I INTRODUCTION

The Employment Act 2000 (the Act) is the governing employment legislation in Bermuda. The Act applies to employees working or performing services wholly or mainly in Bermuda for remuneration under a contract of employment, subject to certain statutory exceptions. The parties may not contract out of the requirements of the Act except where the Act expressly allows it.

Employees may bring a complaint to an inspector employed by the government's Labour Relations Department within three months of the employer's alleged breach of duty under the Act, including unfair dismissal.

Where the inspector has reasonable grounds to believe that an employer has not complied with the Act but is unable to cause a settlement to be reached, the inspector must refer the complaint to the Employment Tribunal (the Tribunal), which will hold a hearing on the matter as soon as practicable and must give the parties or their representatives a full opportunity to present evidence on oath and make submissions. The Tribunal comprises a chairman, a deputy chairman and no more than 12 members appointed by the Minister responsible for labour. Out of that panel, the Tribunal hearing a complaint will normally comprise a panel of three persons, which may or may not include an attorney. Except where provided in the Act, the Tribunal regulates its own proceedings as it sees fit.

If the Tribunal determines that an employer has breached the Act, it must notify the parties in writing of the reasons for its decision and has the power to order various remedies. There is a right to appeal to the Supreme Court from an order of the Tribunal on a point of law. The appeal process is governed by the Employment Act (Appeal) Rules 2014.

Employees may still pursue a common law claim for breach of contract or wrongful dismissal in the courts, notwithstanding the right to pursue statutory remedies for unfair dismissal under the Act. The Supreme Court has original jurisdiction to hear claims valued at Bd$25,000 or higher; breach of contract claims valued at less than Bd$25,000 are brought in the lower magistrates' courts. Appeals against Supreme Court judgments are made to the Bermuda Court of Appeal and, in certain stipulated circumstances thereafter, to the Judicial Committee of the Privy Council in London.

II YEAR IN REVIEW

A clear trend in the employment market over the past few years has been the wave of mergers and acquisitions that has transformed the Bermuda insurance market and caused it to contract significantly. Major transactions in 2018 include the acquisition of XL Group by Axa, the buyout of Validus Holdings by AIG, the acquisition of Aspen by Apollo, and the agreement by RenaissanceRe to buy Tokio Millennium Re. This trend continues to lead to redundancies of executive staff who are finding it more difficult to find replacement jobs in the constricted market.

The Bermuda Immigration and Protection Amendment (No. 2) Act 2017 gives the Bermuda Immigration and Protection Act 1956 primacy over the Human Rights Act 1981 to favour qualified Bermudians in the workforce. This will prevent non-Bermudians from successfully claiming discrimination in hiring on the basis of place of origin or national origin. The Human Rights Commission has criticised the amendment, but the government suggests that human rights are still protected by the Constitution and the European Convention on Human Rights. However, Bermuda's restrictive immigration policies will continue to come under scrutiny because the local population is shrinking and ageing, and with that comes a reduced tax base and revenue stream for the island.

A 2018 survey found that the labour force dropped by more than 1,500 compared to two years ago (down to 36,646 people), a decline of nearly 4 per cent. The combined effect of the reduced labour force, the increased number of retired persons and population stagnancy, suggest that the island faces a demographic challenge with regard to its economic sustainability.

III SIGNIFICANT CASES

i The Attorney General for Bermuda v. Ferguson at al (Civil Appeal Nos. 11 and 12 of 2018)

On 26 November 2018, same-sex marriage was for the third time declared legal in Bermuda after this landmark ruling by the Court of Appeal. This decision will inevitably impact local employment as foreign nationals who are spouses of Bermudians have the right to reside and work in Bermuda without a work permit and may become Bermudians in their own right if they remain married for 10 years, subject to certain residency requirements. The Court dismissed the government's appeal against the decision of the Supreme Court, which had ruled that the Domestic Partnership Act 2018 (DPA), which replaced marriage with a civil partnership arrangement, violated the Constitution. The Supreme Court's ruling had opened the door for same-sex couples to marry in Bermuda and several same-sex marriages ensued. However, in December 2017, the government passed the DPA, which respects same-sex marriages that have already taken place, but prohibits any future such marriages, and introduces civil partnerships instead. The Court of Appeal's decision that the DPA is unconstitutional now allows same-sex marriages once again to proceed, while the government considers whether to appeal to the Privy Council.

ii The Minister of Education v. Clemons (Civil Appeal No. 21 of 2016) (March 2018)

This is the first Bermuda case that considered both physical and psychiatric harm allegedly suffered by an employee in the workplace owing to stress caused by an employer's negligence. The Court of Appeal overturned the Chief Justice's prior ruling that the Ministry of Education was liable for having caused personal injury to a public high school teacher by failing to provide a safe work environment. Ms Clemons's claim for damages for psychiatric and psychological injury (post-traumatic stress disorder) was unsuccessful, but she was found to have suffered physical injury in the form of a hypertension condition. The Court accepted the principles espoused in Hatton v. Sutherland,2 that:

  1. there are no special control mechanisms applying to claims for psychiatric injury from occupational stress;
  2. the threshold question is whether the particular harm to the particular employee was reasonably foreseeable; and
  3. an employer is entitled to assume that the employee is able to withstand the normal pressures of the job.

The Court of Appeal allowed the employer's appeal despite finding the employer in breach of its duty of care. However, although it was reasonably foreseeable that the teacher would suffer injury as a result of the breach, the evidence that the breach caused her hypertension was wholly lacking.

iii VIP Auto Service Ltd v. Sonja Warner SC [Bda] 48 Civ (11 June 2018)

In this appeal from a decision of the Employment Tribunal, the Supreme Court applied the leading UK case of Southern v. Frank Charlesly3 in relation to an employee quitting the workplace during a heated incident. The issue was whether that action amounted to an unambiguous resignation, entitling the employer to treat the employment relationship as terminated. Applying the principle that, where ambiguous words are said by an employee in a moment of anger, there is a duty on the employer not to accept the resignation too readily, but to check clearly that it is the true intention of the employee and to enquire when matters are calmer, the Court held that, on the facts, the employer had breached that duty and thus the employee had been unfairly dismissed. Given the tumultuous circumstances, the employee's two-day (unapproved) leave did not amount to a clear resignation.

IV BASICS OF ENTERING AN EMPLOYMENT RELATIONSHIP

i Employment relationship

An employment contract in the summarised form of a statement of employment (SOE) must be entered into between the employer and employee under the Act no later than one week after an employee begins employment and must be signed and dated by both parties. The SOE must contain:

  1. the full names of the employer and employee;
  2. the date when the employment began;
  3. the job title and brief description of the work;
  4. the place or places of work;
  5. the gross wage and the intervals at which it is to be paid;
  6. the normal days and hours of employment or the normal pattern of shifts;
  7. the entitlement to holidays, including public holidays and paid annual vacation;
  8. the entitlement to paid sick leave;
  9. the length of notice that the employee is obliged to give and receive to terminate the contract of employment;
  10. details of any pension provided;
  11. any disciplinary and grievance procedures applicable;
  12. where the employment is not expected to be permanent, the period for which it is expected to continue or the date on which it is to end;
  13. any probationary period;
  14. any dress code;
  15. the existence of any collective agreement; and
  16. such other matters as may be prescribed.

The SOE may also contain other details relating to the terms and conditions of employment.

Where there are no particulars to be entered into under points (k) to (o), that fact must be noted in the SOE. The SOE may refer to a collective agreement or another document for its terms. Agreed amended terms must be confirmed in writing and signed by both parties within one month.

Fixed-term employment contracts are permissible, in which case the SOE must state the date on which the contract is to end.

Often parties will have more complex written contracts of employment that go beyond what is required to be included in the SOE by the Act. Such contracts may be amended pursuant to ordinary contract law principles.

ii Probationary periods

The Act provides that new employees may be required to serve a probationary period. If so, the SOE must state what that period is and must also state if no probationary period applies. During the probationary period, the employer or employee may terminate the contract of employment for any reason (or no reason) and without notice. If a reason is given, it must be lawful (see Section XII.i).

iii Establishing a presence

All new companies in Bermuda hiring employees must be registered with the Registrar of Companies, which is responsible for tracking, processing and administering all limited liability companies, including local companies, exempted companies, overseas companies and foreign sales corporations. A company that is not registered may not hire employees.

If a foreign company that is based overseas hires employees through an agency or third party in Bermuda, the agency will be the employer for the purposes of Bermuda law. However, the foreign company may, in certain circumstances, be deemed to be the real employer and may be sued in Bermuda for any cause of action arising in Bermuda under the External Companies (Jurisdiction in Actions) Act 1885.

V RESTRICTIVE COVENANTS

Bermuda law permits non-competition clauses in employment contracts subject to the following principles.

During employment, the employee is under an implied duty of good faith and fidelity. Thus, regardless of what express terms exist in the contract, the court may prevent an employee from competing with his or her employer, or otherwise acting outside his or her employment, if such activities are harmful to the business. Breaching this implied duty may justify summary dismissal of the employee for serious misconduct. It is easier to rely on an express non-compete clause than on this implied duty.

Post-termination, an express non-compete clause is necessary to prevent competition. However, Bermuda common law regards covenants in restraint of trade as prima facie unlawful. The court will enforce the covenant only if it goes no further than is reasonably necessary to protect the legitimate interests of the employer (such as trade secrets or similar, highly confidential information, trade connections and workforce stability); it will strike down clauses that are unreasonably wide in time, geographic extent and scope of restricted activity.

There may also be a 'garden leave' clause in the employment contract. This allows the employer to prohibit the employee from working during the notice period while he or she continues to be employed and receive normal wages and benefits.

If the contract contains neither type of clause, the employer may try to rely on the implied post-termination duty on an employee not to disclose or misuse the confidential information of his or her former employer. However, this is often difficult to enforce.

Courts will more readily enforce non-solicitation or non-dealing clauses that prevent employees from soliciting the business of clients of the former employer, or dealing with them, and thus protect trade connections. Courts will also prevent the poaching of key employees to protect the stability of the employer's workforce.

VI WAGES

i Working time

There are no maximum working-hour regulations applicable to adults working in Bermuda, save that the Act mandates that employers provide employees with a rest period of at least 24 consecutive hours in each week, excluding police, prison and fire officers, medical practitioners and nurses.

The Employment of Children and Young Persons Act 1963 provides that no child under 13 is permitted to be employed without having a weekly continuous rest period of at least 36 hours. Children under 16 cannot be employed during school hours on school days and may only be employed for up to two hours on school days outside school hours. Persons under 18 may not lawfully be employed at night unless they are over the age of 16, and then only until midnight.

ii Overtime

The Act provides for mandatory overtime pay, unless the parties expressly contract out of the requirement. Mandatory overtime pay does not apply to a professional or managerial employee whose SOE provides that his or her annual salary has been calculated to reflect that his or her regular duties are likely to require him or her to work, on occasion, more than 40 hours a week.

Otherwise, an employee who works over 40 hours a week is entitled to be paid at the overtime rate of one-and-a-half times his or her normal hourly wage. Alternatively, the employee may be paid their normal hourly rate for the extra hours and be given the same number of hours off in lieu.

Many collective agreements provide for overtime pay, including double pay for hours worked on Sundays and public holidays.

There are no limits to the amount of overtime that may be performed in a given period, save for the mandatory rest period (see subsection i).

VII FOREIGN WORKERS

All workers in Bermuda must either be exempt from immigration control (e.g., possess Bermuda status or have some other qualifying exemption under the Bermuda Immigration and Protection Act 1956) or be in possession of a work permit from the Department of Immigration.

There are no arbitrary restrictions on the number of foreign workers who may be employed in Bermuda, but to obtain a work permit, the Department must be satisfied that there is no Bermudian or spouse of a Bermudian or Permanent Resident Certificate holder who is qualified and has applied for the position.

Foreign workers are protected by the same employment laws and generally pay the same taxes as local workers, save that pension contributions under the National Pension Scheme (Occupational Pensions) Act 1998 are not mandatory for foreign workers. A foreign worker can 'opt in' to a pension plan where the employer permits it.

VIII GLOBAL POLICIES

Internal discipline rules are not required by Bermuda law. Where disciplinary procedures exist, the SOE must contain the particulars and where there are none, the SOE must state that. There are no other mandatory workplace 'rules' (as opposed to laws) that apply.

Although not legally required, employers will often set out their internal disciplinary procedures in the employee handbook or on the intranet. Employees are commonly required to sign an acknowledgment that they have read the policies and agree to comply.

The Act provides that an employer may take disciplinary action, including issuing a written warning or suspending the employee, after taking into account: the nature of the conduct in question; the employee's duties; the terms of the contract; any damage caused by the employee's conduct; the employee's length of service and his or her previous conduct; the surrounding circumstances; the penalty imposed by the employer; the procedure followed by the employer; and the practice of the employer in similar situations.

IX TRANSLATION

English is the written and spoken language in Bermuda. There is no law requiring that contracts of employment be translated into the employee's native language. However, if the employer is aware that the employee does not understand the contractual terms, the contract may not be enforceable under common law unconscionable bargain or undue influence principles.

Until now, given the large number of Portuguese foreign workers in Bermuda, as a matter of immigration policy, regulations on English proficiency applied to persons coming to work under the Portuguese Accord and those employed in construction to ensure that work duties were carried out safely. In 2018, the government announced a draft English Speaking Work Permit Policy, which introduces a language test for recruits from non-English speaking countries in job categories where employees interact with the public or where lives could be at risk (e.g., restaurant and hotel workers, and health professionals). Costs of the tests will be paid by government and persons failing will be sent home at their employer's expense.

For work permit holders who are already employed in Bermuda but cannot speak English, the Department of Immigration will act on complaints from the public and give them a language test. Depending on the results, they may be asked to undertake training and be recalled for retesting or their work permit may be revoked.

X EMPLOYEE REPRESENTATION

The Trade Union Act 1965 provides that every employee has the right to be a member of a trade union, and the right not to be a member of any trade union or to refuse to be a member of a particular trade union.

Where an agency shop agreement is in force, an employee does not have the right to refuse to be a member of the relevant union unless he or she agrees to pay appropriate contributions to the trade union in lieu of membership or, alternatively, to a charity of his or her choice.

An employee who is a union member has the right to:

  1. take part in the activities of the trade union (including with a view to becoming a union official) at the 'appropriate time' (i.e., outside working hours or at a time agreed by the employer);
  2. seek or accept appointment or election; and
  3. hold office if elected.

An employer who interferes with these rights commits an offence.

A union's constitution sets out the election and removal procedures for union officer representatives (by a secret ballot of union members), the length of their terms and the frequency of meetings. There is no fixed ratio of representatives to employees.

Employers must comply with the trade union certification procedures as set out in the Trade Union Act 1965 and must deal with unions that have obtained certification in good faith for the purposes of collective bargaining.

Employers commit an offence if they do not allow representatives of a union that is certified in respect of a bargaining unit in the business, reasonable access to the employer's premises for the union's lawful activities, but employers may impose reasonable restrictions in the interests of safety or avoiding undue disruption of the business. Further, employers may, by notice in writing addressed to a certified union, require that a representative may not engage in union activities on the premises without its prior permission.

XI DATA PROTECTION

i Requirements for registration

The Bermuda Personal Information Protection Act 2016 (PIPA) is the country's first piece of data protection legislation. It does not contain any registration requirements. The preliminary provisions of the PIPA were introduced in 2016 and the rest are expected to come into force in 2019. The PIPA seeks to regulate the use of personal information by organisations in Bermuda by protecting both the rights of individuals and the need for organisations to retain and use personal data for proper purposes. Personal information 'means any information about an identified or identifiable individual', except for information that is publicly available. Every employer will, therefore, possess personal information about every employee and applicant for employment. The operation of the PIPA will be overseen by a privacy commissioner, who will also be responsible for handling complaints about alleged breaches of the Act. A graduated regime applies to the complaint procedure, starting with mediation, then followed by an inquiry by the privacy commissioner, followed by possible criminal sanctions. Every employer will be required to appoint a privacy officer who will communicate with the privacy commissioner.

ii Cross-border data transfers

All personal information protection policies apply to cross-border data transfers.

iii Sensitive data

The PIPA defines this as 'any personal information relating to an individual's place of origin, race, colour, national or ethnic origin, sex, sexual orientation, sexual life, marital status, physical or mental disability, physical or mental health, family status, religious beliefs, political opinions, trade union membership, biometric information or genetic information'.

iv Background checks

Background checks, credit checks and criminal record checks are permitted in Bermuda. Practically, the person being checked must consent to the release of information, but there are no legal requirements per se regarding consent. The Credit Association provides credit checks in certain industries and provides results to paying members. Criminal conviction records will not be released by the court or police without the express consent of the offender. Protection comes with the common law duty of confidence, which prohibits the disclosure or misuse of confidential information. The PIPA will protect personal information provided by employees during background checks when its main provisions come into effect.

XII DISCONTINUING EMPLOYMENT

i Dismissal

An employee who is not on a fixed-term or project-based contract, or not in their probationary period, may not be dismissed without a valid reason connected with the ability, performance or conduct of the employee, or the operational requirements of the employer's business. Further, warnings must be given in the event of repeated misconduct (falling short of serious misconduct) or unsatisfactory performance, giving the employee time to improve. The employer must provide the employee with a certificate of termination stipulating the reason for the termination if requested by the employee, as well as formal employment details.

If the termination is for an invalid reason or for no reason, it is an unfair dismissal meriting a complaint to an inspector. Termination at-will clauses are unlawful and unenforceable.

Further, the Act provides that an employee's dismissal is unfair if it is based on any one of a list of specified reasons, many of which involve protected characteristics under the Human Rights Act 1981.

The notice requirements of the Act must be satisfied. The employer is not allowed to give notice of termination during absences for certain types of leave.

Employees are entitled to at least one week's notice if they are paid on a weekly basis, two weeks' notice if they are paid every two weeks, and in other cases, one month's notice. If the contract stipulates a greater amount of notice, the longer notice period will apply. An employer may elect to make payment in lieu of notice and confer all other benefits that would have been due up to the end of the employee's notice period. If the employee leaves without giving proper notice, the employer need only pay salary plus any accrued but unused vacation and benefits, up to the last day worked. If the employer suffers loss, it may sue the employee for compensatory damages, but in practice this rarely happens.

As to rehire rights, if the Employment Tribunal upholds an employee's complaint of unfair dismissal, the Tribunal has the statutory power to award either reinstatement or re-engagement of the employee in comparable work. However, the Tribunal has never ordered this relief against an unwilling employer, just as the courts will not specifically enforce a contract of employment at the suit of either party, since it is undesirable to compel an unwilling party to maintain continuous personal relations with another.

In the event of an unfair dismissal, the amount of compensation that the Tribunal orders must not be less than two weeks' wages for each completed year of continuous employment for employees with no more than two completed years of continuous employment, and not less than four weeks' wages for each completed year of employment thereafter, up to a maximum equivalent of 26 weeks' wages.

The parties are free to enter into a settlement agreement, which is construed and enforced in accordance with normal contract law principles. Stamp duty of Bd$25 should be applied to the agreement to be enforceable (unless the employer is an exempted company), pursuant to the Stamp Duties Act 1976. Where a complaint was filed with the Department of Labour Relations, written confirmation of the fact of settlement signed by both parties must be sent to the Department for it to close its file. The terms need not be disclosed.

ii Redundancies

An employee is redundant under the Act where his or her termination is, or is part of, a reduction in the workforce that is a direct result of any of the conditions of redundancy, namely:

  1. the modernisation, mechanisation or automation of all or part of the employer's business;
  2. the discontinuance of all or part of the business;
  3. the sale or other disposal of the business;
  4. the reorganisation of the business;
  5. the reduction in business, necessitated by economic conditions, contraction in the volume of work or sales, reduced demand or surplus inventory; or
  6. the impossibility or impracticality of carrying on the business at the usual rate or at all, as a result of:
    • a shortage of materials;
    • a mechanical breakdown;
    • an act of God; or
    • other circumstances beyond the control of the employer.

A lay-off that exceeds a period of four months amounts to a termination by redundancy. A redundant employee is entitled to the following:

  1. Notice – the employer must provide sufficient notice of termination or payment in lieu of notice (see Section XII.i).
  2. Severance allowance – where an employee has completed at least one continuous year of employment, the employee is entitled to be paid severance allowance. The amount depends on the length of service, the statutory minimum being two weeks' wages for each year of completed service up to 10 years, and three weeks' wages for each year of completed service thereafter, subject to a maximum of 26 weeks' wages. If the contract provides for a greater amount of severance, it will prevail. Severance allowance is not payable where the employee unreasonably refuses to accept an employer's offer of re-employment at the same place of work under no less favourable terms than he or she was employed prior to the termination.
  3. Certificate of termination – see Section XII.i.
  4. Itemised pay statement – at or before the payment of any wages, including his or her final payment. Deductions that were not agreed beforehand are unlawful.
  5. Pension transfer – the employee's pension (mandatory for Bermudians or spouses of Bermudians) is transferable on redundancy, including the employer's vested contributions, usually two years after the employment commenced.
  6. Notice to trade union – the Act mandates that, before making an employee redundant, as soon as practicable, the employer shall inform the trade union or other representative of:
    • the existence of the relevant condition of redundancy;
    • the reason for the termination contemplated;
    • the number and categories of employees likely to be affected; and
    • the period over which such termination is likely to occur.

Further, the employer must consult on:

  1. the possible measures that could be taken to avert or minimise the adverse effects of such redundancy on employment; and
  2. the possible measures that could be taken to mitigate the adverse effects of any termination on the employees concerned.

Often there will be a collective agreement delineating the requirements to be followed and the benefits to be paid in the event of an intended lay-off or redundancy.

No notification of redundancies needs to be given to the government, but it is advisable as a matter of good labour practice to inform the minister responsible for labour relations of impending redundancies affecting a sizeable pool of Bermudian workers.

The employee has no rehire rights save those that might otherwise be provided in any relevant collective bargaining agreement.

No specific categories of employees are protected from dismissal (including redundancy), and no social plan is required in the event of a dismissal or redundancy.

The parties are free to enter into a settlement agreement to settle their disputes (see Section XII.i).

XIII TRANSFER OF BUSINESS

There is no specific protection for employees whose employment is threatened by a transfer of business or undertaking. The Act provides that where a business is sold, transferred or otherwise disposed of, the period of employment with the former employer shall be deemed to constitute a single period of employment with the successor employer, if the employment was not terminated and severance pay was not paid under the Act. Acceptance of severance pay by an employee has the effect of terminating the employee's employment.

There is no legal prohibition to outsourcing work, and this is an increasing trend given the high cost of local labour. However, where this leads to job losses for Bermudians, unionised workplaces may engage in protests, including work stoppages.

XIV OUTLOOK

All employers in Bermuda will face additional administrative and financial burdens when the PIPA comes into force in 2019 and thus, they will be required to protect and control access to personal information, both physically and electronically.

It is expected that the insurance market will continue to contract through future consolidations, which means more redundancies are expected.

The job market is currently pinning its hopes on fintech, which attracts both interest and caution. A regulatory framework is already in place. The Bermuda Banks and Deposit Companies Amendment Act 2018 enables the creation, operation and regulation of fintech banks on the island. The Digital Asset Business Act 2018 sets out rules on client disclosure, cybersecurity and prudential standards, and aims to make the digital-asset business a regulated industry. Nevertheless, many questions remain unanswered, such as how the conventional banks will be affected, what career skills will be needed for employment in this sector, whether employment in the finance sector will increase, how Bermuda's financial viability and stability will be impacted, etc.

The government promises to relax immigration policies to some extent in order to allow start-up fintech companies to bring in five employees, provided they are also hiring and training Bermudian staff. Other legislative changes being promised include a more progressive social insurance (government pension) scheme, pay equity and Bermuda's first minimum wage, all aimed at providing relief to those at the lowest end of the economic spectrum.


Footnotes

1 Juliana M Snelling is a director, and barrister and attorney, and Olga K Rankin is an associate barrister and attorney, at Canterbury Law Limited.

2 [2002] EWCA Civ 76.

3 [1981] IRLR 278.