The Employment Act 2000 (the “Act”) promotes the fair treatment of both employers and employees in Bermuda by establishing minimum employment standards and enforcing those standards through the Employment Tribunal (the “Tribunal”).

The majority of claims heard before the Tribunal involve disputes relating to termination, redundancy and vacation pay. Of these issues, termination is often the most contentious, particularly when it constitutes unfair dismissal.

Unfair dismissal occurs where the termination of employment or any disciplinary action against an employee is in breach of the Act, including:

• Dismissal or disciplinary action by an employer without a valid cause;

• Summary dismissal of an employee for serious misconduct when the employee’s conduct does not constitute “serious misconduct” as prescribed by the Act;

• Dismissal for repeated misconduct or unsatisfactory performance in the absence of prior valid warnings; or

• Where the conduct of an employer has made it unreasonable to expect an employee to continue the employment relationship (typically known as “constructive dismissal”).

The Act mandates that any termination of employment in Bermuda must be for cause, except in the case of voluntary termination by the employee. An employee can only be terminated for a valid reason connected to the ability, performance or conduct of the employee or the operational requirements of the employer’s business (serious misconduct, repeated misconduct, unsatisfactory performance and redundancy).

Race, sex, religion, marital status, pregnancy or trade union activity do not constitute valid reasons for dismissal or the imposition of disciplinary action by an employer.

An employer is only entitled to terminate an employee without warning, notice or payment of any severance allowance where that employee is guilty of serious misconduct that is either directly related to the employment relationship or that has a detrimental effect on the employer’s business such that it would be unreasonable to expect the employer to continue the employment relationship.

Where the conduct of an employee does not constitute serious misconduct, an employer can provide the employee with a written warning for their misconduct. If, within six months of the warning, the employee is again guilty of misconduct, the employer may terminate the contract of employment without notice or the payment of any severance allowance.

Similarly, in the case of unsatisfactory performance, the employer is entitled to issue the employee with a warning with appropriate instructions on how to improve their performance. If the employee does not perform their duties in a satisfactory manner during that six month period, the employer may terminate the contract of employment without notice or the payment of any severance allowance.

Sexual harassment, discrimination, changes to contractual duties and responsibilities, unilateral reductions in pay, intolerable working environments, and failure to address grievances, are some examples of conduct that can constitute constructive dismissal.

Where the Tribunal determines that any provision of the Act has been contravened by an employer, the Tribunal will order the employer to undertake any specific act that constitutes compliance with the Act and pay the employee compensation for any unpaid wages or other benefits owed to them. Where the Tribunal further upholds an employee’s complaint of unfair dismissal, it will award one or more of the following remedies:

• An order for reinstatement by the employer, which requires the employee to be treated in all respects as if they were never dismissed by the employer;

• An order for re-engagement of the employee in a similar position; or

• A compensation order.

The Tribunal will consider the extent to which the complainant caused or contributed to their dismissal and has the power to include a disciplinary penalty as a term of any reinstatement or re-engagement order where the complainant engaged in misconduct. When considering a compensation order, the Tribunal will also take into account the loss suffered by the employee as a consequence of the employer’s conduct and will award:

• Not less than two weeks wages per year of completed service for employees with no more than two complete years of employment; and

• Four weeks wages for each completed year in any other case up to a maximum of 26 weeks wages.

Under the Act, an employee has the right to make a complaint in writing to an Employment Inspector advising that their employer has, within the preceding three months, failed to comply with any provision of the Act. The Employment Inspector will conduct an inquiry into the complaint and, once the inquiry is complete, the Employment Inspector is required to conciliate the parties to effect a settlement.

Where the Employment Inspector is unable to effect a settlement and has reasonable grounds to believe that an employer has failed to comply with any provision of the Act, he is required to refer the complaint to the Tribunal.

In December 2013, the Supreme Court of Bermuda confirmed in the landmark decision of Janice Fleming vs the Director of Labour and Training [2013] SC (Bda) Civ that when a complaint brought under the Act is not settled by conciliation, an Employment Inspector must refer the complaint to the Tribunal if the facts alleged in any complaint would, if proven, give the employee some chance of success before the Tribunal. This decision has lowered the threshold test for Employment Inspectors to apply in determining whether to refer a complainant to the Tribunal and has increased the bargaining power of employees.

Lawyer Gretchen Tucker is an Associate and a member of the Employment and Immigration Team within the Dispute Resolution Department at Appleby. A copy of this column can be found on the Appleby website at www.applebyglobal.com.

This column should not be used as a substitute for professional legal advice. Before proceeding with any matters discussed here, persons are advised to consult with a lawyer.