DRAFT EMPLOYMENT (AMENDMENT No. 7) (JERSEY) LAW 201-
Introduction
From 1 January 2011, the Employment (Jersey) Law 2003 was amended to give employees the right to a compensatory payment in the event of redundancy (subject to two years’ qualifying service).
During the process of preparing for the implementation of the law, concerns were raised that the redundancy provisions might impact upon employers and employees utilising fixed-term contracts, particularly in seasonal industries, in a way that was not intended due to the existing rules for calculating continuous service for the purpose of qualifying for a redundancy payment.
The current situation
The non-renewal of a contract, including the expiry or non-renewal of a fixed-term contract, is treated as a dismissal, which might be construed as a dismissal on grounds of redundancy. The definition of redundancy includes where the dismissal of an employee is wholly or mainly attributable to “the fact that the requirements of that business for employees to carry out work of a particular kind…have ceased or diminished or are expected to cease or diminish, permanently or temporarily for whatever reason.”
The end of a season could be determined to fall within this definition and so a fixed-term contract employee is likely to be regarded as redundant at the end of each season. With the introduction of redundancy rights, an employee will have the right to a redundancy payment at the end of their seasonal contract if they have two years continuous service.
The rules for the calculation of continuous service currently provide that if a fixed-term contract has expired and another fixed-term contract is entered into by the same parties within 26 weeks, continuity of employment is preserved. Seasonal employees can therefore accrue two years continuous service over a period of years, for example; 8 month fixed-term contracts over 3 consecutive years would give the employee 24 months accrued service. [1]
The original policy intent in regard to the accrual of service via fixed-term contracts was to prevent employers abusing ‘rolling’ fixed-term contracts, with short gaps between them, so that employees would not qualify for protection against unfair dismissal; this intention will be maintained by not changing the existing rules for calculating continuous service for the purpose of entitlement to protection against unfair dismissal.
Concerns have been expressed to the Social Security Minister that the extension of this policy to redundancy payments unduly impacts upon seasonal industries. Employees undertaking seasonal work will often have been employed by the same employer under short contracts over many consecutive seasons, bringing the possibility of redundancy payments at the end of each season.
Maintaining the current rules might therefore discourage employers from re-employing the same people each year, potentially impacting on employment opportunities for local residents.
Purpose of the Amendment
The primary purpose of the amendment is to ensure that employers in seasonal industries are not discouraged from re-employing staff, season after season, due to the potential for redundancy payments at the natural end of each season.
The Employment Forum has considered the existing measures and appreciates that this is likely to disproportionately impact on seasonal industries, including agriculture and hospitality, as well as fulfilment, retail and construction.
Having consulted directly with relevant stakeholders on various options to resolve the issue, the Minister considers that it is crucial that this unintended effect is addressed. Seasonal working patterns appear to have changed since the existing measures were put in place, for example in Hospitality and Agriculture the ‘season’ is usually longer than 6 months and there is rarely a 26 week break between seasons.
The intention is to establish an appropriate period to break service between fixed-term contracts that will minimise opportunities for employers to abuse successive fixed-term contracts to avoid employment rights, whilst being appropriate in view of current business practices, particularly in accordance with genuinely seasonal business requirements.
The Minister understands that fixed-term contracts in these industries will generally be separated by 9 weeks or more. The Employment Forum agrees that there will generally be off-peak periods of 9 weeks or more between peak business periods in the local industries that utilise short fixed-term contracts.
It is therefore proposed that the law be amended so that, for the purpose of calculating entitlement to redundancy pay, continuity of employment will be preserved between successive fixed-term contracts that are separated by 9 weeks or less, instead of 26 weeks or less, as currently provided.
To protect seasonal employees, fixed-term contracts that are separated by 26 weeks or less will continue to be treated as continuous for the purpose of calculating continuity of employment in respect of determining an employee’s entitlement to protection against unfair dismissal.
This will mean that, in the majority of cases, employees on short fixed-term contracts will not qualify for redundancy pay at the end of each season, but will continue to qualify for protection against unfair dismissal after 26 weeks continuous service.
For consistency within the redundancy related rights, the amendment also provides that, where employees are employed on fixed-term contracts of one year or less, the employer would be obliged to give those employees paid time off work to seek alternative employment, and to consult representatives of those employees about proposals for redundancies at the end of a season, only where the employee has previously been employed under a fixed-term contract of one year or less and the contracts are separated by 9 weeks or less (e.g. ‘rolling’ one year contracts). Employers will still be obliged to consult employees individually about proposals for redundancies.
The opportunity has been taken to include the following additional amendments;
- To clarify that, when used in the context of a ‘redundancy’ (as defined in Article 2 of the Employment Law, the term ‘dismissal’ has the same meaning as described for the purpose of unfair dismissal (in Part 7 of the Employment Law).
- To clarify that for the purpose of any redundancy related payments ‘a week’s pay’ is calculated in accordance with the existing Schedule 1 to the Employment Law (subject to the cap).
- To provide that where an employee has received a redundancy payment, their continuity of employment is effectively ‘reset’ to zero if the contract is renewed, or if the employee enters into a new contract, so that service with that employer prior to the redundancy payment does not count again for the purpose of claiming any further statutory redundancy payment in future.
- To clarify the calculation of time off work to seek alternative employment or re-training that an employee who is given notice of redundancy is permitted to take.
- To reflect the decision that responsibility for the administration of the Employment Tribunal was allocated to the Judicial Greffier from 1 January 2011.
Resource Implications
There are no financial or manpower implications.
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