Statutory Dismissal - Redundancy, Severance and Unfair Dismissal

• Pages: 174-260

CHAPTER 6

STATUTORY DISMISSALS – REDUNDANCY,

SEVERANCE AND UNFAIR DISMISSAL

OVERVIEW

It is true to say that the loss of a job can be one of the most devastating events to occur in the

life of any worker.

1 The fact of the dismissal is bad enough, but the reason behind it, and

manner in which the dismissal is manifested, can be just as overwhelming as the act itself, if

not more so. Indeed, as aptly stated by Downes, Mamingi and Antoine, ‘[T]he most conten-

tious area of labour law in the region relates to the termination of workers and calculation of

the associated fi ring costs to the employer’.

2

As discussed in Chapter 5, a distinct regime exists to regulate dismissals within the purview

of the common law, albeit that limited statutory interventions have encroached thereon with

the express intention of implementing certain minimum standards. Suffi ce it to say that these

common law principles have proved inadequate to address the concerns of especially the long-

term worker who is terminated at the behest of the employer in circumstances where they are

neither at fault nor engaged in activities which would legally allow the employer to dismiss.

These and other reasons, no doubt encouraged and guided by ILO Conventions and

Recommendations, caused many States to introduce specifi c statutory regimens to institute a

framework for the protection of workers in such instances. Two of the most widely recognised

mechanisms used in this regard are (1) redundancy or severance packages and (2) unfair

dismissal procedures and compensation.

This chapter examines the international backdrop to these concepts and undertakes a full

review of their application within the Commonwealth Caribbean context. The implication for

the worker of the interaction of the two precepts in light of the legal framework will also be

considered, infused with references to the recommended statutory dismissal systems as contem-

plated by the CARICOM Draft Model Laws on Termination.

INTERNATIONAL CONSIDERATIONS

The earliest contemplation of the subject of termination at the ILO level occurred in 1963,

when Recommendation 119 (Termination of Employment) was adopted by the ILC. It

outlines the ‘… fundamental notion that managerial power should be exercised so as to be

compatible with notions of formal rationality’.

3 The bedrock principle of the Recommendation,

which has remained true in the successor Convention 158 (Termination of Employment) and

its accompanying Recommendation 166

4 is the premise that ‘termination of employment

should not take place unless there is a valid reason for such a termination connected with the

1 See Brodie, D. (1998) ‘Specifi c Performance and Employment Contracts’ 27 ILJ 37, where he vividly

describes the chagrin of many workers when dismissed: ‘... in reality, people build much of their lives

around their jobs. Their income and prospects for the future are inevitably founded in the expectation

that their jobs will continue. For workers in many situations, dismissal is a disaster.’

2 Downes, A. S., Mamingi, N. and Antoine, R.-M. B. (2004) ‘Labour Market Regulation and

Employment in the Caribbean’ in Heckman, J. and Pages, C. (Eds) Law and Employment Lessons from Latin

America and the Caribbean (University of Chicago Press), 517–552 at 522.

3 Deakin, S. and Morris, G. (2012) Labour Law (6 th Ed., Hart Publishing) p. 420.

4 Both adopted in 1982.

Chapter 6: Statutory Dismissals – Redundancy, Severance and Unfair Dismissal 175

capacity or conduct of the worker or based on the operational requirements of the undertak-

ing, establishment or service’.

5 This grundnorm now forms the basis of most legislation which

seeks to protect workers from the effect of unjust dismissal and arguably provides a rational

basis for the exercise of managerial prerogative.

The Convention is concerned with dismissals which are initiated by the employer and not

with employee-instigated action, except in the case of constructive dismissal which, though

effected by an employee’s positive act, is triggered by the employer’s previous misdeeds.

6 The

Convention goes on to protect workers from unfair dismissal on the following grounds: union

membership or involvement in union activities outside working hours or during normal work

hours (if such activity was permitted by the employer); seeking offi ce as or being a worker

representative; fi ling of a complaint against an employer or being involved in proceedings

against an employer for alleged violation of the law. Importantly, national extraction or social

origin, race, colour, sex, marital status, family responsibilities, religion, political opinion, preg-

nancy or being absent from work during maternity leave do not constitute valid reasons for

dismissal.

7 The Convention also prescribes that temporary absences from work attributable to

illness or injury should not be construed as valid reasons for dismissals, but specifi cally makes

provisions for collective agreements, arbitration awards, court decisions and national laws and

regulations to give effect to these principles.

8 The instrument declares that, if employers are

contemplating terminating a worker because of his conduct or performance, the affected

worker(s) must be afforded an opportunity to defend themselves against the allegations, unless

the employer cannot be reasonably expected to do so.

9

Convention 158 indicates that workers who believe they are unjustifi ably terminated are

entitled to make an appeal to an impartial body such as a court, tribunal or arbitrator.

10

However, they may be deemed to have waived this right if they fail to exercise it within a

reasonable time.

11 In determining an appeal, the appropriate body should be empowered to

interrogate the reasons for the termination, along with any other relevant circumstances, in

order to decide on the justifi ability of the termination.

12 In this regard the burden of proof

should be placed on the employer, and the adjudicatory body should be able to reach their

conclusions by reference to the surrounding circumstances of the case put forward by the

parties, as well as any nationally established procedures and practices.

13 Where the dismissal is

occasioned by an operational (economic) requirement, while the adjudicatory body should be

empowered to decide the veracity of the averred reason, the suffi ciency of the reasons can be

determined by national laws and practice.

14 If unjustifi ed dismissal is found, the preferred

method of reparation according to the Convention is a declaration of invalidity of the decision

or reinstatement of the worker. However, if these are not practical measures, the adjudicatory

body should be empowered to award adequate compensation or other appropriate relief.

15

Upon termination, the worker should be provided with a reasonable period of notice, or

5 Article 2(1) of Recommendation 119; Article 4 of Convention 158.

6 Article 3 of Convention 158; voluntary resignations and retirements are therefore not contemplated.

7 Article 5.

8 Article 6; the issues of what constitutes temporary absence, the extent of medical certifi cation and possible

limitations can be addressed by these methods.

9 Article 7.

10 Article 8(1).

11 Article 8(3).

12 Article 9(1).

13 Article 9(2).

14 Article 9(3).

15 Article 10.

176 Commonwealth Caribbean Employment and Labour Law

compensation in lieu, except where he is guilty of serious misconduct which would make it

unreasonable for the employer to retain his services.

16

The Convention also advocates (in conformity with national laws and practice) the provision

of compensation for workers in the form of severance allowance or other separation benefi ts.

This should inter alia be based on length of service and wage levels and may either be payable by

the employer directly or from a fund fi nanced by employers’ contributions. Alternatively or

concurrently, the compensation may take the form of unemployment benefi ts or other social

security benefi ts.

17 If the employer is contemplating terminations because of an economic, tech-

nical, structural reason, the Convention envisions that a workers’ representative will be given

requisite information, within a reasonable time, relating to the proposed exercise, including the

number of workers to be affected and the period over which the terminations will take place.

18

Efforts should also be made to have meaningful consultations with a view to either averting or

reducing the impact of such a move by the employers. Attempts to provide alternative employ-

ment should also be pursued. The Convention also recommends that, in such cases, the relevant

national authority should be advised as soon as possible, giving stipulated information.

19

The accompanying Recommendation 166 is largely supplementary to the Convention, as

it further elucidates the major principles. It advocates that age and absence from work because

of compulsory military service are invalid reasons for dismissal.

20 It further states that the worker

should be given written warnings when dismissal is being contemplated, and should be allowed

advocacy assistance when defending himself against allegations of misconduct and poor perfor-

mance.

21 The worker should also be allowed paid time off during a period of notice to seek

alternative employment, and be provided with a certifi cate of employment if requested.

22 The

Recommendation also provides valuable guidance on procedures to be adopted by employers

in cases of economic, technological and structural dismissals and on the matter of consultation

with employees on the event.

23 Importantly, the Recommendation indicates that the selection

of employees for termination should be done in accordance with set criteria which seek to

balance the interests of the undertaking with the interests of the affected worker.

24 It should

also give priority to the rehiring of these workers once the relevant qualifi cation is evident and

envisages employers assisting in fi nding alternative employment, retraining where appropriate

and income protection during the period.

25

As will be seen, much of the relevant legislation within the Commonwealth Caribbean

embodies various aspects of the provisions in the Convention and Recommendations. They

are, however, impacted by the operation of national practices and procedures. There is debate

regarding whether the imposition of statutory minimum guidelines in this area presents an

unacceptable incursion into the purview of management activity, thereby restricting the ability

of employers to take necessary employment decisions geared towards making their businesses

16 Article 11.

17 Article 12(1); it should be noted that the Convention provides exceptions for loss of benefi ts in the case

of gross misconduct by the worker, and the employer is not mandated to provide a severance benefi t

to a dismissed worker merely because he does not meet the relevant qualifying conditions for an unem-

ployment benefi t.

18 Article 13.

19 Article 14; these include a written statement of the reason for termination, the number and category of

workers to be affected, and the period of time over which the exercise will be carried out.

20 Article 5 of Recommendation 166; this is subject to national legislation on retirement.

21 Articles 7, 8 and 9.

22 Articles 16 and 17.

23 Articles 19, 20 and 21.

24 Article 23.

25 Article 24.