Employment (Jersey) Law 2003: Law drafting instructions to set maximum value of a week's pay

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A decision made 20 September 2011 regarding:

Decision Reference: MD-S-2011- 0072
Decision Summary Title :	Redundancy Pay Order Law Drafting		Date of Decision Summary:	19 September 2011
Decision Summary Author:	Policy Principal		Decision Summary: Public or Exempt?	Public
Type of Report: Oral or Written?	Written		Person Giving Oral Report:	NA
Written Report Title :	Redundancy Pay Order Law Drafting		Date of Written Report:	19 September 2011
Written Report Author:	Policy Principal		Written Report : Public or Exempt?	Public
Subject: Law Drafting instructions – Order under the Employment (Jersey) Law 2003.
Decision(s): The Minister requested the drafting of an Order to set a figure for the maximum value of a week’s pay for the purpose of calculating a redundancy payment.
Reason(s) for Decision: The current maximum value of a week’s pay is set by reference to the mean average earnings figure that was released by the States of Jersey Statistics Unit in August 2010; £630. However, in August 2011, in addition to the mean average weekly earnings figure, the Statistics Unit released a median average weekly earnings figure. This brings unintended uncertainty as to which figure applies for the purpose of calculating a redundancy payment. Article 60C of the Employment Law permits the Minister to make an Order to set an amount of weekly earnings. An Order must therefore be made to reflect the policy intent that the mean average earnings figure is the amount that will apply. The maximum value of a week’s pay for the purpose of calculating a redundancy payment will increase to £650 for any redundant employee whose effective date of termination of employment is 24 September 2011 or later.
Resource Implications: There are no financial or manpower implications of the law drafting instructions.
Action required: Policy Principal to submit drafting instructions to the Law Draftsman’s Office.
Signature:		Position:
Date Signed:		Date of Decision (If different from Date Signed):

Employment (Jersey) Law 2003: Law drafting instructions to set maximum value of a week's pay - calculation of redundancy payment

LAW DRAFTING INSTRUCTION

Redundancy pay - Order to set the maximum value of a week’s pay

The right to receive a redundancy payment for qualifying employees came into force on 1 January 2011. Article 60C of the Employment (Jersey) Law 2003 provides that the amount of a redundancy payment is calculated as follows:

60C Amount of redundancy payment

(1) The amount of a redundancy payment shall be calculated by allowing one week’s pay for each year of employment during the period, ending with the effective date of termination, in which the employee has been continuously employed.

(2) For the avoidance of doubt, in this Article ‘year’ means a period of 12 calendar months.

(3) For the purposes of paragraph (1), the amount of one week’s pay shall not exceed the amount specified by Order under paragraph (4), or, if no such Order is in force on the effective date of termination, the most recent figure for the average weekly earnings published by the States of Jersey Statistics Unit at least one month before the effective date of termination (disregarding any more recent figure published less than a month before the effective date of termination).

(4) The Minister may, by Order, specify an amount for the purposes of paragraph (3).

An Order has not been made and so the figure that has applied since 1 January 2011 is the average earnings figure of £630, as published by the Statistics Unit in June 2010.

When the redundancy legislation was prepared in 2010, it was not envisaged that the Statistics Unit would release two average weekly earnings figures in the June 2011 report on the Index of Average Earnings: the mean average earnings figure was £650 per week and the median average weekly earnings figure was £520 per week.

It was not the Minister’s intention that there should be any uncertainty as to which average earnings figure applies for the purpose of the calculation. On the basis that this is likely to cause confusion amongst employers and employees, and potentially give rise to disputes and Employment Tribunal claims, the legislation must reflect the policy intent that the mean average earnings figure will apply each year.

The Minister would prefer to make an Order quickly to minimise the period in which there could be uncertainty about which figure applies. When calculating a redundancy payment, the appropriate figure to use is the most recent figure published by the Statistics Unit at least one month before the effective date of termination. The average earnings figures were published on 24 August, so this potentially becomes an issue where a redundant employee’s effective date of termination of employment is 24 September 2011 or later.

If acceptable in drafting terms, it would be preferable to specify by Order that the mean average weekly earnings figure is the amount that will apply in future years. However, if the Order may only specify a precise figure, and the Statistics Unit continues to release both mean and median average earnings figures, an Order will be required in August/September each year to set the new amount, until the primary law is amended.