Minimising the legal risk associated with the dismissal of an employee is good business practice for any employer in Bermuda. That is particularly true since the coming into force of the Employment Act 2000 (“the Act”), which provides aggrieved employees with statutory remedies for unjust dismissal.

Remedies include an order for specific performance, bringing the employer into compliance with the Act, and/or payment to the former employee for unpaid wages or benefits. He may even be able to initiate a claim in the Supreme Court for breach of the employment contract. This has the disadvantage of bringing the employer’s dispute into public gaze.

Employers can minimise the legal risks associated with the dismissal of an employee by taking the following steps:

[box] Become familiar with the termination provisions of the Act.

Section 18 of the Act provides that an employee can only be dismissed if there is a valid reason connected with the ability, performance or conduct of the employee or operational requirements of the employer’s business. Furthermore, adequate notice must be provided or payment must be given in lieu of notice.

Section 25 of the Act provides for the only circumstances in which an employee can be dismissed immediately without notice. This is where the employee is guilty of “serious misconduct” directly related to the employment relationship or which has a detrimental effect on the employer’s business so that it would be unreasonable to expect the employer to continue the employment relationship.

Serious misconduct may include theft, fraud, physical violence, bullying, deliberate damage to property, insubordination, negligence and breach of confidence. This list is not exhaustive. Serious misconduct is determined against the background of the conduct complained of, the contract and employee handbook terms, damage caused by the employee’s conduct and how other employees are dealt with.

Termination can also occur for reasons of repeated misconduct (falling short of “serious”) and/or performance issues under Sections 26 and 27 of the Act respectively. In these cases, notice must be given via a written warning. If within six months of the warning, the employee is guilty of repeated misconduct, the employer can dismiss the employee without notice or severance pay. If during those six months, the employee cannot demonstrate satisfactory performance, the employer may terminate the employment without notice or severance pay.

[box] Conduct a review of the employment contract and the employment handbook (if one exists). The contract/handbook may contain terms more beneficial to the employee than the Act. For example, the contract/handbook may call for informal and formal verbal warnings before a formal written warning. Furthermore, there may be an internal grievance procedure that must be followed prior to dismissal taking place. This may take the form of an internal review conducted by a panel consisting of members of senior management. Such internal procedures should always be followed.

It is also worth checking to see if there is an alternative dispute resolution provision in the grievance procedure identified in the contract/handbook. This may require that mediation or arbitration take place before an employee takes any legal action.

[box] Pay greater attention to record keeping. One of the first pieces of evidence that an Employment Tribunal will wish to see in a complaint made under the Act will be the personnel file. Quite often, this documentation is sparse. All warnings, whether verbal or written, should be properly recorded on the employee’s personnel file. Emails, correspondence and notes of any conversations leading up to the warnings and following the warnings should also be placed on the file.

Any warning period should be properly diarised and followed up by the manager/human resources department. The employee’s progress following receipt of a warning, whether verbal or written, should be monitored and recorded. Without such documentation, it will be difficult to establish that there was cause to dismiss, and that the employer followed the proper procedure either under the Act and/or employment contract/employee handbook.

[box] Ensure performance appraisals are conducted accurately and thoroughly. The appraisal is one of the key documents that an Employment Tribunal will consider when assessing whether the employer had any justification in doubting the performance/conduct of the employee and whether this was communicated to the employee.

The appraisal should accurately reflect the employee’s level of performance with appropriate comments wherever possible. Employers should also explain the importance of performance appraisals to managers/supervisors and hold them accountable for failing to give employees accurate performance appraisals.

n Consider conducting regular informal reviews. This would include periodic work assessment reviews, or perhaps, regular reports from the direct supervisor/manager as to the employee’s performance. This way, any problems with an employee could be identified more quickly and be adequately recorded. This in turn would justify any subsequent warnings given to the employee. At the very least such reviews could lead to an improved work environment and greater productivity.

n Providing a reference to the dismissed employee. Section 22 of the Act provides the minimum requirements in this regard and is becoming the norm. It also helps avoid any possible claims of defamation.

Understanding the law and the internal procedures specific to the employer’s business is essential when planning the dismissal of an employee. An employer should also express the importance of this to its managers/supervisors to ensure that appraisals and reviews are carried out effectively. Taking these steps may help avoid many of the legal risks associated with the dismissal of an employee.

Fozeia Rana-Fahy is an attorney in the Litigation Department at Appleby. A copy of Mrs. Rana-Fahy’s 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 described herein, persons are advised to consult with a lawyer.