Bermuda Employment Cases 2019

Bermuda Employment Cases 2019

About Tim MoltonTim Molton

Tim Molton has a broad practice as an Associate in the Dispute Resolution Team. He advises commercial clients and high net worth individuals on a wide range of matters, having particular experience in the fields of contentious trusts, fraud and asset-tracing, cross-border enforcement, insolvency, financial regulation and employment law matters.

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J. Robinson (1609 VIP Executive Limited) v K. Burchall [2019] SC (Bda) 42 App (22 July 2019)

Where an employee’s probation period has lapsed without been extended, any subsequent attempt by the employer to dismiss the employee in breach of contract will constitute ‘unfair dismissal’ resulting in a right to recover damages.

This case was an appeal against a decision of the Employment Tribunal, which had held that the Respondent had been unfairly dismissed by the Appellant.

The Tribunal had reached its determination of unfair dismissal having been unsatisfied that there was any evidence of “serious misconduct” which would permit the Respondent summarily and without notice or payment, in accordance with s.25 of the Employment Act 2000 (“the 2000 Act”).

The Supreme Court concluded that, in fact, the Respondent had been wrongfully dismissed, rather than unfairly dismissed, as she was no longer on probation with her employer.  The Court recognised that where a probation period is due to expire imminently, the employer can extend that period if it is uncertain as to whether the employee should remain in their position (provided that the express terms of the contract allow for it). However, where an employer fails to exercise that right prior to the end of the probation period, then the employee automatically passes the probation period. That is what had happened in this case.

In the circumstances, the Respondent was found to have been wrongfully dismissed and entitled to the appropriate damages.

T. Wedderburn v The Bermuda Health Council et al. [2019] SC (Bda) 67 Civ (9 October 2019)

Where there is no breach by the employer of any public duties in connection with the termination of a contract of service, judicial review will not normally be available to challenge the termination.

This case involved an application for judicial review, primarily concerning the applicant’s loss of employment. The Applicant alleged that the termination of her employment was “politically motivated” and brought a claim for judicial review against the Bermuda Health Council (“BHC”).  In cases for judicial review against a public body, the applicant must first obtain the leave of the court.

It was averred that the BHC had failed to follow the prescribed procedure for terminating the applicant’s employment, as the Bermuda Health Council Act 2004 (the “Act”) requires that her employment (as CEO) could only be terminated with the approval of the Minister of Health.

The Court accepted that the failure of the public authority to comply with statutory requirements for termination would normally entitle the employee to remedies available in judicial review proceedings, e.g. a declaration that the decision to terminate is null and void.  However, where there was no breach of public duties in connection with the termination of the contract, judicial review would not

 be available to challenge the termination. As the termination was effected in accordance with the terms of the contract, it was not relevant to the application that the decision to terminate was made without a valid reason connected with the Applicant’s ability, performance or conduct.  That would simply mean that the contract was terminated wrongfully or that the BHC repudiated the contract.

The power of the BHC to terminate the employment of the Applicant was not a statutory power, but a common law power of an employer. While the Act imposes a requirement that the Minister’s approval be obtained before that common law power is exercised, that requirement did not mean that the BHC’s decision to terminate the employment constituted the exercise of a statutory power.  Therefore, in the Court’s view, there was no public law element to the termination and the decision was not amenable to judicial review.

CATS Ltd. V J. Wilkinson [2019] SC (Bda) 14 Civ (18 February 2019)

A charity formed as an unincorporated association has no legal existence separate from its members, and a Court should not readily infer (in the absence of compelling evidence) that a company’s directors have acted against the interests of the company so as to justify the piercing of the corporate veil.

The Respondent, Ms. Juliet Wilkinson, was employed by an unincorporated association, the Bermuda Feline Assistance Bureau (the “BFAB Association”), which terminated her employment in November 2014. Ms. Wilkinson alleged that she had been unfairly dismissed because she was a whistleblower (in respect of the BFAB Association’s non-payment of pension payments for its staff members), but failed in her claims before the Employment Tribunal.

On appeal to the Supreme Court, Mr. Justice Stephen Hellman remitted the matter to a differently constituted panel of the Employment Tribunal and, having found that the BFAB Association was the proper respondent to the appeal, directed that the new panel consider whether the BFAB Association still existed and whether its corporate successor ought to be joined.

The BFAB Association was incorporated as BFAB Limited in May 2017 and subsequently changed its name to CATs Ltd in February 2018.  The new panel of the Tribunal deemed that this change must engage section 31(1) of the 2000 Act (regarding the effect of a sham sale to facilitate the avoidance of legal obligations to employees). It also found that CATs Limited was the corporate successor of the BFAB Association and ought to be joined as a respondent. Ultimately, the panel found that Ms. Wilkinson had been unfairly dismissed.

On appeal, the Supreme Court considered whether the liabilities of an unincorporated association (the BFAB Association) can lawfully pass on to a corporation (BFAB Ltd or CATs Ltd). Referring to the well-known case of Salomon v Salomon Ltd[1] the Respondent argued that, when considering whether or not the corporate veil should be pierced so as to impose liability on the company’s members, the Court must consider the motive behind the company’s decision to incorporate.

However, the Court preferred the arguments of the Appellant, and agreed that it should not draw inferences of mala fides on the part of a company’s directors without having heard evidence tested by cross-examination. The length of time between the Respondent’s employment being terminated and the incorporation of BFAB Ltd and CATs Ltd was also a factor. In such circumstances, there was no justification for piercing the corporate veil, nor was the test under section 31 of the 2000 Act satisfied.

The appeal was allowed and, setting aside the award for unfair dismissal, the Court expressed the view that Ms. Wilkinson ought to have proceeded against the BFAB Association and its members in their personal capacity.

[1] [1987] AC 22