LEGALINK CROSS-BORDER LAYOFFS QUESTIONNAIRE

There are no Laws that deal solely with redundancy.  The Employment Protection (Guernsey) Law, 1998, as amended (“the Law”) does, however, contain certain provisions relating to redundancy.

Redundancy is defined at section 34 (3) as:

(a) the fact that the 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, to carry on that business in the place where the employee was so employed; or

(b) 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 the employee was so employed, have ceased or diminished or are expected to cease or diminish.

The Commerce and Employment Department of the States of Guernsey has published a Code of Practice for handling redundancy.  Whilst this is not legally enforceable per se, employers are advised to follow these Guidelines as closely as possible in order to protect their position.  A redundancy carried out in accordance with Codes of Practice is drastically less likely to be considered unfair. 

The Code of Practice recommends:

1. that a redundancy procedure be set up, with input from the workforce;
2. that the redundancy procedure should include:
   
   (i) confirmation that it is the management’s aim to maintain job security where possible;
   (ii) consultation arrangements with employees or any trade union;
   (iii) measures for minimising or avoiding redundancy;
   (iv) that selection criteria be used where redundancy is unavoidable; and
   (v) any contractual agreement on notice and/or redundancy pay.
   
3. steps should be taken to ensure that any redundancy will be genuine;
4. redundancies should be minimised or avoided where possible;
5. a pool for selection should be drawn up;
6. objective and verifiable selection criteria for redundancy should be  established, keeping employees informed and avoiding inadmissible criteria ;
7. trade unions and/or staff should be consulted;
8. alternative work should be considered as an alternative to redundancy, with reference in related companies or businesses.

Where a company is too small for the above process to be practicable, three principles should be adhered to.  These are:

• consulting with employees about redundancy situations well before final decisions are reached;
• ensuring that there is a fair and objective basis for redundancy selection; and
• taking all reasonable steps to avoid or minimise redundancy e.g. offering alternative work where it exists.
  

An employee may make a complaint if the redundancy was such as to constitute an unfair dismissal.  This may occur, for example, if proper procedure was not followed, or if the redundancy was a sham.  Like all claims in unfair dismissal, this action is restricted to employees who have a year’s continuous service (section 15(1) of the Law).

There are special considerations where a person has been made redundant for an ‘inadmissible reason’.  Pursuant to section 13 of the Law, if an employee has been made redundant because of:

• trade union membership or activity;
• pregnancy;
• their having asserted a relevant statutory right;
• health and safety;
• an act of sexual discrimination; or
• refusal to work on Sundays, if they are a worker protected by the Employment Protection (Sunday Shop Working) (Guernsey) Law, 2001;

their dismissal will automatically be deemed unfair, without being subject to the usual one-year qualifying period for unfair dismissal (section 15(2) of the Law), but only if the circumstances constituting the redundancy applied equally to one or more other employees in the same undertaking who held positions similar to that held by the employee and who have not been dismissed by the employer.

1. Employers may fail to follow the Commerce and Employment Department’s Code of Practice.  This does not, of itself, render them liable to a penalty, but an Employment Tribunal will take into account any failure to follow the Code into account.
2. Employers occasionally make an employee redundant, and replace them immediately.  This reveals the redundancy to have been a sham and potentially an unfair dismissal.
   

Under Guernsey law, there is no statutory requirement for an employer to make a redundancy payment.  That said, it is usual for contracts of employment to contain some provision relating to redundancy and to provide an assurance of severance pay.   Compromise agreements providing an employee with redundancy pay in exchange for confidentiality and various waivers of statutory rights are also the norm.

The most common issues relate to whether accrued bonuses and other like benefits survive the redundancy, or do they terminate with the dismissal.