Can an employee be laid off without consent?
THE SOCIAL and economic upheavals brought on by the COVID-19 has also created a whole list of legal problems in many spheres of economic activity, but the impact has been acutely felt in employment relationships. Employers whose businesses have been widely affected by reduced demand for their goods and services, have had to cut expenses because of the drastic reduction in revenue, and one critical area has been attempts to reduce the wage bill by laying off workers.
How this is to be dealt with, is guided by the minimum standards laid out in the Employment (Termination and Redundancy Payments) Act and, to a degree, the Labour Relations and Industrial Relations Act and its attendant Labour Relations Code, if employees claim unjustifiable dismissal. But what of lay-offs in the current dispensation, and can you do it without being met with a claim for unjustifiable dismissal?
LAY-OFFS BY EMPLOYERS
Section 5A of the Employment (Termination and Redundancy Payments) Act (ETRPA) provides the employer with the right to lay off an employee without pay, if it is done in accordance with the terms of the contract of employment, or if the circumstances of his employment are changed so that for some period he receives no pay, pending the employer’s decision to reinstate him on previous circumstances of employment, or one that is similar. The employee, however, has the right to elect to be made redundant if he has been laid off in excess of 120 days.
Employers have posed many questions as to their rights and that of the employees in this context of laying off. Are they mandated to consult with the employee before doing so, and should they get the employees’ agreement before laying off? While in an ideal situation these steps would be desirable in the interest of good labour relations, it is not necessary to consult with, or seek the agreement of, the employee before laying him off.
If the employee is laid off in accordance with the terms of his contract of employment, the employer is entitled to do so, and the act is very clear in this regard on the employer’s rights. The employer also has the right to lay off, under the act, if the circumstances of the employee’s employment have changed. The changed circumstances may be varied and many, but there is no doubt that the current COVID-19 may very well constitute such changed circumstances as contemplated by the Parliament when this provision in the act was enacted in 1986.
Back then, there was great economic dislocations which saw employees sometimes being placed on lay-off indefinitely, which was unfair and unconscionable. The objective of the amendment was to ensure that after at least 120 days of being laid off, the employee could seek redress via being treated as being made redundant. The amended law did not create an obligation for notice, agreement or consultations in the lay-off process.
In fact, the legislative intent was to allow employers the ability to suspend certain requirements of the employment contract in the face of adverse circumstances, to encourage job preservation, since workers remain ‘on the books’ during the lay-off, albeit without pay or, at the employer’s option, being provided with limited pay and benefits. Indeed, the employee can choose to remain on lay-off even past the 120 days, if they believe that in due course, the business will once again become viable and they will be recalled to their normal or similar duties.
To therefore say that the Jamaican Court of Appeal decision in Branch Developments Limited v Taylor (2016) is of general application to all genres of lay-off would be erroneous. To begin with, the case surrounded the employer’s decision to utilise the lay-off provision to facilitate a disciplinary investigation. The court was clearly of the view that the wrong legal tool was used in the context of a disciplinary process. The court, therefore, correctly decided that this approach was unlawful, as there was no contractual or statutory right to do so.
Employers should rest assured that layoffs in the light of changed circumstances, such as COVID-19, would not amount to breach of the employment contract, if these matters are covered in the contract or the act.
In the Branch Development case, where the employer purported to lay off the employee, it was not because of changed circumstances, but it was to remove the employee from the workplace without pay, for the purpose of conducting disciplinary proceedings. The Court of Appeal ruled that the compensation due to Ms Taylor should not take account of the period she remained unemployed up to 120 days, since she was effectively dismissed at the date the unlawful lay-off was instituted. A lay-off that is lawfully done suspends the contract of employment but does not bring the contract to an end, and in such a context, it allows the employer to temporarily reduce the workforce and the wage bill in a situation where production has dropped or operations have closed temporarily. These circumstances never existed in the Branch Development case.
Additionally, access to the Industrial Disputes Tribunal (IDT) make any claim for monetary compensation will not be possible, unless an employee (unionised or not) can claim an industrial dispute under the Labour Relations and Industrial Disputes Act? Since the employee has not been dismissed by lay-off, it could prove challenging them to fit this prerequisite, given that constructive dismissal is not in the jurisdiction of the IDT.
In light of the foregoing, and since even among lawyers there are contending views, now is an opportune time for the policymakers and Parliament to urgently address this issue, by clarifying the statutory provisions for the avoidance of doubt. Otherwise, a definitive interpretative pronouncement from the court could also be of assistance.
In the meantime, it is submitted that employers would not be out of line with the statute in laying off employees, given the changed circumstances of employment occasioned by COVID-19. This practise could also be justified by settled custom and practice and operation of an implied contractual term in the Jamaican employment and labour law environment. Employers are, however, encouraged to communicate with their employees what is happening in the business, so that a shared approach to dealing with this unprecedented crisis will enure to the benefit of all concerned.