Thoughts on the new Guernsey Population Management Law

 From 3 April 2017, the Housing (Control of Occupation) (Guernsey) Law, 1994 was replaced by the Population Management (Guernsey) Law, 2016 (the Population Management Law) and The Open Market Housing Register (Guernsey) Law, 2016.

The main focus of the old law was capping immigration, but the new law is designed to focus more on the changing (and aging) demographic of the island and "to ensure that the population is made up of the right people to help the States meet their economic, social and environmental objectives" (see the States Quick Guide to the Population Management Law).

In summary, under the Population Management Law, everyone living in Guernsey aged 16 and above needs to hold a Certificate or Permit in order to legally live and work in Guernsey. A Certificate is issued to someone who is entitled to live and work in Guernsey. Some Certificates will permit the holder to reside in only Open Market accommodation. A Permit is issued to someone whose residence status in the island is conditional and is based on things like working in a specific job, or living with a specific person.

Employment Permits

For our clients, securing Employment Permits remains the key concern. There are three main types of Employment Permits each requiring a named full-time job and a named employer:

• The Short Term Employment Permit of up to 1 year which is renewable up to a maximum of 5 years aggregate residence. The holder can live in Open or Local Market housing; must live in shared accommodation; is not a householder; cannot accommodate others and can never hold another Short Term Residence Permit once the 5 years aggregate residence limit is reached. Short Term Employment Permits are issued for jobs where there are manpower shortages in Guernsey.
• The Medium Term Employment Permit of up to 5 years which is non-renewable. The holder can live in Open or Local Market housing; is a householder; can accommodate immediate family members; and must take a Recognised Break in Residence upon expiry. Medium Term Employment Permits are issued for jobs where there are skills shortages in Guernsey, but the skills are being developed locally or are not in short supply elsewhere.
• The Long Term Employment Permit of up to 8 years. The holder can live in Open or Local Market housing; is a householder; can accommodate immediate family members; and can expect to become an Established Resident after completing 8 years residence under this Permit. Long Term Employment Permits are issued for jobs where there are skills gaps in Guernsey and the skills needed are in short supply internationally.

There are now lists of jobs eligible for each type of permit. If the vacancy does not appear on the list, an employer can make an 'out of policy' application, which has a higher administration fee. 

Applying for Employment Permits

Before a business can access Short, Medium and Long Term Employment Permits for jobs that are listed in the Employment Permit Policy, they first go through an assessment process known as the "Employer Assessment".

Applications for Employment Permits are made on-line, via the Employer Portal.  The first time an employer makes an application for a Short, Medium or Long Term Employment Permit under the Population Management Law, they will be prompted to complete the Employer Assessment questions, as well as information about the job they want a Permit for. 

There are two levels of Employer Assessment: Full for those applying for Medium and Long Term Employment Permits, and Short for those only applying for Short Term Employment Permits.

The Employer Assessment areas are:

• Business activity
• Direct economic benefits
• Environmental & reputational impact
• Employees & the community

The Employment Assessment is then valid for three years. From discussions with the States Population Management Team, we understand that the Employment Assessment should contain a significant level of detail, as would have been present in applications for long licences under the old law. The Employment Permit applications within that three year period can then be briefer, assuming the vacancy is on the policy list.

Positives and negatives

It is early days but our experience to date is that there are certainly some significant positives to the new system. It is efficient to have the system online, although inevitably it will take a while to become familiar with how the portal works. It appears to us that there is less repetition now in the questions being asked of employers. Having set lists of vacancies eligible for the permits presumably means that the chance of success for an "in policy vacancy" are reasonably high if the employer assessment and permit application have been completed diligently.

It is also an obvious positive that an employee will become an established resident after just 8 years (rather than 15 years under the old system) albeit that permanent residency with a right to return after a break in residency is not granted until 14 years' of consecutive residency.    

On the negative side, there will inevitably be a "bedding in" period for both employers and the States Population Management Team. We understand that there is currently a significant backlog of applications.

It seems the Long Term Employment Permits definitely assist the States achieving their goal of "ensuring that the population is made up of the right people to help the States meet their economic, social and environmental objectives", but there have been questions raised as to whether the Short and Medium Term Permits do the same. Under the old law, there was a large contingency of seasonal workers who would work nine months in Guernsey, returning home for three months, before repeating the process for many years. The new Short Term Employment Permit can only be renewed for five years and we understand this is causing difficulties particularly in the restaurant and hospitality industries.

Another point to note is that Employment Permits can only be issued for full-time employment of 35 hours per week. Whilst we appreciate one aim of the legislation is to secure a stable workforce, there should arguably be consideration to covering part time workers to ensure a diverse and non-discriminatory environment. 

Only time will tell as to whether the new Population Management Law achieves the States' aim and works for both employers and employees. We would be very interested to hear any views or experiences which you have of the new law, and we are here to help if you require any assistance with applications.

Minimum wage

The Employment Forum in Jersey is carrying out its annual review of the minimum wage and would like to hear your views about what rates the minimum wage, trainee rates and maximum offsets should be set at from 1 April 2018. You can access the consultation here. The deadline for responses is 28 July 2017.

In considering the Employment Forum's review of the minimum wage, you may also be interested to read Oxera's report "Raising the minimum wage: economic and fiscal impacts" which was prepared for the States of Jersey in June 2017. It examines the impact of increasing the minimum wage to 45% of mean weekly earnings which was agreed by the States' Assembly as the target to which Jersey should aspire.

Fee increases

Control of Housing and Work Law

Fees levied under the Control of Housing and Work (Jersey) Law 2012 have been increased (for the first time since the legislation was introduced) to enable the States of Jersey to invest more in migration controls and skills development to support businesses. The key changes include:

• Work permit holders seeking limited leave to remain: £677.
• Non work permit holders seeking limited leave to remain: £993.
• Indefinite leave to remain: £2,297.

Transfer of Immigration functions and powers

Proposed changes to immigration legislation affecting Jersey suggest that certain powers and functions in relation to immigration will be transferred from the Lieutenant Governor to the Minister for Home Affairs. If the changes are agreed, the Minister for Home Affairs will be the deciding authority in the future on matters such as deportation, asylum and applications to enter or remain in Jersey. The Minister will also have power to issue the Island's rules relating to immigration.

Awards for costs

The Jersey Employment and Discrimination Tribunal (the Tribunal) currently has no power to award costs in relation to proceedings before it. In the recent case of Mrs Yulia Trenouth-Wood v Euraco Group Limited claims of constructive unfair dismissal and wrongful dismissal were brought against the Jersey employer. The Tribunal concluded that the claims lacked merit and the applicant was unsuccessful. The Tribunal went further and expressed its view that, if it had been within its power to do so, it would have ordered costs against the Applicant on an indemnity basis to reflect its disapproval of the tenuous claims.

This case is a helpful reminder that there should be a credible foundation and basis to any claim brought before the Tribunal. Whilst the Tribunal does not currently have the power to award costs that may change in the future.

Gross negligence as gross misconduct: Mr Colin Adesokan v Sainsbury's Supermarkets Ltd

Ordinarily when we think of 'gross misconduct', the worst kinds of wilful misbehaviour spring to mind: theft, fraud and violence. Actions, not inactions, tend to dominate. 

What about where a senior manager takes insufficient steps to correct an HR manager's undermining of an employee feedback survey? 

Such an omission was held to amount to gross misconduct justifying summary dismissal in the very recent Court of Appeal case of Mr Colin Adesokan v Sainsbury's Supermarkets Ltd [2017] EWCA Civ 22 (England and Wales).  This case is not binding in Guernsey or Jersey but may be taken into account by the Guernsey and/or Jersey Courts.

Factual background

The claimant was employed as a Regional Operations Manager responsible for twenty stores within Sainsbury's Supermarkets Ltd (Sainsbury's).  It was one of the more senior posts within Sainsbury's and he had 26 years' service.  The High Court found that part of the claimant's role was to oversee the running of Sainsbury's 'Talkback Procedure' (TP), a feedback strategy intended to give employees genuine voice at work, with the aim of enhancing engagement, motivation and pride in work.  Survey results fed into engagement analysis, progression decisions, target setting, remuneration and staff deployment decisions.  All employees participated in TP, and managers were under no illusion that employee feedback provided needed to genuinely reflect the full range of staff views.  Incident and failure to rectify

A HR Manager sent an email under the claimant's purview to five store managers encouraging them to get their most enthusiastic colleagues to complete the TP survey, rather than encouraging all employees to provide feedback.  The email was ostensibly sent jointly by the HR Manager with Mr Adekosan, but the claimant knew nothing of the email at the time.

When the claimant became aware of the email some days later, the survey had ten days left to run and he told the HR Manager to clarify the position with the store managers. He did not ensure that this was done, and the HR Manager did not clarify the position. The claimant became aware of this failure with days left to run on the survey but took no action himself to clarify the position. Sainbury's considered that this gross negligence amounted to gross misconduct, and following an investigation summarily dismissed Mr Adekosan. 

His contract of employment provided for summary dismissal on the basis of gross misconduct but provided no definition.  The applicable disciplinary policy provided only a general definition of gross misconduct and did not reference gross negligence in the definition.  The policy did provide examples of gross misconduct, which relevantly included any "breach of procedure or policy that leads to a loss of trust and confidence".

Decision and appeal

The High Court held that Mr Adesokan had failed to take active steps to remedy the effects of the HR Manager's email.  This was held to amount to gross misconduct, on the basis that the claimant knew or ought to have known that:

• the failure was a breach of a core part of Sainsbury's process and philosophy;
• other colleagues had been dismissed for offending the TP process;
• manipulating the survey potentially distorted the results, with major implications for pay and staffing decisions; and
• the managers of the claimant and the HR Manager should have been made aware of the situation and been given an opportunity to help correct it. It should have been obvious to Mr Adekosan to report the matter.

Notably, the Court found that although manipulating the survey had the potential to affect the survey results, the results were not in fact distorted in this case. Ordinarily with gross misconduct, at least some actual damage is done, e.g. actual theft, actual fraud or violence. The fact that the Court based its decision in part on only potential damage again underscores the significance of this case and raises the possibility of the definition of gross misconduct being broadened in future.

The Court of Appeal agreed with the High Court's conclusions. While careful to point out that it is always a question of degree how extreme misconduct needs to be before becoming 'gross', and it ought not readily be found that unintentional failures amount to gross misconduct, it was open to the High Court to find such a serious error. The claimant took insufficient steps to rectify a situation that he knew clearly to be critical to Sainsbury's strategy. This breached his duty as employee.

It did not help matters, the Court of Appeal thought, that the claimant seemed 'indifferent' to the seriousness of the breach at the time. He should have known to ensure that his order was followed through. This failure, it was held, fatally undermined trust and confidence in him as employee.

Lessons:

Employers can consider:

• expressly including "any breach of procedure or policy that leads to a loss of trust and confidence" as part of the definition of gross misconduct in contract and/or policy;
• being mindful of the accused employee's response at the investigatory stage: remorse and contrition in this case might possibly have resulted in a different outcome;
• that length of service may not be sufficient to overcome a finding of gross misconduct justifying summary dismissal if litigated in the courts; and
• taking local advice on the position in Guernsey or Jersey as applicable before seeking to take similar action.

Restrictive covenants revisited: Egon Zehnder Ltd v Mary Caroline Tillman

The reasonableness of a restrictive covenant will be judged at the date it was entered into. This means that where restrictive covenant clauses are challenged by employees who have begun employment with an employer at a junior level and progressively worked their way up the firm (as is so often the case), the court will look at whether the covenants were reasonable when the employee signed up to them. This is why it is so important to your restrictive covenant clauses to each employee, ensuring that they go no further than is reasonably necessary to protect business interests and that these are reviewed throughout an employees' career.

A restrictive covenant clause preventing a junior administration assistant from working for a competitor for 12 months is highly unlikely to be enforceable, but the reasonableness of a restrictive covenant will not always be as clear cut.In Egon Zehnder Ltd v Mary Caroline Tillman, the UK High Court found that a non-compete restriction which the employee entered into when she started her employment went no further than what was necessary to protect the company's business interests when it considered what was in the parties' contemplation at the time they entered the contract. The employee was a successful individual and regard was had to her future prospects as well as the fact that she would have significant client engagement and strategic involvement going forward.

Whilst this case went in favour of the employer, it involved very particular circumstances (including that the effect of the restrictive covenants were restricted by other means). Notwithstanding the outcome of the case, our advice is always to:

• consider the sorts of covenants that will be necessary to protect your business interests;
• think about the appropriate type, length and geographical scope of each restrictive covenant; and
• be alert as to if and when it will be necessary to enter into fresh covenants, in respect of each of your employees.

What not to wear

The UK Petitions Committee and Women and Equalities Committee have published a report "High heels and workplace dress codes".

The report was written following an e-petition by Nicola Thorp who was employed by an agency, Portico, as a temporary receptionist. She was sent home from work in December 2015 for refusing to wear high heels. The e-petition asked the UK Government to "make it illegal for a company to require women to wear high heels at work".

Sex discrimination can be direct or indirect. Direct discrimination occurs if an employer treats an employee less favourably on the grounds of their gender. Indirect discrimination occurs when a rule or policy applies equally to all employees, yet has a discriminatory effect on one gender or the other.

If, as in most cases, a dress code applies to both men and women, then it would probably not result in direct discrimination. It could, however, result in indirect discrimination if its effect more stringent for one gender than the other. Indirect discrimination can be justified on the basis that it is reasonably necessary to achieve a legitimate aim. In the case of dress codes, such a legitimate aim could be health and safety or the need to project a smart image. The UK Government considered that the requirement for women to wear heels was unlawful i.e. it was not reasonably necessary to achieve a legitimate aim. The report agreed and also commented on the health implications of being forced to wear heels.

The report found the UK law was clear in principle in setting out what constitutes discrimination, but that discriminatory dress codes remained commonplace in some sectors of the economy. The report recommended: for the Government to review the area of the law and to ask Parliament to amend it, if necessary, to make it more effective; more effective remedies for employment tribunals to award against employers who breach the law; and detailed guidance and awareness campaigns targeted at employers, workers and students.

Whilst UK law is not enforceable in Guernsey or Jersey, due to the similarities in our sex discrimination legislation, it is likely our Employment and Discrimination Tribunal would take into account the position in the UK when determining any cases regarding dress code. Whilst few Guernsey or Jersey employers are likely to have a dress code requiring women to wear heels, we would advise reviewing your policy to ensure it is not more stringent for one gender than the other, and seeking advice if there is any uncertainty.

Where am I?  The tests for territorial application of unfair dismissal laws

Given the significant numbers of international employees coming to and from the Islands, particularly from the UK, we are regularly called on to determine whether local employment laws apply.  Determining which laws apply can seem confusing, as the employment contract might be subject to the laws and jurisdiction of one place, but the work might be performed somewhere else.  How do you determine if the employee has the benefit of local unfair dismissal protection? 

A recent UK case brought this issue into sharp focus: Green v SIG Trading Ltd UKEAT/0282/16.  In Green, the Employment Appeals Tribunal considered the test under UK law, which is to what extent the employee has a sufficient 'connection' to the UK.  It concluded that the Tribunal should reconsider its original decision, looking at a range of objective factors.  These are likely to include, for example, the governing law provision in the contract, where the employee lives and works, where the employer is located, etc.  Because the UK statute does not provide an explicit test to determine connection, it is a question of fact in every case what sort of connection the employee has.  We await the Tribunal's conclusions.

In Guernsey and Jersey, the issue is more straightforward.  The Employment Protection (Guernsey) Law, 1998 clearly states that the unfairly dismissal protections do not apply where the employee ordinarily works outside Guernsey under the contract of employment.  If the employee ordinarily works outside Guernsey under the contract, it does not matter what other 'connections' may exist between the employment and the Island (eg where the employer is registered). The Employment (Jersey) law 2003 applies where an employee's employment requires them to work wholly or mainly in Jersey. Although interpretation will be required when the employee works some of the time in Guernsey or Jersey, this is a simpler test than whether they are sufficiently 'connected' to the jurisdiction. 

As always, seek advice if unsure! 

Compromise agreement seminar 8 June 2017

The Guernsey team held a very well-received seminar last month covering the perennial issue of handling compromise agreements. 

The team walked through all the key provisions of agreements, dispelling some myths along the way, for example regarding the tax treatment of 'ex-gratia' termination payments. Focusing on practicalities, the team noted key factors to keep in mind, including:

• issues specific to senior employees, such as handling shares and directorships;
• tailoring of restrictive covenants to suit small jurisdictions; and
• planning time for budgetary approval of large termination payments. 

The team concluded by recommending that, although compromise agreements are not the solution to every case, so should only be entered into after due consideration, they offer an expedient means of securely exiting an employee in the right circumstances. 

The Jersey team is looking forward to its turn to discuss compromise agreements in a presentation to clients over the coming months.  More details to follow.

Women's Development Forum survey results on flexibility in Guernsey

A survey of professionals working across Guernsey recently found that 76% had requested flexibility and, of that group, 90% had their request granted.  77% also agreed that their workplace supports flexible working.  This suggests that Guernsey employers may be more open to flexibility than is sometimes commonly believed. 

Other interesting findings include that while three quarters had sought flexibility to care for children, a substantial number had also sought it to study or re-train (23%).  This suggests that flexibility in the modern age is not exclusively about caring for children, although childcare remains a key driver.  Respondents also overwhelmingly thought that offering flexibility enhances staff retention (93%).

Risks remain, however, in ensuring that flexibility does not negatively impact individuals and employers.  A third of respondents thought that accessing flexibility still holds women's careers back, and large majorities also believed that flexibility can cause employers problems in terms of protecting confidentiality (eg for remote workers), maintaining profitability and servicing clients and customers. 

Overall, though, those making the case for flexibility seem to have some cause for optimism on the strength of these results.  A link to an infographic summarising these results can be found here.