Not all firings lead to pay-offs

Roxanne Miller, GUEST COLUMNIST

I was recently told a story in which an ancillary worker in a small business with a total of four employees was repeatedly given verbal and written warnings by her supervisor on account of her tardiness.

Her issue with punctuality applied both to the time that she arrived for work and the tardiness with which she completed her assigned tasks.

Notwithstanding the numerous warnings, the employee showed no signs of improvement. Consequently, the employer took the decision to fire her because of her repeated lateness, that is, to terminate her employment for cause.

The employee was paid her salary up to the date of termination and, gratuitously, given notice pay of two weeks' salary commensurate with her employment duration of one year.

Notice pay was gratuitous, as no notice or payment in lieu of notice is required when terminating for cause. A week after being provided with her letter of termination, effective immediately, she contacted her former employer demanding a 'redundancy' payment.

This case and other similarly themed discourse shows the need for clarification of the difference between termination by reason of redundancy and other forms of employment termination.

There are basically two ways that a contract of employment can be terminated: either by the employer or the employee.

For the purposes of this article resignation, death and retirement are placed in the termination-by-the-employee category.

termination by the employer

Everything else is termination by the employer. This article concerns instances in which the employer terminates the contract.

The relevant legislation in Jamaica, the Employment (Termination and Redundancy Payments) Act does not specify the instances in which an employer can terminate the employment but it does state minimum notice periods, or payment in lieu of notice in the event of termination.

Importantly, however, the act goes on to preserve the right of the employer to terminate the employment without notice in the event of gross or persistent misconduct.

Termination of employment by redundancy is an altogether separate matter.

The act lists the various instances in which a redundancy situation will arise.

In summary, termination by redundancy usually occurs where the employee is dismissed because the business no longer requires the services he/she provides. It does not arise if the employee is dismissed because of misconduct.

Where there is a redundancy situation, and provided that the employee has been employed for at least two years, a redundancy payment would be due.

It is useful to note that the act explicitly states that an employee shall not be entitled to a redundancy payment "where his employer, being entitled to terminate his contract of employment without notice by reason of the employee's conduct, so terminates it".

The misunderstanding revealed in the aforementioned story may be due in part to the belief that if an employee is terminated and he/she is not immediately replaced then the employee's position was made redundant.

Caution should be exercised before endorsing this sweeping generalisation. Both statute and case law are clear that it is the reason for the dismissal that will determine if a redundancy situation has occurred and not simply what the employer does after the termination.

This point is illustrated in the scenario above as the employee was dismissed for cause.

After the dismissal, the employer may have reviewed his/her staff structure and determined that the work carried out by the former employee may be more efficiently carried out if it is shared among the existing workers instead of hiring a new worker. Alternatively, the employer may conclude that the services need not be provided by a permanent employee and therefore may look to outsourcing or undertake a complete restructuring whereby other workers with different skill sets are hired in new posts.

In any of these situations, the failure to hire a new ancillary worker to 'replace' the fired staffer is immaterial to the reason for the dismissal and in any event such restructuring or analogous decision would have been taken after the decision to dismiss the employee was made and effected.

Termination for cause does not equate to a redundancy and therefore, without more, does not entitle the dismissed employee to a redundancy payment.

Roxanne Miller is an attorney with the law firm DunnCox in Kingston. roxanne.miller@dunncox.com