All questions

Discontinuing employment

i Dismissal

An employee who is not on a fixed-term or project-based contract, or not in their probationary period, may not be dismissed without a valid reason connected with the ability, performance or conduct of the employee, or the operational requirements of the employer's business. Further, warnings must be given in the event of repeated misconduct (falling short of serious misconduct) or unsatisfactory performance, giving the employee time to improve. The employer must provide the employee with a certificate of termination stipulating the reason for the termination if requested by the employee, as well as formal employment details.

If the termination is for an invalid reason or for no reason, it is an unfair dismissal meriting a complaint to an inspector. Termination at-will clauses are unlawful and unenforceable.

Further, the Act provides that an employee's dismissal is unfair if it is based on any one of a list of specified reasons, many of which involve protected characteristics under the Human Rights Act 1981.

The notice requirements of the Act must be satisfied. The employer is not allowed to give notice of termination during absences for certain types of leave.

Employees are entitled to at least one week's notice if they are paid on a weekly basis, two weeks' notice if they are paid every two weeks, and in other cases, one month's notice. If the contract stipulates a greater amount of notice, the longer notice period will apply. An employer may elect to make payment in lieu of notice and confer all other benefits that would have been due up to the end of the employee's notice period. If the employee leaves without giving proper notice, the employer need only pay salary plus any accrued but unused vacation and benefits, up to the last day worked. If the employer suffers loss, it may sue the employee for compensatory damages, but in practice this rarely happens.

As to rehire rights, if the Employment Tribunal upholds an employee's complaint of unfair dismissal, the Tribunal has the statutory power to award either reinstatement or re-engagement of the employee in comparable work. However, the Tribunal has never ordered this relief against an unwilling employer, just as the courts will not specifically enforce a contract of employment at the suit of either party, since it is undesirable to compel an unwilling party to maintain continuous personal relations with another.

In the event of an unfair dismissal, the amount of compensation that the Tribunal orders must not be less than two weeks' wages for each completed year of continuous employment for employees with no more than two completed years of continuous employment, and not less than four weeks' wages for each completed year of employment thereafter, up to a maximum equivalent of 26 weeks' wages.

The parties are free to enter into a settlement agreement, which is construed and enforced in accordance with normal contract law principles. Stamp duty of Bd$25 should be applied to the agreement to be enforceable (unless the employer is an exempted company), pursuant to the Stamp Duties Act 1976. Where a complaint was filed with the Department of Labour Relations, written confirmation of the fact of settlement signed by both parties must be sent to the Department for it to close its file. The terms need not be disclosed.

ii Redundancies

An employee is redundant under the Act where his or her termination is, or is part of, a reduction in the workforce that is a direct result of any of the conditions of redundancy, namely:

  1. the modernisation, mechanisation or automation of all or part of the employer's business;
  2. the discontinuance of all or part of the business;
  3. the sale or other disposal of the business;
  4. the reorganisation of the business;
  5. the reduction in business, necessitated by economic conditions, contraction in the volume of work or sales, reduced demand or surplus inventory; or
  6. the impossibility or impracticality of carrying on the business at the usual rate or at all, as a result of:
    • a shortage of materials;
    • a mechanical breakdown;
    • an act of God; or
    • other circumstances beyond the control of the employer.

A lay-off that exceeds a period of four months amounts to a termination by redundancy. A redundant employee is entitled to the following:

  1. Notice – the employer must provide sufficient notice of termination or payment in lieu of notice (see Section XII.i).
  2. Severance allowance – where an employee has completed at least one continuous year of employment, the employee is entitled to be paid severance allowance. The amount depends on the length of service, the statutory minimum being two weeks' wages for each year of completed service up to 10 years, and three weeks' wages for each year of completed service thereafter, subject to a maximum of 26 weeks' wages. If the contract provides for a greater amount of severance, it will prevail. Severance allowance is not payable where the employee unreasonably refuses to accept an employer's offer of re-employment at the same place of work under no less favourable terms than he or she was employed prior to the termination.
  3. Certificate of termination – see Section XII.i.
  4. Itemised pay statement – at or before the payment of any wages, including his or her final payment. Deductions that were not agreed beforehand are unlawful.
  5. Pension transfer – the employee's pension (mandatory for Bermudians or spouses of Bermudians) is transferable on redundancy, including the employer's vested contributions, usually two years after the employment commenced.
  6. Notice to trade union – the Act mandates that, before making an employee redundant, as soon as practicable, the employer shall inform the trade union or other representative of:
    • the existence of the relevant condition of redundancy;
    • the reason for the termination contemplated;
    • the number and categories of employees likely to be affected; and
    • the period over which such termination is likely to occur.

Further, the employer must consult on:

  1. the possible measures that could be taken to avert or minimise the adverse effects of such redundancy on employment; and
  2. the possible measures that could be taken to mitigate the adverse effects of any termination on the employees concerned.

Often there will be a collective agreement delineating the requirements to be followed and the benefits to be paid in the event of an intended lay-off or redundancy.

No notification of redundancies needs to be given to the government, but it is advisable as a matter of good labour practice to inform the minister responsible for labour relations of impending redundancies affecting a sizeable pool of Bermudian workers.

The employee has no rehire rights save those that might otherwise be provided in any relevant collective bargaining agreement.

No specific categories of employees are protected from dismissal (including redundancy), and no social plan is required in the event of a dismissal or redundancy.

The parties are free to enter into a settlement agreement to settle their disputes (see Section XII.i).