AMENDMENTS TO THE EMPLOYMENT ( JERSEY ) LAW 2003, RELATING TO THE POWERS OF THE JERSEY EMPLOYMENT TRIBUNAL
- SUMMARY
The Minister proposes that the Employment (Jersey) Law 2003 be amended to develop the Employment Tribunal’s powers in relation to unfair dismissal claims. The Social Security Minister requested that the Employment Forum consider the issues discussed in sections A and B and to report back with its views. The Forum’s recommendations and the Minister’s responses are included at section C.
A.1 The first proposed amendment would give the Tribunal the power to reduce an unfair dismissal award where an employee is found to have contributed to their own dismissal (in specified circumstances).
A.2 The second proposed amendment would give the Tribunal the 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
B.1 REDUCTION IN UNFAIR DISMISSAL COMPENSATION
In it’s December 2001 recommendation on unfair dismissal[1], 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. Such provisions would also give redress to the employer for procedural irregularities. The following principles should apply:
• The Tribunal should begin with an assumption that the claimant is entitled to a full award, and the burden of proof for a finding of contributory conduct by the claimant is upon the employer.
• Where an employer can demonstrate to the Tribunal that the dismissal of the employee was due to their conduct, or that their conduct was a contributory factor in the dismissal, awards may be reduced or withheld in full.”
The report that accompanied the draft Employment Law to the States said 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, when the Employment (Awards) (Jersey) Order, 2005, was being drafted early in 2005, a request was made for this power to be specified. Early drafts of the Order did include this power; however the Law Officers’ Department was not convinced that the award could be reduced in this way by Order, so the paragraph was omitted with the intention of bringing an appropriate amendment to the Employment Law in future.
The Minister has recently received representations regarding such an amendment from the Jersey Employment Tribunal, the Jersey Hospitality Association and Chamber of Commerce. It is understood that the absence of this provision is causing a great deal of discontent for employers and frustration for the Tribunal. As explained above, the Forum had already recommended that the Tribunal should have this power. The Minister therefore asked the Forum to consider some additional matters regarding the proposed amendments that were not detailed in the Forum’s original recommendation.
Guernsey
An equivalent provision in a similar small jurisdiction is Article 23 of the Employment Protection (Guernsey) (Amendment) Law, 2005, which provides that the newly created Employment and Discrimination Tribunal (which replaces the Adjudicators), may reduce an unfair dismissal award in certain circumstances.
The Tribunal may take into account whether an offer of reinstatement has been unreasonably refused, and any other circumstances in which the Tribunal considers that it would be just and equitable to reduce the award of compensation, to whatever extent it sees fit.
Other than where an offer of reinstatement has been refused (an award which the Jersey Employment Tribunal currently does not have the power to make), the facility to reduce the award does not apply if it is shown that the reason for the dismissal, or in a redundancy case, the reason for selecting that employee for redundancy, was one of the “automatically unfair” reasons (which are similar to those specified in Jersey’s Employment Law).
In Guernsey, up to 6 months pay may be awarded for unfair dismissal and there is no scale based on length of service, as in Jersey. It is thought that this power might encourage employees to conciliate and agree a settlement without recourse to the Tribunal if there is the possibility that they might not be awarded the maximum sum by the Tribunal.
The Guernsey Tribunals’ power to reduce an award was introduced in March 2006 and a decision to reduce an award was issued for the first time in December 2006. In Clarke v Hockey (heard in November 2006), it was decided that “Whilst the Tribunal finds the dismissal unfair on procedural grounds it also takes account of the actions taken by the employer in the period leading up to the dismissal, in taking many reasonable steps to avoid the redundancy of Mr Darren Clarke; and thus finds it just and equitable to reduce the award.”
It is considered that this power could also encourage employers to take their chances at a Tribunal, rather than reach a settlement in advance as they often do now. It has been suggested that the powers given to the Guernsey Tribunal are wider than intended for Jersey in that an award may be reduced in any circumstances that the Tribunal considers just and equitable. In the interests of natural justice, it is considered that there should be statutory provisions for the circumstances in which an award may be reduced.
Grounds for Reducing Award
The basic award available in the UK is similar to Jersey’s unfair dismissal award in that both are calculated in units relating to week’s pay and years of continuous service. Also, both awards are intended to compensate for loss of job security. In UK, the basic award can be reduced for the following four reasons:
1. The employee has unreasonably refused an offer of reinstatement.
It is suggested that this should be included in Jersey and must cover constructive unfair dismissal cases. It should also be extended to apply where the employee walks out within a very short time of starting a reinstated position.
2. The employee’s conduct before dismissal makes a reduction just and equitable.
It is suggested that this should be included in Jersey and should apply to conduct before notice is given or in the act of dismissal, but should not apply where the employee is made redundant. This should also include conduct committed whilst in employment which does not come to light until after notice is given or the dismissal occurs.
3. The employee is awarded a sum in respect of a dismissal under a designated dismissals procedure.
It is suggested that this provision should instead cover situations where there has been an ex-gratia payment or settlement reached between the parties before the Tribunal hearing, which explicitly covers any liability arising out of an unfair dismissal case.
4. The employee is dismissed for redundancy and has received a redundancy payment.
It is suggested that this should be included so that any payment received on the grounds of redundancy (either contractual, or when the new redundancy law comes in) must be deducted from the unfair dismissal award made in Jersey, provided that the dismissal was not “automatically” unfair by reason of redundancy.
The report that accompanied the draft Employment Law to the States prior to its debate referred to reducing awards only for reasons of conduct, however it is suggested that all four points referred to above should also apply.
The additional award payable under Article 86 of the Employment Law (which is capped at £10,000) and the compensatory award in the UK are both intended to compensate an employee for actual financial loss suffered as a result of the unfair dismissal. In the UK the compensatory award is subject to a statutory maximum, as in Jersey, and is a statutory concept. In the UK these awards can be reduced where:
There has been a failure to comply with a relevant statutory dismissal and disciplinary procedure.
Where an employee has contributed to his dismissal
Where the Tribunal considers it just equitable to award a lesser amount.
Where the employee fails to take reasonable steps to mitigate their loss.
However, in Jersey, the Tribunals jurisdiction arises out of that of the “courts in Jersey” which is much wider. Accordingly, the Tribunal powers to reduce this award will be based on the Royal Court precedents of equity and the principles of “just and equitable” reduction for matters brought to the Tribunal’s attention, for example, conduct and failure to mitigate will apply.
The Employment Forum’s 2001 recommendation said that the burden of proof for reductions from the basic award of 100% should be on the employer and that the Tribunal should have the power to “withhold” an award. However, it is noted that the award is intended to reflect loss of job security, so if the Tribunal finds that a dismissal was unfair, an award must be made, even if the reduction applied by the Tribunal is 100%.
B.2 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. “
The power is rarely used in other jurisdictions as it is often impractical given that the relationship between the employer and employee has deteriorated. In only three of Guernsey’s 380 unfair dismissal cases so far, has there been an offer of reinstatement from an employer, however it is considered important that the Tribunal may consider an award for re-employment, particularly in a small Island where, in many cases, it would be more difficult than in the UK to find a similar job.
The UK
In the UK, where a Tribunal finds that an employee has been unfairly dismissed, it can make orders for the employee to be re-employed (either reinstated or re-engaged) and will ask the employee whether he or she wants such an order. In deciding whether or not to make such an order, the Tribunal will take into account:
the employee's wishes;
the practicability of the employee returning to work for the employer;
in cases where the employee was partly to blame for the dismissal, whether or not it would be just to make such an order.
Where reinstatement is awarded, the employee is to be treated in all respects as though the dismissal had not occurred, with no loss financially, or of seniority.
Where re-engagement is awarded, the employee is to 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.
Orders for reinstatement or re-engagement normally include an award of compensation for any loss of earnings. If an employer refuses to comply with the terms of an order for re-employment, an award of compensation can be made by the Tribunal and if there has been a total failure to comply with the order there will be an additional award of compensation over and above the basic and compensatory awards, unless the employer can satisfy the Tribunal that it was not practicable to comply with the order. The additional award can be between 26 and 52 weeks' pay.
Jersey
In Jersey, there is presently only one remedy available to the Tribunal on finding unfair dismissal, which is compensation under Article 77 of the Employment Law.
The Forum’s original recommendation on this matter referred only to reinstatement, rather than the wider category of re-employment, which includes re-engagement. If the Tribunal is to be given this additional power in unfair dismissal compensation, then it is suggested that both options should be available, particularly as re-engagement is a more flexible option than reinstatement.
The Forum had also stated that parties can enter into a new contract of employment if they wish to do so, however this does not mean that financial and seniority matters are protected by continuation and requires enormous goodwill on both sides for it to happen and for the employee’s rights to be protected.
It is suggested that the Tribunal should have statutory considerations, as in England and Wales, to assess if it is practical and possible, covering:
· Whether the employee wants an order to be made for reinstatement, and with re-engagement, what sort of order he wants, and
· Whether it is practicable for the employer (or successor companies, etc, with re-engagement) to comply.
· Whether, where the employee’s conduct contributed to their dismissal, it is just to make an order of re-employment.
It is considered that it would be appropriate for additional awards to be payable to employees where an employer has unreasonably refused to comply with an order for re-employment, provided that the Tribunal has taken all of the statutory considerations into account.
It is thought in the UK that employees sometimes feign a desire for re-employment, as the burden of proof is then on the employer to show the Tribunal why re-employment should not be awarded. Concern has been expressed that employees might use this as a tool to negotiate a higher pre-tribunal settlement with an employer who is unwilling to risk an increased unfair dismissal award for refusal to comply with a re-employment award.
A great deal of time is spent by tribunals in the UK to determine whether re-employment is appropriate in the circumstances and there is legislation relating to this. If the matter has been properly assessed by the Tribunal at the time of making an order, it is perhaps unlikely that this would be used as a negotiating tool for an additional award. It is suggested that the Tribunal could have the discretion not to make an additional award if the employee is behaving in a vexatious manner, such as, making unreasonable demands, or refusing to return to work.
C. EMPLOYMENT FORUM’S RESPONSE
The Forum considered the suggestions set out in the above report and presents its recommendations on each issue in the following section. The Minister’s response to each of the recommendations is also recorded after each sub-section.
C.1 REDUCTION IN UNFAIR DISMISSAL COMPENSATION
The first proposed amendment would give the Tribunal the power to reduce an unfair dismissal award where an employee is found to have contributed to their own dismissal (in specified circumstances).
The Forum understands that the absence of this power is affecting the credibility of the Employment Tribunal.
The Forum recommends that the Employment Tribunal should have the power to reduce an unfair dismissal award only in specified circumstances, rather than in any circumstances that it considers would be “just and equitable”.
The Forum considered the 4 points discussed on page 3 of this report, under the heading “Grounds for Reducing Award”. The Forum agreed that the law should provide that an award may be reduced only in the 4 circumstances described, with one exception which the Forum felt it had not been given sufficient consideration to reach a consensus (or majority) view.
The second point makes a reduction in award "just and equitable” where there has been bad behaviour by the employee during the process, including bad conduct before notice is given, except where an employee is made redundant.
Some members agreed with the suggestion that a reduction in award would be unfair in a redundancy situation as the dismissal is based on the employers’ need to reduce staff numbers and has not occurred as a consequence of the employees own conduct.
Other members felt that the Tribunal should be able to at least consider reducing an award as it would be looking at unfair dismissal on the grounds of unfair selection for redundancy (not awarding a redundancy payment), and conduct could be taken into account where a selection must be made between two employees, one with a record for poor conduct.
The Forum agreed that the degree to which the award may be reduced should be at the discretion of the Tribunal depending on the circumstances of the case. It may be necessary for the Tribunal to develop some ground rules on how such reductions are calculated.
The Forum recognised that, contrary to its 2001 recommendation on this matter, it should not be possible for an award to be “withheld” as such, as the award is intended to reflect loss of job security. If the Tribunal finds that a dismissal was unfair, the Forum agrees that an award must be made, even if the reduction applied by the Tribunal is 100%.
The Minister approves the Forum’s recommendations for the reduction in unfair dismissal compensation in the specified circumstances.
The Minister notes that the Forum did not reach a consensus (or majority) view as to whether a reduction in award is "just and equitable” where there has been bad conduct by the employee where an employee is made redundant.
The Minister understands that a reduction in award would not generally be considered just and equitable in a redundancy situation because the dismissal is based on the employers’ need to reduce staff numbers, not as a consequence of the employees own conduct. However, the Minister would support the view expressed by some Forum members that the Tribunal must have the ability to consider if it would be just and equitable, depending on the specific circumstances of the case.
C.2 RIGHT TO RE-EMPLOYMENT
The second proposed amendment would give the Tribunal the 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.
The Forum’s 2001 recommendation on this issue was considered to be a sensible approach at that time, based on advice from other jurisdictions that the power is rarely used, as it is usually impractical given the deterioration in the relationship between the employee and employer. The recommendation was not intended to restrict the powers of the Tribunal and was in the interests of avoiding unnecessary complexity.
The Forum understands that Jersey is a more restricted employment market than the UK, making the option of an award for re-employment more relevant and necessary.
The Forum’s original recommendation referred only to awards of reinstatement, where an employee must be returned to their old job and treated in all respects as though the dismissal had not occurred, whereas re-engagement requires that the conditions of employment must be preserved, but not necessarily replicated, in a different job.
Having considered this wider category of re-employment and the distinction between the two types of award, the Forum agreed unanimously that if the Tribunal is to have this power, then awards for both types of re-employment should be available to it.
The Forum recommends that the Tribunal should have the power to award additional compensation to employees for any loss suffered because of the employer's failure to comply with an order for re-employment (whether reinstatement or re-engagement) and considers that the Employment Tribunal should have discretion in the level of the award, depending on the circumstances of the case. It may be necessary for the Tribunal to develop some ground rules on how such compensation is calculated.
The Minister approves the Forum’s recommendation that the Tribunal must have 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 that it must have the power to award additional compensation if the employer does not comply with a direction for re-employment. Any compensation should be awarded from the £10,000 maximum sum that the Tribunal may award for all claims other than unfair dismissal.
[1] http://www.gov.je/NR/rdonlyres/EA93958E-CF6E-497D-B7C2-114AADEE6D41/0/reccomendation_unfair_dismisal.pdf
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