Column: Employment Rights During A Pandemic

[Column written by attorney Peter Sanderson + Updated]

Many people are asking questions about their employment rights during the pandemic. This article is an attempt to help ordinary people, who might not be in a position to pay for legal advice, understand what rights they might have.

Employers have to tread carefully, as they have a duty to pay employees who are ready and willing to work. Employers enjoy the profits from employees’ labour during the good times and have a duty to continue to pay employees during the bad times, and paying severance pay in the event of redundancy.

Salaried employees typically have a right to a fixed salary. Waged employees, although paid only for the actual hours worked, usually have a contractual right to receive a minimum number of hours of work per week. Efforts by an employer to unilaterally cut pay or hours, whatever the circumstances, can result in claims for constructive dismissal, and compensation of at least four weeks’ pay per year of employment [capped at 26 weeks], plus payment for the employee’s notice period.

Lay off and severance

The Employment Act sets out minimum rights of employees when being laid off for a limited time without pay. It is important to read these lay off provisions in the context of an employment contract. An employee cannot be laid off unless it is clearly set out in the employment contract. If an employee has agreed in their contract to being laid off then, after four months of lay off, they must be given severance pay [typically two weeks per year of employment, capped at 26 weeks’ pay] and payment for their notice period. There is a lack of clarity over whether an employer is required to maintain health insurance for an employee who is laid off. At minimum, employers are required to maintain it for the four weeks following the lay-off, and may find themselves joined into litigation for payment of costly medical bills if they do not maintain it for the whole period of the lay off.

If an employment contract does not provide for laying off, an employer will have to give immediate notice of termination and severance pay in order to end their obligation to pay the employee and avoid a constructive dismissal situation. Similarly, health insurance will continue for four weeks following the end date of the employment contract. If an employer gives payment in lieu of notice, they will normally still have to maintain health insurance and other benefits for the period of the notice and for 28 days thereafter.

If an employer goes out of business, employees will be due severance pay. Sums due to employees when a business is wound up must be paid in priority to all other debts, including tax arrears.

Government has announced a rescue package for employees who are laid off or made redundant during these events. The package is limited to $500 per week, and does not include health coverage.

Refusal to work

Difficult questions can potentially arise where an employee refuses an instruction to come into work due to the risk of catching or spreading coronavirus. It is the employer’s responsibility to safeguard the health and safety of employees. Under the Employment Act, an employee could claim unfair dismissal if terminated when their refusal to work was due to an imminent and serious danger to life or health. This is new territory and it remains to be seen how an employee refusing to work due to the pandemic would be dealt with if they were to reach a tribunal. The question of whether the employee should continue to be paid when refusing to work would depend on whether the dangerous conditions are the responsibility of the employer. There may be a distinction between an employer who puts in place suitable safety measures and one who does not. There may also be special considerations for essential service workers, who are required to work in sometimes dangerous conditions.

Employee prevented from working by events outside of their control

Difficult questions may also arise if the reason why the employee is not at work is because of a public health or quarantine order, or inability to return to Bermuda due to travel restrictions. If the employee is ready and willing to work but is unable to do so due to circumstances beyond their control, it seems likely that the employer would still be obliged to pay them. This is not, however, free from doubt, and there could be issues in some cases over to what extent the employee is responsible for being unable to work [for example, if they chose to go on holiday when travel restrictions were being announced].

Sick leave

In terms of employees falling ill, the Employment Act provides that employees are entitled to 8 days of paid sick leave per year after completing one year of employment, although many employment contracts may provide for more generous sick leave. However, the Employment Act also says that an employee is not entitled to be paid for two or more consecutive days of sick leave without a doctor’s certificate. This requirement could be challenging if medical resources are overstretched, or if the doctor is not able to issue a certificate without an office visit.

It is important to note that the Employment Act prevents an employee being terminated while on sick leave unless they’ve been off sick for more than four weeks.

Consequences on rent and other debts

It seems likely that many people will become unable to pay their rent as a result of the insufficient rescue package. It is unlawful for a landlord to terminate a lease due to non-payment of rent without a court order [although a month to month lease can be terminated with a month’s notice if not under rent control]. When considering whether to make an order, the courts must consider whether it is reasonable to terminate the lease. The courts are not listing new matters at this time, so there is little prospect of anybody being evicted during the pandemic. When the courts are back in session, tenants would have a reasonable argument that the court should not terminate the lease when it was impossible for them to pay their rent due to the economic fallout of the pandemic. Landlords may have to consider a rent holiday in a similar way to how banks have put a mortgage holiday in place. It would seem particularly crass for a landlord to be demanding rent from a tenant who has lost their job, whilst at the same time receiving a mortgage holiday themselves. All these circumstances could be put before the court for consideration.

Bermuda currently has extremely harsh and draconian bankruptcy laws for individuals. It can take fifteen years to go through a bankruptcy, compared to one year in the UK. Government should urgently review bankruptcy laws to make it easier for people who are unable to pay their debts as a result of the pandemic to start over.

Remedies

The above issues present challenging questions and drastic options. In many cases, people may face a choice of breaching or terminating a contract. An employee who goes along with a lay off or pay cut without challenging it may be later held to have agreed to it by having continued to work. Employees should take legal advice to avoid prejudicing themselves.

Potentially, employees in the same workplace facing the same issues could join together to make it more affordable to obtain legal advice. This can be done informally, or by forming a trade union.

Complaints regarding unfair dismissal or other breaches of employment contracts can be made to Workforce Development, to be referred on to an employment tribunal. Complaints should be made within three months, but this can often be extended. Some employment matters can be heard by Magistrates’ Court, or the Supreme Court, but advice should be taken on the appropriate place to bring a claim.

In contentious situations, there may be value in parties jointly appointing an attorney or other experienced person as an independent mediator to help the parties find a solution that can work for everybody without having to go to court.

In cases that cannot be resolved amicably, there is the additional challenge that access to courts and tribunals may be limited during this period. If all parties consent, it is possible to appoint an arbitrator to resolve a dispute in a flexible way, which could include via video-conferencing, or deciding disputes based on the papers, depending on how the parties wish to proceed.

Update 2.47pm: Some aspects of this have been disputed by another leading local lawyer, so that should be noted, and of course seek your own advice.

- Peter Sanderson is a barrister & attorney who has appeared at all levels of Bermuda’s courts, from Employment Tribunals, Supreme Court, Court of Appeal and Privy Council. His practice includes contract and employment disputes, and he has also been appointed as a mediator and arbitrator on many occasions. Different people have different views of the law, and it is possible that some of the statements expressed in this article may be wrong. This article should not be relied on as legal advice. His email address is psanderson@benedeklewin.com.

Update: The below is from Juliana Snelling and Richard Horseman, who are both lawyers

Whilst Mr. Sanderson’s attached Bernews article no doubt is well-intentioned to provide free legal advice to the public, we take issue with some of the advice contained in his article with which we do not agree and therefore alert the public of our legal views:

We take issues with the following statements:

1. Employers enjoy the profits from employees’ labour during the good times and have a duty to continue to pay employees during the bad times …

Not agreed. Employees also benefit from full pay and excellent benefits during the good times as well as bonuses, summer parties and other fringe benefits.  The right to layoff exists in the bad times so that employers can keep their employees employed (and not have to terminate them by making them redundant).

2. An employee cannot be laid off unless it is clearly set out in the employment contract.

Strongly disagree. Section 32 of the Employment Act 2000 gives employers the right to lay off employees in accordance with the Act’s requirements (up to 4 months, if the layoff exceeds 4 months it becomes a termination by reason of redundancy).  Note that notice is not required although a good employer will give their employees some notice as a courtesy.

Union collective agreements, if they apply, will usually compel the employer to consult with the Union before layoffs.

3. If an employment contract does not provide for laying off, an employer will have to give immediate notice of termination and severance pay in order to end their obligation to pay the employee and avoid a constructive dismissal situation.

Strongly disagree.  See Answer to 2.  We do not agree that the right to lay off must be in the contract – contracts rarely if ever provide for the right to layoff – the Employment Act governs and gives the employer the right to lay off which protects the employee’s employment status and helps them in hard times to maintain employment and benefits.  If they are terminated, then their benefits terminate (subject to what is said below).

4. Similarly, health insurance will continue for four weeks following the end date of the employment contract.

It is correct that after an employment contract terminates, as a matter of law, health insurance will extend at the employer’s cost but only at the lowest level of statutory hospital insurance benefit cover.  It is not correct that the same level of benefits (eg. major medical or HIP) must be extended 4 weeks after termination.

5. If an employer gives payment in lieu of notice, they will normally still have to maintain health insurance and other benefits for the period of the notice and for 28 days thereafter.

Not agreed for 28 days thereafter – the obligation is limited as per Answer 4 – only the lowest level of statutory health cover extends as a matter of law for 28 days (at the employer’s cost) and is automatic.

6. If the employee is ready and willing to work but is unable to do so due to circumstances beyond their control, it seems likely that the employer would still be obliged to pay them …

Not agreed.  If an employee has to stay at home (eg. forced Government Order) and there is no work that they can sensibly do from home for the employer because of the nature of the work that they do, then the employer may exercise its right to lay them off without pay.

This is no substitute for legal advice and employees should consult with attorneys in light of their own contractual provisions as set out in their contracts, Statements of Employment, Employee Handbooks, etc.

Finally, the Government is asked to immediately clarify the $500 financial assistance benefit – is this only for employees whose employees have been ordered by Government to shut (eg. gym staff) or for all employees who fall within the definition of “employee” under the Employment Act who have been laid off by their employers because there is no work for them to do?

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As the island and world deals with the Covid-19 pandemic, we are doing our best to provide timely and accurate information, and you can find more information on the links below.

• Our continuously updated live blog here
• All our coverage of the Covid-19 pandemic here
• The official Bermuda Government website here
• Dashboard showing all the cases worldwide here
• Our newly launched Covid-19 website here.

Officials are urging everyone to please follow all guidance like washing your hands, adhering to self quarantine if relevant, and practicing social distancing, and they have asked that if it is not urgent, a necessity or work, to please stay home to prevent the spread of the coronavirus.

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