News

How hard can it be to determine when an employee starts and ends employment? Clarity in Guernsey at last!

15 December 2022

The Guernsey Employment and Discrimination Tribunal (the "Tribunal") delivered its judgment on 5 December 2022 in the case of Michael Hurwitz v. The House of Green (Case number ED031/21). Mr. Hurwitz had been employed as the Head of Extraction at The House of Green ("THOG") and alleged that he had been unfairly dismissed (the "Claim"). The Respondent filed a preliminary objection, claiming that the Tribunal lacked jurisdiction to hear and decide the Claim because Mr. Hurwitz did not have the required 12 months' continuous service required by The Employment Protection (Guernsey) Law 1998 (the "Law"). Bedell Cristin represented the Respondent and was successful in its application to have the Claim dismissed.

The Law

The Law imposes a qualifying period which restricts unfair dismissal protection to employees with at least one year of continuous employment. An employee's period of continuous employment is defined as beginning "with the day on which the employee starts work" and, where an employee's employment is terminated by the payment in lieu of notice (as it was in this case), ending with "the date on which the termination takes effect" in other words, the "effective date of termination."

These terms are all statutory constructs and it was the job of the Tribunal to answer two questions to determine the Applicant's period of continuous service:

  • when did the Applicant commence working under the contract of employment?; and

  • what was the Applicant's effective date of termination ("EDT")?

The commencement date

Mr. Hurwitz initially argued that his employment commenced at the point in time that he signed his contract of employment and started making arrangements to relocate from the US to Guernsey. He subsequently (and rightly) dropped that claim and relied instead on the contractual commencement date of 2 November 2020.

THOG argued that Mr. Hurtwitz's commencement date was the date he actually started working and receiving remuneration under the contract of employment in respect of which the work was performed. This date was 1 December 2020.

The relevant question was whether, in the period from 2 November to 1 December 2020, Mr. Hurwitz was "working" under the contract of employment.

During that period, Mr. Hurwitz relocated himself and his family from the US to Guernsey and spent two weeks in mandatory isolation. Mr. Hurwitz was granted permission to work in Guernsey with effect from 25 November 2020. Mr. Hurwitz attended  the THOG premises, received a tour and was  issued key tags and security fobs following his release from mandatory isolation but was not required commence working that week so he could get his affairs in order following his relocation to the Island. THOG's evidence was that he did not report for work until the week beginning 30 November 2020. Mr. Hurwitz argued that he commissioned a piece of machinery on behalf of THOG, attended two teams meetings, was allocated a business email account and was copied in on selected operational emails concerning the business.

THOG successfully argued that:

  • For the purposes of calculating his period of continuous employment, Mr. Hurwitz's commencement date begins on the day he "starts work."

  • When determining when an employee "starts work," the Tribunal should consider the following principles well established in UK case law and previously adopted in Guernsey decisions:

  • The commencement date is determined by reference to "the beginning of the Applicant’s employment under the relevant contract of employment" (General of the Salvation Army v. Dewsbury [1984] ICR 498);

  • "that the work referred to must necessarily be work in respect of which the Applicant is an employee and is work under and not collateral to the contract of employment" (Koenig v. Mind Gym Ltd., (Appeal No. UKEAT/0201/12/RN), [2013] 3 WLUK 221); and

  • That the parties may agree on a start date but then later agree to vary it orally, in writing, by conduct or some mixture thereof (O'Sullivan v. DSM Demolition Ltd., [2020] IRLR 840).

  • The Tribunal accepted that the contractual commencement date had been amended by the conduct of the parties and that the activities performed by Mr. Hurwitz prior to 1 December 2020 were "at most collateral to the contract of employment and were not performed under it."

 Mr. Hurwitz's commencement date was therefore found to be 1 December 2020.

The effective date of termination

The Tribunal accepted THOG submissions that:

  • The law defines the effective date of Mr. Hurwitz's termination as the "date on which the termination takes effect" (as illustrated by Pellegrini v. Barings Asset Management (CI) Ltd. Guernsey E&DT 2019 and Bougourd v. Close Fund Services Guernsey E&DT 2018).

  • The Tribunal should analyse the EDT in accordance with the "what", "how" and "when" test set out in Societe Generale, London Branche v. Geys [2012] UKSC 63, [2013] 1 A.C. 523. In particular:

  • the "what" – i.e., that the employee is told in "clear and unambiguous" terms that their employment contract is being terminated;

  • the "how" – i.e., how will that termination be effected (i.e., by making a PILON); and

  • the "when" – i.e., when will the termination take effect.

THOG successfully argued that in this case:

  • The Termination Letter notified the Applicant in clear and unambiguous terms that, "under the employment contract," his employment was being terminated. It also referred to the specific provisions in the contract and the rights being exercised (the "what");

  • That the Respondent was electing to make a payment in lieu of his three month notice period and that he was not required to work his notice period (the "how"); and

  • That his employment would terminate with immediate effect, such that his "last day of employment with the company is today, Friday 27 August 2021" (the "when").

  • The effective date of termination is the date of notification of such termination to the Applicant (see Gisda Cyf v. Barratt [2010] UKSC 41, [2010] 4 All E.R. 851).

In its judgment, the Tribunal held that "the dismissal was communicated to and received by the Applicant in an email dated 28 August 2021 and amounted to a valid election by the Respondent to make a payment in lieu of notice. This means that the dismissal was effective upon notification to the Applicant."

Consistent with the authorities referred to by the Respondent, the Tribunal further held that "…once the Respondent has elected to terminate the Applicant's employment immediately and make a payment in lieu of notice (and communicated that to the Applicant) all that the Applicant has is the right to claim a breach of contract if no payment (or an insufficient payment) is ultimately made by the Respondent. It is not necessary, in my judgment, for there to be a full or partial payment within a reasonable time to bring about the immediate termination of the Applicant's employment; the Respondent's election and communication is sufficient."

Key take aways for employers

Whilst, thankfully, common sense ultimately prevailed in the Hurwitz case, there were some useful lessons for employers arising from the case – many of which are common sense but worth a reminder.

Commencement date

  • Ensure that clear and unambiguous conditions are imposed on an employee's commencement of employment. If an employee is relocating from another jurisdiction, ensure that the commencement of their employment under the contract of employment (and for all statutory purposes) is preconditioned on:

  • their arrival in Guernsey;

  • appropriate immigration clearance (i.e., their visa);

  • their being able to lawfully live and work in Guernsey (i.e., their residential certificate/permit or employment permit); and

  • their employment not actually commencing until they present for work in Guernsey and are directed to commence working. This may seem common sense, however, the argument was progressed in the Hurwitz case on the basis of a contractual provision that allowed for remote working (in certain circumstances).

  • Ensure that the offer letter is incorporated into the employment contract, or if this is not the intention, that key terms, particularly the conditions of the offer of employment, are reflected in the contract.

  • If a commencement date is confirmed in writing but is later brought forward or pushed back for any reason, ensure that the reason for the change and the new commencement date is confirmed in writing. This will avoid any of the unintentional ambiguity of the kind experienced in the Hurwitz

  • Consider incorporating a requirement into your on-boarding process to confirm an employee's actual start date in writing—perhaps through a welcome letter presented to them on their first day of work.

  • Do not allow employees access to confidential information or Company systems before they commence employment.

  • Unless a role is remote, consider inserting wording into your contracts or handbooks that requires employees to be physically present in the office for an initial period of employment.

  • It is ok to on board a new employee before their commencement date (i.e., set up email and Teams accounts and assign passwords, etc.), but to avoid any ambiguity, do not activate access until the commencement of employment.

Termination date

  • Be clear and unambiguous in your written communications with exiting employees.

  • Where exercising a contractual right to make a payment in lieu of notice, in the letter of termination, be sure to:

  • refer to the relevant contractual notice period and confirm that notice is being served in accordance with that provision;

  • refer to the specific clause in the contract (or handbook) which provides the right to make a PILON;

  • be clear that you are exercising that right to make a PILON and that the employee will not be required to work their notice period but, instead, will receive a payment in lieu of that notice period;

  • confirm when the PILON (and other payments arising out of the termination) will be paid;

  • be clear as to when the employee's employment will be terminating (i.e., with immediate effect); and

  • clarify their final date of employment and confirm that it is the EDT for any statutory related claims.

  • The EDT is the date that the employee receives notification of their dismissal. Ideally, employers should tell the employee face to face in a meeting and create a file note of that meeting. Alternatively, if the dismissal is to take effect by letter, ideally, deliver it personally and stay with the employee when they open and read the letter, or send it by registered post. If you send the letter by email, make sure you request a read and delivered receipt.

This case was a timely reminder that, separately and independently from the probationary period, employers have a 12 month period to determine the suitability of an employee for their business before any rights crystallise in respect of unfair dismissal. This is a useful fact to bear in mind when new employees are coming up to their first year anniversary.

Location: Guernsey

Related Service: Employment Law

Authors

Key Contacts