Posted on

FRANKLY SPEAKING: Fix Severance Payments Act!

Caswell Franklyn

FRANKLY SPEAKING: Fix Severance Payments Act!

Social Share

Over the years, I cannot recall how many workers have asked me about their rights to severance payments.
Each time I offer advice in that area, it bothers me because I am forced to apply the interpretation placed on the Severance Payments Act by the courts, and not what the act actually says or what was intended by Parliament.
Let me state from the outset that the Severance Payments Act is a poorly drafted piece of legislation that is difficult to read and understand. However, it is not so bad that you cannot discern an intention to deal not only with redundancy payments, but also with other aspects of termination pay.
The act sets out a clear intention to pay compensation to persons who lose their jobs, after working 104 weeks, through no fault of their own. It was passed in Parliament in 1971 and was brought into force on January 1, 1973. The long title states: “An Act to provide for the making by employers of severance payments to employees who cease to be employed in circumstances amounting to redundancy and for related matters.”
Unfortunately, for Barbadians, our act bears some resemblance to the former British Redundancy Payments Act, and our courts have been persuaded to use English precedence to interpret the Barbados law, without appreciating the significant differences between the two pieces of legislation. The last four words of the long title – “and for related matters” – would suggest that the act is not strictly dealing with redundancy.  
Be that as it may, lawyers have continued to advise employers that in order to avoid paying severance, all they have to do is to give the employee the notice that is required under the terms of the contract. They would say to you that this is the common law position, failing to recognise that the common law on dismissal has been modified with effect from January 1, 1973. I place reliance on Sections 4(2), 16(1) and 45 of the Severance Payments Act for this assertion. Section 4 (2) states:
“Except as provided by Section 8, an employee is not entitled to a severance payment because of dismissal where his employer, being entitled to terminate his contract of employment without notice because of the employee’s conduct, terminates it
(a) without notice;
(b) by giving shorter notice than that which, in the absence of such conduct, the employer would by law be required to give to terminate the contract; or
(c) by giving notice, not being such shorter notice as is mentioned in paragraph (b), which includes or is accompanied by a statement in writing that the employer would because of the employee’s conduct, be entitled to terminate the contract without notice.”
The act provides that an employee is not entitled to a severance payment if he is terminated without notice because of his conduct. It therefore goes without saying that the employee would be entitled to a severance payment if he is terminated in circumstances where the employer is not entitled to terminate because of the employee’s conduct. It is obvious to me, from reading only Section 4(2), that the Severance Payments Act requires that a person would be compensated for his service if he is terminated through no fault of his own, contrary to the advice that lawyers have been giving. It cannot be fair for an employer to terminate a worker who has been employed for 20 years, by giving a period of notice and no compensation.
Section 16(1) further strengthens my view that the act does not only speak to the payment of severance where an employee is terminated in circumstances that amount to redundancy. It states, in part:
“For the purposes of this act, an employee shall, subject to Part II, be deemed to be dismissed by his employer if –
(a) the contract under which he is employed by the employer is terminated by the employer, whether it is so terminated by notice or without notice; or
(b) where under that contract he is employed for a fixed term, that term expires without being renewed under the same contract; or
(c) the employee terminates that contract without notice in circumstances (not falling within subsection (4) of Section 8) such that he is entitled so to terminate it by reason of the employer’s conduct.”
Common sense would suggest that this subsection could not be speaking to redundancy. From reading Sections 4(2) and 16(1), the act shows a clear intention of compensating an employee who was terminated through no fault of his own.
Section 45, even though it is a bit confusing, confirms that the act deals with more than just redundancy. That section sets out the method for computing compensation for wrongful dismissal. If, as has been interpreted by lawyers and the courts for the last 40 years, the Severance Payments Act does not speak to wrongful dismissal, why would that act mandate a formula for calculating it?
Public officers who work on contract receive a gratuity at the end of the period for satisfactory service. It is reasonable to assume that the Errol Barrow administration, in 1971, was attempting to provide similar conditions for workers in the private sector. Unfortunately, Barrow’s intention and the letter of the law have been misinterpreted in favour of unscrupulous employers who would work a person for years, dismiss him and seek a technicality to avoid paying compensation.
Since the letter and spirit of the Severance Payment Act were misinterpreted at the highest level, it is left to Government to fix the problems created by the courts. The act should be amended to remove any doubt about its original intention.
• Caswell Franklyn is a trade unionist and social commentator.