Jersey to significantly increase compensation in employment cases

The key headlines are:

• Discrimination compensation – this is currently capped at £10,000, but the proposal is that compensation is set to increase to:

1. Up to the greater of £50,000 or 52 weeks’ pay for financial loss (whichever is the greater); and
2. Up to £30,000 for hurt and distress.

Subject to the overall compensation not exceeding the greater of £50,000 or 52 weeks’ pay.

• Unfair dismissal compensation for those with long service – the current maximum compensation for anyone in Jersey is 26 weeks’ pay, which is reached after 5 years’ service. However, the proposal is to introduce two new bands of compensation as follows:

1. Those with more than 10 years but less than 15 years – 31 weeks’ pay;
2. Those with 15 years or more – 36 weeks’ pay.

• Uplift in unfair dismissal compensation – a new power for the Tribunal to consider the employer’s conduct when making an award of compensation for unfair dismissal, and increase the award by up to 25%.
• Written statement of reasons for a dismissal – this will be a new positive obligation on all employers within 7 days of the date of dismissal to provide a statement of written reasons for a dismissal, without the need for an employee to make a request. Failure to comply with this obligation will result in an award of up to 8 weeks’ pay.

What will this mean for Jersey employers?

Despite having discrimination legislation in force since 2014, the reality is that very few cases have been heard by the Employment Tribunal, and the vast majority of cases that have progressed to a final hearing have tended to involve smaller employers (often with junior employees), with both parties being unrepresented before the Tribunal. The simple reason for this is that the present cap on compensation for discrimination claims means that it isn’t economically viable most of the time to instruct lawyers and/or fight cases.

In addition, when combined with the fixed compensatory awards of 26 weeks’ pay, the temptation (especially for medium to large businesses when dealing with senior level employees) has often been to reach for the cheque book and offer a compromise agreement whenever there is a perception that they have a difficult employee.

The most obvious impact of these proposals is that it will be more difficult in the future for those employers who want to continue this approach – especially when one considers there is also the potential for whistleblowing legislation on the horizon in Jersey, which is the subject of an ongoing public consultation until 22 November 2024 – The Employment Forum consultation on whistleblowing.

As such, the reality is there will be far more incentive in the future for employees to seek to litigate claims – although whether that happens in practice will of course be a different question.

By way of comparison, Guernsey introduced the Prevention of Discrimination (Guernsey) Ordinance, 2022 in late 2023, which led to an increase in employees’ rights for unfair dismissal and discrimination with a combined cap of compensation of 9 months’ pay and £10,000 for injury to feelings. Despite the increased compensation levels, there has, so far, not been an avalanche of claims. Indeed, in the 12 months that the new ordinance has been in force, there hasn’t even been a final hearing on a claim. However, from our experience, there has been increased activity around claims and potential claims below the surface that has not yet hit the public domain, and we would expect Jersey will also be similar.

One feature of the current proposals that will be interesting is how the Tribunal will determine the 25% uplift. The Employment Forum’s recommendation was that this should be used in cases where an employer’s actions have been particularly egregious. No examples have been given as to when this would apply, but it is likely to be relevant where an employer either follows no procedure at all, or is found to have acted in bad faith.

In addition, with the greater compensatory powers now given to the Tribunal, what this is likely to mean is that in the future there will have to be, in some cases, separate remedy hearings to determine the amount of compensation (as has been the practice in the UK for many years). In particular, with the ability of the Tribunal now to award up to the greater of £50,000 or 52 weeks’ pay, consideration will have to be given to the efforts of the employee to mitigate their losses.

Interestingly though the Employment Forum did recommend earlier this year that a limited costs regime should be introduced in Jersey to sanction or deter vexatious claims and conduct. Whilst the detailed proposals have yet to be published by the States of Jersey in respect of these new powers, it is again likely they will follow a similar path to the UK, and that they will be introduced at the same time as the new compensatory regime.

For any employment law advice in Guernsey or Jersey, please contact Richard Sheldon, Niall MacDonald, or James Gallimore.