COVID-19 and workforce lay-offs

Sherry Ann McGregor
Sherry Ann McGregor

March 23, 2020

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COVID-19 has sent shockwaves throughout the world, and its adverse impact on local and global economic activities has forced employers to assess whether they can actually retain their employees.

One March 18, 2020, Gleaner headline read, ‘Hotels closing – RIU shutting three out west, 1,000 workers going home’. The article explained that several other hotels and tourist attractions were facing closure because of reduced occupancy levels and low guest arrivals coming out of global travel restrictions that have crippled local tourism. Although the total number of workers who will be affected by the closures is not yet known, the forecast is bleak.

Employers in various sectors in Jamaica may be contemplating reducing the size of their workforce in an effort to cut their operating costs while revenue remains flat or declines as a result of the impact of COVID-19.

In common law, there is no general right for employers to lay off employees. It is also true that the Employment (Termination and Redundancy Payments) Act does not explicitly state that an employer has the right to lay off staff. However, Section 5A of the act provides as follows:

“(1) For the purposes of Section 5, an employee who has been laid off without pay for a period in excess of one hundred and twenty days may by notice in writing to the employer elect to be regarded as dismissed by reason of redundancy from such date (not being less than fourteen days nor more than sixty days after the date of the notice) as may be specified in the notice, which date shall, for the purposes of this act, be regarded as the relevant date.”

Based on the way in which this section has been interpreted and applied, the following points should be noted:

  1. It is implied and generally accepted that an employer may lay off an employee in reliance on the act.
  2. However, to interpret Section 5A to say that it gives an employer the right to lay off any employee for a maximum of 120 days would be wrong (Branch Developments Limited v Taylor [2016] JMCA Civ 10).
  3. Instead, from the same case, it is clear that an employee who has been laid off for more than 120 days has the option to treat the lay-off as a dismissal on the grounds of redundancy after a period of 120 days by serving notice to this effect on the employer.
  4. If that option is exercised, an employee will be entitled to redundancy pay in accordance with Section 5 of the act, which states that “an employee who has been continuously employed for the period of one hundred and four weeks” will qualify to receive redundancy payments.
  5. Not all employees will qualify to receive redundancy payments after being laid off. An employee who was not employed for a period of 104 weeks prior to being laid off may not be able to elect to be treated as being dismissed by reason of redundancy 120 days after being laid off.
  6. Section 5A does not entitle an employee who has been laid off to insist on an extension of the lay-off period (Branch Developments Limited v Industrial Disputes Tribunal and Anor.[2015] JMCA Civ 48, paragraph 65).
  7. Also, in paragraph 65 of that ruling, it was confirmed that the decision as to the length of the lay-off period lies entirely within the employer’s discretion. In theory, that period could, therefore, be indefinite.
  8. In that paragraph, it was also stated that the applicability of Section 5A is not limited to seasonal employees but applies to all employees.
  9. An employee remains employed during the lay-off period.
  10. It is, therefore, possible that an employee could remain employed during the lay-off period long enough to qualify to receive redundancy payment.

It is hoped that the number of lay-offs and redundancies will be few.

Sherry Ann McGregor is a partner, mediator and arbitrator in the firm of Nunes Scholefield DeLeon & Co. Please send questions and comments to lawsofeve@gmail.com.

Sherry Ann McGregor

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Sherry Ann McGregor

Sherry Ann McGregor is a partner, mediator, and arbitrator in the firm of Nunes Scholefield DeLeon & Co.

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