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How layoffs become redundancies

Thousands of staff have been laid off by employers during the first weeks of the Covid-19 crisis ­— and those that have not been rehired after four months will lose their job on a permanent basis.

The timeline is set out under Bermuda law under the Employment Act 2000, said Juliana Snelling, an employment law expert at Canterbury Law, who has been inundated with questions from clients.

Shelter-in-place restrictions and social-distancing measures have left businesses such as restaurants, hotels and retailers without any income and they have responded by laying off thousands of staff.

The Government's $500-a-week unemployment benefits programme has seen rapid uptake. Lovitta Foggo, the labour minister, said on Monday that the department had received 9,108 applications for unemployment benefits and that more than 5,000 had already received payments.

In this environment, employers and staff alike should be aware of their rights and responsibilities, especially when layoffs become redundancies, Ms Snelling said.

“Where redundancy conditions exist — defined in the Employment Act 2000 and the Covid-19 crisis crippling economic conditions certainly qualifies — an employer may lay off an employee for a continuous period not exceeding four months,” Ms Snelling said.

“Where the layoff continues past four months, it shall be deemed to be a termination for redundancy under the Act.”

She added: “The redundancy must be fair and lawful and if not, can be challenged in the Employment Tribunal as an unfair dismissal. If successful, the employee may receive a compensation award or even possibly be reinstated to his or her former job, albeit this rarely, if ever is ordered.”

The employer must be able to explain why employees let go were selected over others, Ms Snelling said. “Matters like one's job performance and conduct, longevity of service, attendance record, importance to the organisation, etc, can be taken into account.”

Th cost for employers who make multiple redundancies, particularly if they have many long-serving employees, will be substantial.

Legal requirements for severance pay are set out in section 23 of the Employment Act.

Ms Snelling said: “The amount payable is the equivalent of two weeks' wages, essentially salary and commission only, for each completed year of continuous employment up to the first ten years and three weeks' wages for each completed year of continuous employment thereafter.

“The maximum severance allowance payable is six months' wages, unless the contract or employee handbook provides for a more generous amount in which case the contract will prevail.”

The employment repercussions of the crisis are evident in some of the questions that the employers who contact Ms Snelling are asking.

They include:

• In what circumstances can an employer lay off an employee without pay?

• Can employees be requested to take pay cuts instead of layoffs?

• Is the layoff and/or pay cut process voluntary or can it be forced on employees?

• Can I give work to an employee who is laid off and do I have to try?

• Can employees use up their vacation leave and/or sick leave instead of being laid off? Can they be forced to?

• Can the employer argue the virus amounts to a “force majeure” as a defence to a breach of contract claim?

• Can different pay reductions apply to different categories of employee and if, so, based on what criteria?

• Do all or some benefits need to be maintained during layoff and who pays for them?

• Can an employer do repeated layoffs for less than four months?

• If employees are union employees, what extra protections, if any, are in place for employees?

• What do I have to pay an employee if I make him/her redundant?

• Can I use this opportunity to get rid of poorly performing or bad attitude staff? How?

• If the Government says my office can go back to work, what duties as an employer do I have to keep my staff safe from the virus?

Inundated with questions: Juliana Snelling, of Canterbury Law (Photograph supplied)

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Published April 24, 2020 at 9:00 am (Updated April 24, 2020 at 9:51 am)

How layoffs become redundancies

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