Employment Law Overview - International Law Office

Introduction
Statement of Employment
Annual Vacation, Sickness and Maternity Leave
Termination

Introduction

By establishing minimum employment standards in Bermuda for the first time, the Employment Act 2000 was a landmark piece of legislation. Bermudian employers and employees have embraced the act, which has developed from the collective bargaining agreements negotiated by Bermuda's trade union movement.

Any employee who is employed wholly or mainly in Bermuda or who performs services wholly or mainly in Bermuda falls under the jurisdiction of the legislation, as do employers. The act provides minimum requirements; however, if individual contracts or collective bargaining agreements are more favourable, their standards will prevail.

Statement of Employment

An employer must provide an employee with a statement of employment within a week of the commencement of employment. The statement of employment is a summary of the contractual terms, including:

• job title;
  
  
• place of work;
  
  
• gross wage or methodology of calculating the gross wage and the intervals at which it is paid;
  
  
• working days and hours;
  
  
• holiday entitlement;
  
  
• sick leave;
  
  
• notice provisions;
  
  
• pension provisions;
  
  
• disciplinary and grievance procedures;
  
  
• probationary periods; and
  
  
• other matters that are relevant to the employment.

Where non-Bermudians are being hired, the Bermuda Department of Immigration will require a copy of the statement of employment before issuing a work permit.

The employer must include in the statement of employment whether overtime - payable at time and a half for hours in excess of 40 in a week or time in lieu - is payable in respect of the particular job. Overtime is not payable (and this has been a contentious issue) where (i) the employer and employee agree that overtime shall not be payable, and (ii) the employee is a professional or managerial employee whose annual salary has been calculated to reflect the fact that regular duties are likely to require him or her to work on occasion more than 40 hours a week.

Annual Vacation, Sickness and Maternity Leave

The act also governs issues such as annual vacation entitlements, absence through sickness and maternity leave. In the latter case an employee is entitled to paid maternity leave once she has completed one year of continuous employment (or will have done so by the expected date of delivery). The entitlement is 12 weeks' leave consisting of eight weeks' paid leave and four weeks' unpaid leave. If the employee does not have 12 months of continuous tenure of employment, she is entitled to only eight weeks' unpaid leave.

Two weeks before maternity leave ends, the employer must be notified of the date on which the employee intends to resume work. She shall be entitled to resume in the position that she occupied at the time that she commenced maternity leave or, where that position no longer exists, in a comparable position with no less than the same wages and benefits that she was receiving before maternity leave began and with no loss of seniority. An employee who does not notify her employer that she is returning within this timescale will be deemed to have terminated her employment.

Termination

Key features
The issue that creates the most confusion - and has the greatest potential for litigation before the Employment Tribunal or the Bermuda Supreme Court - is termination of employment. Contracts at will are not recognized in Bermuda and any termination of employment must be for cause; the exception is voluntary termination by the employee. Under the act, employment may be terminated only for a valid reason that must be connected with the ability, performance or conduct of the employee or the operational requirements of the employer's business. This falls into four categories:

• serious misconduct;
  
  
• repeated misconduct;
  
  
• unsatisfactory performance; and
  
  
• redundancy.

Any termination (save serious misconduct) must be preceded by written notice. The minimum periods of written notice, known as the statutory notice periods, are aligned to the pay days of the employee - for example, one week if paid weekly, two weeks if paid bi-weekly and one month in any other case (except where the industry norm provides for longer notice or the contract provides for longer notice). Notice cannot be given when an employee is absent through maternity leave, bereavement leave or annual vacation; unless the period of sick leave extends beyond four weeks, an employee cannot be given notice of termination during sick leave. An employer may, instead of providing notice and at its discretion, pay the equivalent salary and benefits that the employee would have received in lieu of the period of notice.

In the case of redundancy or winding up of the employer, the employee is entitled to receive a severance allowance in addition to any payment in lieu of notice. Severance allowance shall be no less than the equivalent of two weeks' wages for every complete year of continuous employment up to the first 10 years and three weeks per year thereafter up to a maximum 26 weeks. An employee loses his or her right to severance allowance if he or she unreasonably refuses to accept an offer of re-employment by the employer at the same place of work under no less favourable terms than he or she was employed immediately prior to termination of the employment.

Misconduct or unsatisfactory performance
The most common causes of employment termination are conduct or performance issues. The act permits an employer to terminate an employee summarily for serious misconduct, but the term is not defined in the legislation. The serious misconduct must be directly related to the employment relationship or have a detrimental effect on the employer's business, such that it would be unreasonable to expect the employer to continue the employment relationship (eg, theft, fraud, sexual harassment and assault). The degree of seriousness must be considered and weighed against:

• the nature of the conduct complained of;
  
  
• the employee's duties;
  
  
• the terms of the contract;
  
  
• the damage caused by the employee's conduct;
  
  
• the length of service of the employee and previous conduct;
  
  
• the employee's circumstances;
  
  
• the penalties and procedures followed by the employer; and
  
  
• the practice of the employer in similar situations.

An employer cannot determine the seriousness of the conduct until a full investigation has been undertaken, which may necessitate suspending the employee with pay during the period of investigation. Natural justice requires that an employee under suspension and investigation should know the case against him or her. Therefore, after the investigation has concluded, the employee must be given the opportunity to answer the allegations. If the employee is then terminated, notice and severance allowance need not be given.

On many occasions the misconduct of an employee is not so serious as to warrant summary dismissal, but is such that, if allowed to continue, it would cause disruption in the workplace. In such cases the act requires the employer to give written notice of the misconduct complained of, making it clear that the employee will be subject to termination without notice or payment of any severance allowance if there is any further misconduct within six months of the date of the warning.

The issue of performance is also a possible cause of termination. The employee must receive written notice of the performance issue in question and be given specific details about how his or her performance can be improved. The consequences of failing to improve must be spelt out and the employee advised that if during the course of six months from the date of the notice the performance has not improved, the employment may be terminated without notice and without payment of any severance allowance.

Unfair dismissal
The concept of unfair dismissal in Bermuda is slightly different than in the United Kingdom or the United States. Unfair dismissal occurs where the reason for dismissal or the disciplinary action is in breach of the law; this includes discrimination on the basis of:

• race;
  
  
• gender;
  
  
• religion;
  
  
• colour;
  
  
• pregnancy; and
  
  
• trade union activity.

If unfair dismissal is found in any termination, an employee has greater remedies against the employer and a compensation award will be made that is more than the severance allowance payments. Constructive dismissal occurs where an employee terminates his or her contract of employment without notice where the employer's conduct is such that it is unreasonable to expect the employee to continue the employment relationship having regard to the employee's duties, length of service and circumstances. It is sometimes called the 'last straw' issue, where an employee feels victimized or unfairly treated and one last event prompts him or her to leave. If there is a finding of constructive dismissal, it is deemed to be an unfair dismissal for the purposes of the act.

Redundancy
The final manner in which the relationship of employer and employee may come to an end is by redundancy. Conditions of redundancy have been held to be:

• the reorganization, sale or disposal of the business;
  
  
• discontinuance of part of the business;
  
  
• modernization or automation; or
  
  
• the impossibility or impracticality of carrying on the business at the usual rate or at all due to shortage of materials, mechanical breakdown, an act of God or other circumstances beyond the control of the employer.

The employee is entitled to notice of the redundancy and a severance allowance is payable under the act. However, the severance allowance is not payable should the employee unreasonably refuse to accept an offer of re-employment by the employer at the same place of work under no less favourable terms than he or she was employed immediately prior to the termination.

For further information on this topic please contact Kelvin Hastings-Smith at Appleby by telephone (+1 441 295 2244) or by fax (+1 441 292 8666) or by email (khastings@applebyglobal.com).