Redundancy Procedure and Payments (enacted 1st January 2011)

Redundancy Procedure and Payments

Enacted 1st January 2011

Guidance note 11 to the EMPLOYMENT (JERSEY) LAW 2003

Employment (Amendment No. 5) (Jersey) Law 2010

This short statement is intended to explain to employers and employees the Redundancy rights which are set out in the new Part 6A of the Employment Law.  It is not intended to cover the requirements of the Law, nor does it represent a statement of the Law. It constitutes a guide only and detailed legal advice should be taken in relation to each individual situation. Any reference to male persons in the statement should be read as including, or being female persons where this is appropriate.

The main aims of the Amendment are to:

Set out an employee’s entitlement to a redundancy payment, the qualifying and associated conditions.

Provide for paid time off to seek, or arrange training for, future employment.

Provide for a means of enforcement of these provisions.

The fundamental principle is that employees with a minimum of 2 years qualifying service have an entitlement to a redundancy payment of 1 week’s pay subject to a "cap" on the value of a week’s pay, for each year of service, in addition to any statutory or contractual notice.

1. Definitions

1.1 "Effective date of termination" means the date as determined in Article 63 of the principal law, i.e.

a) the date on which the notice expires, whether given by employer or employee.

b) when termination is without notice, the date termination took place.

c)    in relation to a fixed term contract which is not renewed under the same contract,     the actual date of expiry.

2. The right to a redundancy payment and qualifying service.

An employee with a minimum of 2 years’ qualifying service, who is dismissed by reason of redundancy, has a right to a redundancy payment.

Those who work less than 8 hours per week do not currently have the right to a redundancy payment; however this will be addressed by an amendment (not yet in force). Those who work less than 8 hours a week do not have a right to statutory notice nor to written terms of employment.

3. Statutory minimum redundancy payment.

The minimum redundancy payment is one week’s pay per year of service ("year" is defined as 12 calendar months). All service counts, including service before the age of 16 or after the age of 65, (however the ’cut-off’ age of 65 for unfair dismissal claims and the minimum age of 16 remain for entitlement to protection against unfair dismissal).

The value of a week’s pay is capped at a maximum level of the most recent figure for average weekly earnings in Jersey published at least one month before the effective date of termination (disregarding any more recent figure published less than a month before). Currently the cap is £650 per week as at September 2011 (£630 per week from July 2010).

Redundancy payments are payable in addition to statutory or contractual notice periods. Certain elements of compensation may be liable to income tax e.g. payments in lieu of notice. Details are explained in our guidelines.

4. Statutory Notice Periods

Statutory notice periods apply to those over the age of 16 who work 8 hours or more a week. The period of notice to be given by the employer (there will be no change to the period of notice the employee is required to give) will be amended to:

1 week’s notice if continuous service is less than 2 years

2 week’s notice if continuous service is 2 years or more but less than 3 years

Plus 1 week’s notice for each additional year’s continuous service up to a maximum of 12 weeks.

5. Time limits applicable to redundancy payments.

For an employee to be entitled to a redundancy payment, any of the following must have occurred within 6 months from the date of termination of employment;

• the payment must have been agreed and paid;
• the employee must have claimed the payment from the employer in writing;
• a claim for redundancy payment must have been made to the Tribunal; or
• a claim for unfair dismissal must have been presented to the Tribunal.

However, even if none of the above has occurred, the Tribunal may allow an employee to claim redundancy if, within a further period of 6 months, the employee claims a redundancy payment from the employer in writing and refers the claim to the Tribunal or presents a claim for unfair dismissal to the Tribunal. In considering a late application the Tribunal will consider the reason given by the employee for their failure to apply within 6 months and other relevant circumstances.

6. Right to take time off to look for work or arrange for training.

An employee who is given notice of dismissal by reason of redundancy and who has been continuously employed for 2 years or more (inclusive of notice period) is entitled to take paid time off during his notice period equivalent to 40% of one of his normal working weeks (i.e. a total of 2 working days for those working a standard 5 day week), for the purposes of:

• Looking for new employment, or
• Making arrangements for training for future employment

An employee who is refused permission to take such time off or who was not paid the whole of the amount due to him may make a complaint to the Tribunal within a period of 8 weeks beginning with the date on which it is alleged the time off should have been permitted (the Tribunal has the discretion to extend this 8 week period if it decides it was not reasonably practicable for the complaint to be submitted within the 8 weeks). Where the Tribunal finds such a complaint well-founded, it may direct the employer to pay a sum which could be greater than 40% of the employee’s normal weekly pay.

7. Individual consultation

Although not specifically mentioned in the Law, individual consultation in respect of redundancy remains as currently required for unfair dismissal purposes, to show that a fair process has been undertaken. While there is no set period for consultation in individual cases, where compulsory redundancy is necessary, case law shows that the Tribunal will take the matter of consultation into account i.e. the employer should follow four ordinary principles of fairness which should always be considered in situations of redundancy:

• The duty to consult with the employee
• The duty to warn of redundancy
• The duty to establish fair criteria for selection of employees for redundancy
• The duty to explore alternatives to redundancy.

8. Fixed Term Contracts

The non-renewal of a fixed term contract amounts to dismissal. Where the job has come to an end this may be construed as redundancy and, subject to the employee having a minimum of 2 years’ continuous service (which can be achieved through a single FTC or a series of FTCs where the gap between contracts has been less than 26 weeks), statutory redundancy provisions could apply.