Contracts and Dismissals
Written Employment Particulars
Under the Labour Act, 2007, a basic condition of employment constitutes a term of any contract of employment except where the law provides a more favourable term for the employee, where a term of employment or collective agreement is more favourable to the employee, or where the basic condition of employment has been altered by the Minister of labour. Remuneration, working hours, annual leave, along with other kinds of leave, accommodation and employment termination are considered as basic conditions of employment.
Upon termination of employment, an employer must give an employee a certificate of service stating the employee’s name, the name and address of the employer, a description of the industry the employer is engaged in, the date of commencement and termination of employment, the employee’s job description, the remuneration at date of termination, and upon request of the employee, the reason for termination of employment.
Under Regulations relating to Domestic Workers issued under the labour Act, 2007, an employer, upon hiring a domestic worker, should enter into a written contract with the domestic worker. The details to be provided in the written contract between an employer and a domestic worker are to consist of names, contract details, place of work, job description, ordinary work days and hours, meal intervals, monetary remuneration and basic wages, overtime, ordinary work on Sunday or public holiday, transport allowance, social security, sick leave, compassionate leave, maternity leave, vacation leave, provision of food, accommodation, benefits, health and safety obligations, freedom of association, code of conduct, changes to the contract, and commencement date.
An employer must provide a copy of the written contract, but before the contract is signed, the employer must explain to the domestic worker the terms of the contract in a language which the domestic worker understands.
Source: §9 & 37 of the Labour Act, 2007 and Regulation 12 of the Regulations relating to Domestic Workers
Fixed Term Contracts
No provision concerning fixed term contracts could be located in the Labour Act.
Probation Period
No provision concerning probation periods could be located in the Labour Act.
Termination of Employment
Causes of termination recognised by the Act
The Labour Act recognises the following six types of employment contract termination:
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Termination by notice
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Automatic termination (on expiry of fixed-term contract or completion of task, or death of employee)
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Dismissal by the employer (due to conduct or capacity of worker or operational requirements of enterprise)
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Constructive dismissal (employee terminates the contract due to employer’s conduct)
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Termination of employment by mutual agreement
The Labour Act allows for termination of employment by notice, payment instead of notice, automatic termination in certain circumstances affecting the employer, and in one specific case, by constructive dismissal. Termination on notice is accessible to both employer and employee, with minimum notice periods linked to the length of service. Notices must be in writing (except for illiterate employees), must specify the date they are given and the reason for termination, and cannot be used to undermine statutory leave by running notice during that leave. Instead of permitting notice to run, either party may end the employment immediately by compensating the other for the remuneration that would have been payable during the notice period.
The Act further states that employment contracts automatically terminate one month after the death or sequestration of an individual employer, the winding-up of a corporate employer, or the dissolution of a partnership, unless the employment is lawfully continued or transferred; employees whose contracts terminate this way have statutory protection as preferential creditors for unpaid wages. Additionally, if an employer sexually harasses an employee and the employee resigns due to that harassment, the Act treats the resignation as a constructive dismissal.
The Act requires that any dismissal by an employer, with or without notice, must be based on a valid and fair reason and must follow a fair procedure. It also makes clear that once an employee shows that a dismissal took place, the employer carries the burden to prove that the dismissal met these standards of substantive and procedural fairness.
Collective dismissals and redundancy
Where the employer intends to reduce the workforce because of reorganisation or transfer of the business, or because the business is being discontinued or reduced for economic or technological reasons, the resulting dismissals are classified as arising from collective termination or redundancy. In such cases the employer must give written notice to the Labour Commissioner and to the recognised trade union representing the affected employees, or if there is no such union, to workplace representatives and the affected employees, generally at least four weeks before the planned dismissals. That notice must give reasons, indicate the number and categories of employees who may be affected, and state the intended date of termination. The employer must disclose relevant information (subject to specified exceptions for legally privileged, confidential or prohibited information) and consult in good faith on possible alternatives to dismissal, ways to limit the number of dismissals, fair and objective selection criteria, the conditions on which dismissals will occur, and measures to mitigate adverse effects on employees. The Act also links these processes to the conciliation machinery and restricts the implementation of collective dismissals until prescribed steps have been completed. Failure to comply with these duties constitutes an offence, punishable by fine or imprisonment as provided in the Act.
Gross misconduct
The Act refers generally to misconduct in several contexts, including as a ground on which an employee may be dismissed and as a reason to exclude entitlement to severance pay. However, it does not define “gross misconduct” as a separate legal category and does not enumerate particular acts that must be treated as gross misconduct.
Unfair dismissal
A dismissal is automatically unfair if it is motivated by the employee’s disclosure of information that the employee is legally entitled or required to disclose, by refusal to do something the employer may not lawfully demand, by the exercise of any right under the Act, an employment contract or a collective agreement, by membership of or participation in the lawful activities of a trade union, or by the performance of functions as a workplace union representative. The Act also treats as unfair any dismissal that is based on listed discriminatory grounds, which align with the general prohibition of discrimination in employment on grounds such as sex, race, colour, ethnic origin, religion, creed, social or economic status or political opinion. In addition, the Act prohibits sexual harassment in employment and provides that where sexual harassment is committed by an employer and the employee resigns because of it, that resignation is deemed to be a constructive dismissal and so falls under the unfair dismissal regime.
Remedies
Where a dismissal or other conduct relating to termination contravenes the Act, the dispute-resolution provisions empower an arbitrator to make an appropriate award. The statute expressly allows for orders prohibiting certain conduct, orders requiring acts to be performed to remedy a wrong, declaratory orders, and awards of compensation. The power to order that a party perform an act to remedy a wrong includes the ability to direct that an employee be reinstated or re-employed on specified terms where this is required to give effect to the Act’s protections. The power to award compensation permits monetary redress for losses caused by an unfair dismissal, in addition to any other statutory entitlements, such as severance pay, where the conditions for that benefit are satisfied.
Source: §5, 29–37, 48 and 86 of the Labour Act, 2007
Regulations on Employment Security
- Labour Act, 2007
