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EVERYDAY LAW: Notice under Severance Act


CECIL MCCARTHY

EVERYDAY LAW: Notice under Severance Act

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WHEN AN EMPLOYEE is made redundant, one of the issues often overlooked is the requirement for notice under the Severance Payments Act.

In civil appeal No: 33 of 1998, June Clarke v American Life Insurance Company (ALICO), the Barbados Court of Appeal considered the issue of the requirement for notice or pay in lieu of notice in addition to the severance payment made to an employee who was made redundant.

At paragraphs 20, 22, 25, 26 and 27 of the judgment, former Chief Justice Sir David Simmons discussed the requirements for notice and the purposes and intent of the Severance Payments Act.

“[20] Mr Shepherd does not challenge the trial judge’s finding that the appellant was dismissed by reason of redundancy. The only issue between the parties boils down to this. Is she entitled to more than one month’s notice or equivalent payment in lieu of notice in addition to the severance payment made by the company?

“[22] Section 20 of the act prescribes statutory minimum periods of notice to be given to employees made redundant. It is important to emphasise that the periods of notice apply only ‘for purposes of this act’. These statutory minima cover employees who have worked between two to five years and employees who have worked for five years or more. Thus it provided: ‘20. (1) For the purposes of this act, the notice required to be given by an employer to terminate the contract of employment of a person who has been continuously employed for 104 weeks or more –

(a) shall be not less than two weeks’ notice if the period of continuous employment is two years or more but less than five years; and (b) shall be not less than four weeks’ notice if his period of continuous employment is five years or more.

(2) For the purposes of this act, the notice required to be given by an employee who has been continuously employed for 104 weeks or more to terminate his contact of employment shall be not less than one week.’

Subsection 3 empowers either party to the contract of employment to waive his right to notice or to accept a payment in lieu of notice.

“[25] Before we can answer the problem posed by this appeal, we must turn our attention to the purpose and intent of the Severance Payments Act.

Over the years this legislation has been used as an instrument for the adaptation to the changing needs, demands and economic imperatives of contemporary society and in response the challenges of a technologically-driven world.

In the course of time many thousands of workers have lost their jobs where the dominant motive for termination has been a genuine redundancy caused by financial collapse or a need to restructure and reorganise a business.

“[26] Whatever its economic purposes or labour market objectives, we accept that one of the principal purposes of the act was, as Lord Denning observed in an early decision on the English act, to provide ‘compensation for long service’.

“[27] Where an employee loses his job because of redundancy, Section 3 of the act, for the first time, introduces a right to compensation for the dismissal. For the purposes of the act, Section 3(3) states that an employee’s dismissal shall be deemed to be by reason of redundancy if ‘it is wholly or mainly attributable to –

(i) the fact that this employer has ceased or intends to cease to carry on the business for the purposes of which the employee was employed by him, or has ceased, or intends to cease or carry on that business in the place where the employee was so employed; or

(ii) the fact that the requirements of that business for employees to carry out work of a particular kind or for employees to carry out work of a particular kind in the place where he was so employed, have ceased or diminished or are expected to cease or diminish . . . .

The criteria at (i) and (ii) speak to cessation of business and diminishing requirements of the business.”

The court went on to hold that the periods of notice prescribed in Section 20 were statutory minima and that the statutory period of notice could be enlarged.

On the facts of the case, the court implied  that an employer was under a duty for reasons of fairness and good industrial practice to give a reasonable

notice of redundancy beyond the statutory minimum period.

The court ordered that the plaintiff (who had been employed by ALICO for 25 years) should be given an amount representing five months’ emoluments, having regard to the facts and circumstances of the case.

• Cecil McCarthy is a Queen’s Counsel. Send your letters to Everyday Law, Nation House, Fontabelle, St Michael. Send your email to [email protected]

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