By Ravi Nanga
AS the Covid-19 Regulations are relaxed and more businesses are allowed to re-open, the true impact of the pandemic will start to evolve.
We have seen the widespread impact that measures taken to combat the pandemic has had on global economies and the travel and leisure businesses have taken a particularly heavy battering. Many would have read of airlines going bankrupt and others laying-off staff by the thousands. Many large businesses have decided to scale back operations and close retail outlets by the hundreds, unfortunately impacting on employees.
Like with the rest of the world, Trinidad and Tobago is not immune to the impact of the pandemic.
Amongst the first businesses to have felt the impact here were the bars, cinemas and restaurants.
Even with a phased opening and eventual full opening, it is not sure how these businesses will be affected.
For example, with the limit on in-house dining and congregations, it may be necessary to reduce staff.
How then does a business determine which employee will be impacted and who will not?
Does an employee who has been earmarked for termination have any rights and entitlement?
In circumstances where the operations of a business have been reduced, for whatever reason and there exists a surplus of labour, a business is permitted to retrench workers through redundancy. That is, where there no longer exists work to engage an employee and he is now redundant to the business.
In TT there is the Retrenchment and Severance Benefits Act which lays out the procedure for retrenching an employee. A surplus of labour occurs where there is simply more staff than available work.
For example, taking the business of a restaurant. A restaurant may be opened for lunch and dinner and have two or three shifts, operating for a certain period of time.
Currently there is no in-house dining permitted, so that it is immediately apparent that the job of waiters and bar tenders may be impacted. Accordingly, there will be a surplus of labour as these jobs no longer exist.
It is of course open to a business to temporarily lay off an employee in the hope that business will return to normal. However, where it is not possible to do so, the business may have no choice but to retrench an employee. Where there is a surplus of labour and it is apparent that that state of affairs will continue to exist for the foreseeable future, the law allows an employer to retrench an employee. Where it becomes necessary to undertake retrenchment, it will be necessary for the employer to follow the provisions of the act.
Depending on the size of the undertaking, the employer will be required to rationalise the operations in order to determine whether it is possible to absorb a particular type of employee.
For example, going back to the restaurant business, a restaurant may decide to increase its take out business. Therefore, there may be a need for more staff to take orders curb side, so that waiters may be utilised in that regard. However, before an employer can change the terms and conditions of work in this manner, it is necessary to consult with the employee and indicate that his job no longer exists, but there may be another type of work available. It is open to the employee to either agree to the new job or accept retrenchment.
In the event it is not possible to retain staff in a new position, a retrenchment must be done in a structured manner. For example, the employer must serve notice on the employee advising him of the retrenchment. The employer must explain what steps were taken in determining that this was a case of redundancy and on what basis the employee was chosen.
In deciding which employee should be retrenched there is a principle known as LiFo, which stands for last in, first out.
Therefore, in the event there exists a redundancy, the last person to have been employed or the newest employee (last in) will be the first person to be retrenched (first out).
Although this is a general principle, if there is a good reason for not following this principle, an employer is allowed to depart from it. For example, if the last person to be employed is highly qualified and specialised and brings a unique skill set to the business, the employer will be justified in retaining such an employee’s services in preference to a more senior employee.
Once the retrenchment is properly done, the act provides for the payment of severance benefits, which is calculated based on an employee’s rate of pay and length of service.
Provided the employee has been employed for more than a year (there however are certain exceptions) an employee is entitled to half month’s pay for every year of service where the employee has worked for less than five years.
Therefore, where an employee has worked for four years, he will be entitled to two months’ pay.
Where an employee worked for five or more years, he is entitled to two months’ pay in respect of the first four years employed and from the fifth year onwards, he is entitled to three quarter month’s pay for each completed year of service.
It is also possible for an employer and employee to agree to a higher rate of severance pay than what is prescribed in the act.
Accordingly, in the event an employer determines that business has been impacted to such an extent that there exists a surplus of labour, the employer can have recourse to retrenchment, whereby the services of an employee can be dispensed with on the basis that there is no longer any work available. However, in such circumstances the employee will be entitled to severance payment.
Ravi Nanga is an attorney-at-law.
(Please note that this article is intended only to provide general information on the topic being addressed and should not be taken as providing legal advice. In order to be properly advised it will be necessary for an attorney to examine the relevant documents and obtain the necessary instructions before properly advising as to rights and obligations).
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