The onset of the Covid-19 pandemic has significantly impacted businesses worldwide and some are assessing whether they can continue to operate at their current capacity or if they will have to right-size to continue to exist. Inclusive in assessing the business continuity, businesses must weigh their financial exposure if they are forced to downsize or shutdown, and the procedures that must be followed. Corporations are also assessing how to legally end contracts due to this unexpected, unforeseeable event. Some of the answers to the above are straightforward and others require a deeper exploration of employment legislation case law and policy.
In 2017, The Bahamas Government enacted the Employment (Amendment) Act, 2017 (“Act”), which repealed and replaced Part VI of the principal legislation. Part VI of the Act provides guidance on redundancies, lay-offs and short-time.
Provided a contrary intention is not expressed in an agreement, where an employer has temporarily ceased to carry on business for the purpose for which an employee was hired, or the purpose for which the employee was hired temporarily ceases or diminishes, an employer may lay off or place an employee on short-time.
For some companies, the first step may be to place employees on short-time. An employee is placed on short time where due to a diminution in work, an employee’s wages for a week are reduced to less than half a week’s wages.
An employee may be “laid off” where he has been contracted to perform work to be provided by the employer, and the employer does not provide such work, which results in the employee not receiving compensation.
In addition to the above, some employers may also invite their employees to take an unpaid leave of absence from work. In the United States, this scenario may be categorized as a “furlough”. While there are regulations to provide guidance on its implementation in the United States, this term is not defined in Bahamian legislation. In The Bahamas, in the absence of an agreement to the contrary, employees may be asked to take unpaid leave; however, employers should seek legal advice as to how this ought to be implemented to minimize future claims for compensation.
Employers may also consider closing the business and dismissing its employees by reason of redundancy. When considering redundancy, the Act provides for the procedure to be implemented inclusive of written notification and consultation with the trade union or employee’s representative, consultation with the Minister, and notice to the employee, one – two weeks before the date of dismissal. The Act also provides for the minimal payments that ought to be made to an employee dismissed for redundancy.
During this period of uncertainty, employers have options, but they need to be implemented within the legal parameters to fairly compensate employees and minimize future actions for compensation.
This article should not be considered as legal advice. Please consult an attorney should you require specific advice concerning your rights, duties and obligations as an employer or employee.
Dated: 30 March 2020