment, until such a time as the award making powers of the Tribunal have been reviewed more generally. To make the option of reinstatement more financially beneficial to employees than the unfair dismissal award would be potentially detrimental to local businesses. Equivalent financial compensation is not available to unfairly dismissed employees who are not seeking re-employment and the Minister accepted the Forum’s concern that the possibility of receiving additional compensation on these grounds may lead employees to apply for re-employment as a matter of course, resulting in a reduced number of pre-hearing settlements. The draft provides that any other rights and privileges, including any improvements in terms and conditions that the employee would have been entitled to, must be restored to the employee from the date of re-employment.
Further to that recommendation, it became clear during the drafting of this amendment that preserving an employee’s continuity of employment from the date of dismissal will not protect the continuity of contributory pensions, other contributory benefit schemes and bonus entitlements. The draft therefore reflects the recommendation that employees should not receive arrears of pay for the period between dismissal and re-employment, however gives the Tribunal the power to award some financial recompense, in that that pension schemes and other contributory schemes for the benefit of the employee must be reinstated from the date of dismissal, rather than the date of re-employment, as well as any bonuses an employee might reasonably be expected to receive.
The Minister did not accept one of the Forum’s recommendations. The Forum recommended that the amendment should be clarified to require the Tribunal to take into account the evidence presented by both parties in its consideration of whether re-employment is “practicable”. The Minister understands that this recommendation was provided to allay the concerns of employers regarding the evidence that the Tribunal will take into account in determining whether re-employment is “practicable”.
The Minister has received advice that, as currently drafted, the Tribunal would already be bound to require and consider evidence from both parties in it’s consideration of “practicability”. The Minister understands that it is inappropriate to insert such a requirement explicitly in relation to this article because it suggests that the Tribunal will not consider both parties evidence in relation to other factors, such as in considering whether the employee had contributed to his or her dismissal to any extent.
Although the Minister appreciates the desire for an explicit duty for the Tribunal to take both parties evidence into account, in view of the advice received, the Minister considers that this additional provision should not be made and that detailed guidance based on UK precedent of the test of practicability would allay the concerns of employers.
CONCLUSION
Having conducted additional public consultation on the draft amendment at the direction of the Social Security Minister, the independent Employment Forum has reaffirmed its recommendation that the Employment Law should be amended to give the Tribunal the two proposed additional powers in relation to unfair dismissal awards; giving the Tribunal the power to reduce an employee’s unfair dismissal award in certain circumstances and the discretion to consider whether it would be practicable to award re-employment instead of financial compensation.
Given the support for the new powers from the Employment Forum, which is balanced in its membership; consisting of three employer, three employee and three independent representatives, the Minister is confident that the amendment provides an appropriate balance which can be of benefit to both employers and employees.
The Minister accepted all but one of the Employment Forum’s recommendations (which was rejected on the grounds of advice that it would be unnecessary) and the draft amendment has been revised accordingly. The Minister is satisfied that Members should be asked to adopt the amendment.
Resource Implications
There are no financial or manpower implications.
1 http://www.gov.je/NR/rdonlyres/EA93958E-CF6E-497D-B7C2-114AADEE6D41/0/reccomendation_unfair_dismisal.pdf
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