COVID-19 LAY-OFFS

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May 15, 2020

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In last week’s article when I compared lay-off to redundancy, I said that with lay-off, “No consultation required, although it is advisable to consult” and with redundancy, “Employer must consult with employees“.  I maintain that view, even after re-reading the Court of Appeal case of Court of Appeal in the case of Branch Developments Limited v Taylor, the Employment (Termination and Redundancy Payments) Act, the Regulations and the Labour Code.

Limited space will not allow for a detailed analysis, but below are the details of the Taylor case, which should help you to decide whether it leads to the conclusion that consultation is a prerequisite for lay-offs:

  1. In the case of Branch Developments Limited v Taylor, after having a meeting with three employees, including Taylor, the employer decided to lay them off pending further investigations.  Taylor alleged that the lay-off amounted to dismissal and filed a claim in court to recover damages for breach of her contract of employment.
  2. Branch Developments responded to say that Taylor had not been dismissed.  Instead, they contended that she was “suspended/laid off” and that they had the right to lay her off for up to 120 days.  (Suspension and lay-off are not synonymous terms.)   
  3. In the Supreme Court, the Learned Judge found that Taylor’s contract of employment had been breached and that Branch Developments had no contractual right to suspend her pending investigations. 
  4. On appeal, the issue was whether the damages awarded to Taylor was correct, and this involved an analysis of the effective date of Taylor’s termination.  On Taylor’s behalf, it was argued that she should be paid for being laid-off and also for being dismissed.
  5. The Court of Appeal concluded that “absent either a statutory or contractual power to do so, the laying off of an employee amounts to a dismissal“.  However, that was because Taylor’s case involved flawed disciplinary proceedings which resulted in her being allegedly laid off.  It was because she was not properly laid off that it was proper to treat her as being dismissed from her employment. 
  6. In conclusion, the court made a single award for damages for the wrongful lay off that amounted to a dismissal.
  7. Taylor’s case, therefore, did not provide a road map as to what circumstances could warrant an employee being laid off.  It only concluded that the circumstances for lay-off did not arise in that case. 
  8. For certain, the Court did not consider section 5A of the Act in its entirety because 5A (3) sets out the statutory bases for laying off an employee without pay as follows:

(a) an employee is laid off without pay if, other than on disciplinary grounds-

(i) he is laid off without pay in accordance with the terms of his employment; or

(ii) the circumstances of his employment are changed so that for some period he receives no pay pending a decision by his employer to reinstitute previous, or similar, circumstances of employment; and

(b)a person may, subject to regulations, be regarded during any period, as laid off without pay notwithstanding that during that period he receives some pay or is engaged to work for limited times only. In my view, the COVID-19 pandemic has certainly given rise to changed circumstances that cause employers to reduce pay or to make no payments at all.

On the question of consultation, although a lay-off could lead to redundancy at the option of the employee who has been laid-off for 120 days, the fact is that a laid off employee could well be reinstated within that period, and there would inevitably be consultations as to the amount of pay that employee should receive.  Therefore, at the start of the lay-off period, it would seem to be premature to treat it as triggering the same obligations for consultation as a redundancy exercise would.

Finally, for practical purposes, employers who are now faced with ever-changing circumstances due to the impact of the COVID-19 pandemic have little time to make plans and engage in the detailed consultations that planned redundancy exercises would.

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.

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