March 2020 | By

COVID-19: Lay-offs, short-time & redundancy – What you need to know

 

This Explanatory Note is intended to provide an understanding of employers and employees rights and obligations under the Employment Act, Ch. 321A (as amended, the “Act”), in times such as these, as a result of the spread of the COVID-19 Coronavirus.

Who should read this:

1. Employers who want to ensure that they are balancing their concern for their business with their concern for their employees; and

2. Employees who want to know what they are entitled to and what they should do if they are made redundant, laid off or put on short-term work during this time of crisis.

EMPLOYMENT ACT, CH. 321A

Minimum Entitlements

The Act stipulates certain entitlements for employees in relation to matters such as:

  • Standard hours;
  • Entitlements to leave (legitimate time spent away from work);
  • Wages (although provisions for minimum wages are dealt with under a separate act);
  • Termination, including notice and pay;
  • Lay-offs and short-time; and
  • The employ of children and young persons

For the purpose of this Explanatory Note, we focus on the provisions of the Act as they relate to lay-offs, short-time and termination due to redundancy.

Lay-Off and Short-Time

Under the Act, an employer may lay-off an employee or place an employee on short-time if:

  1. There is a provision in the employment contract between the employer and employee that permits it;
  2. The employer has temporarily ceased, or intends temporarily to cease, to carry on the business for the purposes of which the employee was employed;
  3. The employer has temporarily ceased, or intends temporarily to cease, to carry on business for the purposes of which the employee was employed in the place where the employee was so employed;
  4. Work of the particular kind for which the employee was hired is temporarily not required or is expected to temporarily not be required; or
  5. Work of the particular kind for which the employee was hired is temporarily not required, or is expected to temporarily not be required, in the place where the employee was so employed.

With the implementation of the Emergency Powers (COVID 19) (2) Order 2020 (the Second COVID-19 Order) pursuant to the Emergency Powers (COVID 19) Regulations 2020 – which came into force on 24 March 2020, initially expired on 31 March, 2020 and was extended until 30 May 2020 (the Relevant Period) – with the exception of businesses deemed essential under Order 5 of the Second COVID-19 Order, every business whose employees cannot work remotely were required to cease their operations during the Relevant Period, or until further Orders were implemented.

As a result of the Second COVID-19 Order, many of the businesses operating in The Bahamas are legally obligated to temporarily cease operations. The temporary cessation of operations of non-essential businesses permit such employers to either lay-off employees or place employees on short-time.

Before an employer can lay-off an employee or place an employee on short-time, the employer must supply the employee, the trade union recognised for purposes of bargaining on behalf of the employee (if there is one) and the Minister of Labour (the “Relevant Persons”) with a written statement of the facts that require the employer to lay off the employee or place the employee on short-time. Information to be included in such notices include:

  • The number of employees affected;
  • The category of employees affected; and
  • The period during which the lay-off or short-time action is to be carried out.

Such notices should be given to the Relevant Persons for the purpose of consultation in respect of the proposed method of selecting employees to be laid off or placed on short-time, the proposed method of carrying out the lay-off or short-time action and mitigating measures considered and/or taken in respect of those affected:

  • at least one week prior to the lay-off or short-time action where twenty (20) or less employees are to be affected; and
  • at least two weeks prior to the lay-off or short time action where more than twenty (20) employees, the employer shall be affected.

Employees are considered to continue to be employed by the employer during the time that such employee is temporarily laid off or placed on short-time.

Where an employee has been laid off for a continuous period of at least twelve (12) weeks, such lay-off shall be deemed a termination of employment due to redundancy.

Redundancy 

Where an employee is made redundant, the employer must pay the employee a redundancy payment calculated in accordance with the following table:

YEARS OF WORK/POSITION NOTICE/NOTICE PAY ADDITIONAL BASIC PAY 

12+ months (Non-Managerial Position)

2 weeks’ notice or 2 weeks’ basic pay instead of notice

2 weeks’ pay (or prorated amount) for each year worked, capped off at 24 weeks

Managerial or Supervisory Position (regardless of years worked) 1 month’s notice or 1 month’s basic pay instead of notice 1 month’s pay (or prorated amount) for each year worked, but no more than 48 weeks

 

In addition to the redundancy payment calculated as set out above, the employer must also distribute to the employee any vacation pay due to the employee under the Act and the employee’s contract of employment.

Where the employer provided and fully paid for a gratuity or pension for the employee, the employee must choose whether he would wish to receive his redundancy pay or his gratuity or pension payment. The employee is not entitled to both.

The manner in which redundancy selections are made can, in certain circumstances, be challenged. To avoid this, employers should evenly apply reasonable criteria for redundancy to the pool of employees, and judiciously weigh each situation before the selection is made.

Other Considerations

Unemployment Benefits

Under the National Insurance (Benefits and Assistance) Regulations (as amended, the “Benefits Regulations”) a person employed in The Bahamas who has not attained the age of 65 years and is:

  • unemployed and has an interruption of earnings from his employment; or
  • laid off and has suspension of earnings from his employment,

shall be entitled to unemployment benefits at a rate of fifty percent (50%) of the sum of the weekly insurable wage or income on which contributions have been paid in respect of that employee divided by the number of weeks to which the paid contributions correspond (“Unemployment Benefits”).

In order for an employee to receive Unemployment Benefits,

a. The employee must:

  1. Submit a B.82 Claim for Unemployment Benefit Form to the National Insurance Board;
  2. Be capable of work (including being legally able to work in The Bahamas);
  3. Be available to work;
  4. Have paid at least fifty-two (52) contributions; and
  5. Have been credited with at least thirteen (13) contributions in the last twenty-six (26), and seven (7) contributions in the last (13), contribution weeks immediately proceeding the first day of the employee’s unemployment.

b. The employer must complete a Termination of Service/Lay-off Certificate (Form B.80) and provide the same directly to the National Insurance Board or to the employee to submit with the Claim for Unemployment Benefit Form.

The relevant forms can be found at the website of the National Insurance Board under the “Library” tab.

It should be noted that during the Relevant Period, the National Insurance Board has suspended all face-to-face transactions. The relevant forms would need to be submitted to the National Insurance Board via email at customerservice@nib-bahamas.com.

Vacation Leave

As an alternative to lay-offs, it may be beneficial to both employer and employee that the employee take time off during the Relevant Period in the form of accrued vacation leave.

Other Arrangements

In certain circumstances it may be possible to alter the conditions of employment of certain employees during the Relevant Period in a manner that makes it possible for the employee to not be laid off but also not receive full pay. In these circumstances employers and employees should work together to find amicable solutions that prove beneficial to both parties.

It is advisable that where any temporary arrangement is struck between an employer and an employee the terms of that arrangement are documented.

Conclusion 

As we go through these unprecedented times, employers and employees alike need to be au courant with their rights and obligations.

Employers should ensure that the decision to take lay-off or short-time actions are taken with due consideration and in accordance with the relevant provisions of the Act.

Employees should be prepared for the possibility of being laid off or put on short-time and, understanding their options under the Act and the Benefits Regulations, work with employers to produce the best outcome for themselves and their employers.

Contact an attorney at Lennox Paton should you be unsure of your rights and obligations as an employer or employee.

Download our Newsletter here: COVID-19: LXP INSIGHTS

ILO version: COVID-19: lay-offs, short-time and redundancies – what you need to know

 

DISCLAIMER

The contents of this publication are intended to be only an aid to understanding the area of law reviewed in this Explanatory Note. The contents do not in any way constitute legal advice to any person for payment or otherwise and the partners of the firm of Lennox Paton do not and will not in any way accept responsibility or liability for any loss or damage caused by or arising from reliance on the information contained herein. 

Persons reading this publication are reminded that where a decision is to be made which depends for its correctness on the effect of the new legislative regime discussed herein or on any other legislation or Common Law rules, professional advice should be sought from the firm of Lennox Paton or any other firm of qualified legal professionals.


FAQs and Useful Links