Contributed By Cruzlaw LLP
The Conditions of Employment (Standard Minimum Wage) (Amendment) Order 2019 increased the minimum wage as of the 1 August 2020 to GBP7.25 per hour, GBP282.75 per week and GBP1,225.25 per month.
In August 2019, the Employment Tribunal ruled that a single incident was sufficiently serious to constitute bullying under the Bullying at Work Act. This decision is currently being appealed to the Supreme Court.
The Appropriation (Business Employee Assistance Terms COVID-19) Regulations 2020, were passed under Section 8 (1) of the Appropriation Act 2019 (“the BEAT COVID-19 Regulations”).
The BEAT COVID-19 Regulations set out the regulatory framework for the application, payment and management of the BEAT COVID-19 measures first announced by the Chief Minister of Gibraltar in his emergency budget address of 20 March 2020.
The BEAT COVID-19 Scheme is available to employers with inactive employees and self-employed individuals from relevant sectors that have been affected by the restrictions on economic activity and free movement of people. The scheme provides direct financial support so employers can retain their staff and pay them a salary at a fixed rate, based on the BEAT COVID-19 rate. The relevant sectors are defined by exclusion as opposed to definition in the BEAT COVID-19 Regulations. Supermarkets, Petrol Stations and Accountancy and Law firms are examples of excluded sectors for the purposes of the BEAT measure.
Employers from relevant sectors have to make an online application for a payment for their inactive employees. “Inactive employees” means registered employees that have been sent home and are not working for the whole of that calendar month. The employer then receives a series of payments from the Government of Gibraltar Special Fund (this is described as a BEAT COVID-19 Contribution) and the employer is legally required to make an onward payment to each of their inactive employees. This payment should be made in full, without any deduction.
Amendments and New Rules
Amendments were made to the BEAT COVID-19 Regulations in May allowing excluded sector businesses, with the approval of the Financial Secretary, to designate their employees as "inactive" with the consent of the Director of Employment. If consent is granted, the employer is able to pay their inactive employees either 50% of their salary or the BEAT COVID rate, whichever is the higher. These payments would be funded exclusively by employers but not attract PAYE or Social Insurance. There is a general restriction so employers can only apply this scheme to a maximum of 25% of their workforce. The maximum period that an employee can be furloughed under this scheme is 35 days. Any number of staff to be furloughed over 25% of the workforce or for a period beyond 35 days would only be considered by Government under exceptional circumstances.
Additionally, the new rules allowed businesses in the “Included Sectors” to make an employee inactive for only half a month. The Government paying for half the wage at the “BEAT COVID rate” and the business paying the employee the other half of their salary at their usual, contractual rate.
From the 1 July 2020 up to 31 March 2021 (or such later date as the Minister, in consultation with the Leader of the Opposition unless it is not practicable to do so, may determine by notice in the Gazette), under the Appropriation (Business Grant Terms COVID-19) Regulations 2020, payments will continue throughout the third quarter of 2020, but in the form of a grant to provide support for businesses in meeting their ordinary course-of-business expenses. These grant payments are no longer required to be paid to designated employees as COVID-19-related salaries. The new grant payments will only be paid to businesses that are operating in accordance with the guidelines set out in the government’s “Unlock the Rock” document.
Any business that received COVID-19-related salaries and any self-employed person who received COVID-19-related payments will automatically qualify for the new grant payments program. However, there will be some exceptions - such as businesses that are deemed by the government to have been in “substantive operation” throughout the COVID-19 period. Businesses in relevant sectors that did not previously receive payments will be considered for the new grants on a case-by-case basis.
The grant payment will be calculated as an average of payments that each business or self-employed person previously received over the months of April and May 2020 and paid using a sliding scale:
Self-employed individuals do not have the same rights as employees under Gibraltar law. They are also responsible for their own tax and social insurance payments.
A job offer may be for an indefinite period or for a fixed term. Fixed term contracts are governed by the Fixed Term Employees (Prevention of Less Favourable Treatment) Regulations 2003, which aim to prevent fixed term employees being treated less favourably than similar permanent employees and limits the use of successive fixed term contracts.
In order to engage an employee, an employer must be registered as such under the Business Trades and Professions Registration Act 1989 and must also register with the Income Tax Office.
In addition, a Notification of Vacancy form must be completed and all vacancies must be registered with the Department of Employment before seeking to engage a person as a worker.
A Notice of Terms of Engagement must also be completed and submitted to the Department of Employment for all workers. This Notice must set out certain terms of the employee's employment, including wages and notice periods. A copy must be given to the employee. Any changes to the employment relationship must be notified to the Department of Employment on a prescribed form.
The Working Time Act (WTA) provides specific rules governing the working hours, breaks and holidays of workers. A person under a contract of employment or who provides work or services to another person under a contract which is not a contract for professional services is considered a worker for the purposes of the WTA.
There is a 48-hour limit on average weekly working time, including overtime. The average number of hours worked must be calculated with reference to a 17-week period. There are some special case exemptions allowing a 26-week reference period, and the possibility of a reference period being a full year where a collective or workforce agreement provides for this:
The first category above is open to wide interpretation with some employers arguing that it covers all professional and managerial staff.
Night Workers and Part-time Workers
The normal working hours of a night worker must not exceed an average of eight in each 24-hour period. In the case of a night worker whose activities involve special hazards or heavy, physical or mental strain, there is an absolute limit of eight hours. Night time means the period between 11pm and 6am. The precise period can be determined in a relevant agreement and in the absence of such an agreement it will be 11pm to 6am.
Part-time workers have the same rights/entitlements as a full-time worker, unless there is an objective justification for the difference in treatment. Part-time workers accrue rights over time in the same way as full-time workers. The duration of the annual holiday of part-time employees shall be calculated pro rata an employee who works a five-day working week.
If employees are expected to work regular overtime, it is good employment practice to state this clearly in the employee's contract of employment, together with:
Overtime rates are a matter for agreement between employer and employee or on an industry-wide basis. There are certain minimum statutory levels and overtime pay varies from business to business.
Typical rates for overtime are:
Under the Conditions of Employment (standard minimum wage) (amendment) Order 2019 the statutory minimum wage has increased from GBP6.75 to GBP7.00 from the 1 August 2019. From the 1 August 2020 it will increase by 3.7% to GBP7.25 and from the 1 August 2021 it will increase by 3.4% to GBP7.50.
All employees in any undertaking or any branch or department of an undertaking are entitled to a minimum hourly, weekly and monthly remuneration. This does not include:
It is not unusual to reward employees through bonuses in some sectors, such as financial services. Although many bonus schemes are described as discretionary, they are likely to be subject to implied duties and should be operated in a way that does not discriminate or breach the Equal Opportunities Act 2006.
The Employment (annual and public holidays) Order 1969 (EAPHO) provides specific rules on the duration of an employee’s annual holidays and payment of the same.
According to the Section 4 of the EAPHO an employer shall, between January 1st and December 31st in each year, allow a holiday (hereinafter referred to as an “annual holiday”) to every employee who was employed by them for four weeks or more during the 12 months immediately preceding the January 1st in that year, (such 12 months-period is hereinafter referred to as the “qualifying period”). The duration of an employees’ annual holiday shall be related to the period of their employment with the employer during the qualifying period, the employees continuous service and the amount of working days a week the employee is conditioned to. The duration of an employee’s annual holidays should be calculated in accordance with the tables in Schedule 2 of the EAPHO. The duration of the annual holiday of part-time employees shall be calculated pro rata an employee who works a five-day working week.
Application of Annual Holiday Entitlements
The minimum paid annual holiday entitlement is 15 days for employees working at least five days a week, increasing to 25 days once the employee has eight years of service. There is no statutory unpaid holiday entitlement.
An annual holiday shall be allowed on consecutive days. Any rest day or public holiday which intervenes in a period of annual holiday shall not count as a day of annual holiday.
An employer shall give to an employee reasonable notice of the commencing date or dates and duration of their annual holiday periods and such notice may be given individually to an employee or by the posting of a notice in the place where the employee is employed.
An employee qualified to be allowed an annual holiday shall be paid by their employer in respect thereof, on the last pay day preceding the commencement of such annual holiday, or of each period thereof as the case may be, one day’s holiday pay in respect of each day thereof.
End of Employment
Where an employee ceases to be employed by an employer, the employer shall, on termination of the employment, pay to the employee one day’s holiday pay in respect of each day of accrued annual holiday to which the employee would have been entitled to, less any days of annual holiday already allowed. However, holiday pay shall not be payable to an employee where the employee is dismissed on the grounds either of dishonesty or of misconduct and is so informed by their employer at the time of dismissal or where the employee leaves their employment without having given his employer notice of termination of employment in accordance with Section 54(2) of the Employment Act.
Where any employee dies while in the employment of an employer, the amount of any accrued holiday pay to which he would have been entitled had they given notice to terminate the employment to their employer, expiring on the date of his death shall be due and paid to the legal personal representative of the employee by the employer.
Nonetheless the provisions of the EAPHO discussed above do not prevent the allowance by any employer of any annual or public holiday condition or the payment of holiday remuneration more favourable than those prescribed.
The types of covenant commonly used in employment contracts are:
Covenants will only be enforceable if they are considered reasonable. Reasonableness will include such factors as:
This may be particularly relevant to a jurisdiction as small as Gibraltar.
If restrictive covenants are disregarded or if confidential information is misused an employer can seek damages against the employee or ex-employee or obtain an injunction restraining him from breaching the covenants or misusing the confidential information. It may also be possible to sue the new employer for inducing a breach of contract or for breach of confidence.
There are no statutes pertaining to covenants not to compete in Gibraltar.
See 3.1 Non-competition Clauses.
General Data Protection Regulation (GDPR) came into force on 25 May 2018 and, therefore, data collected, processed, stored and accessed should be restricted to the minimum for each specified purpose. Data should only be kept for as long as necessary. Out of date or unnecessary information should be deleted.
Individuals including employees have the right to be informed of how their data will be used. They can access, rectify, erase and object to data being held or processed. They also have the new right of portability, that is, the data can be transferred to another organisation on request.
Employers are not able to process data until they show that the legitimate interest or legal basis outweighs the interests or rights of the employee. Any data held on paper or electronically should be available to the individual, free of charge, in a commonly used format, electronically and within one month of a request.
A "legal basis" is needed to justify the processing of each data category. A legal basis can be a statutory requirement, such as recording for tax purposes, necessary for a legal obligation, or for the performance of the contract, like paying the individual or ensuring work is performed. For much employee data, the legal basis will be a "legitimate interest", for example capturing data to improve workforce performance or to respond to a dispute.
The Employment Regulations 1994 provide that, it is an offence to engage a worker other that an entitled worker, as defined in the Employment Regulations, without having first obtained a permit in respect of that worker.
Entitled workers are:
All other workers require a work permit to work in Gibraltar. It is as yet unclear what the position of EU workers will be after the UK and Gibraltar leave the EU on the 31s December 2020 and whether they will continue to be “Entitled” workers, or require a work permit, although early indications from the Gibraltar Government are that they will continue to treat EU workers as “Entitled”.
Work Permit Applications
Where applicable a work permit must be obtained before employment commences and will only be issued for 12 months at a time. The application is made by the employer to the Director of Employment. The employer must lodge a deposit with the Director of Employment for the amount that would be required to repatriate the employee on termination.
Applications are usually processed within two to three weeks. Failure to obtain a work permit is subject to financial penalties, and non-EU nationals require residency permits if they wish to reside in Gibraltar. A person who is not entitled to reside in Gibraltar and does so without a permit will not be allowed to stay.
Applications must be made to the Civil Status and Registration Office and it takes around four weeks to obtain a residency permit.
In order to engage an employee, an employer must be registered as such under the Business Trades and Professions Registration Act 1989 and must also register with the Income Tax Office.
The law on trade unions is largely governed by the Trade unions and Trade Disputes Act 1947.
In order for a trade union to be able to conduct effective collective bargaining on behalf of its members, it must be registered in accordance with the provisions of the Trade unions and Trade Disputes Act 1947.
An employee has the following rights in relation to his or her employer:
Where an employer is proposing to dismiss as redundant five or more employees at one establishment within a period of 90 days or less, the employer shall consult about the dismissals all the persons who are appropriate representatives of any of the employees who may be affected by the proposed dismissals or may be affected by measures taken in connection with those dismissals.
The appropriate representatives of any affected employees are if the employees are of a description in respect of which a trade union is recognised by their employer, representatives of the trade union or in any other case, employee representatives the employer chooses.
These are agreements negotiated by trade unions and employers or employers' associations. They can form the basis of an individual's contract of employment provided certain conditions are met.
Employees with at least a year of continuous service can only be dismissed for a fair reason, namely:
The employer has the burden of proving the reason for dismissal.
Redundancy is a potentially fair reason for dismissal, if there is a genuine redundancy situation. Employers must follow a fair and reasonable process, which should involve:
Employers must usually consult employees about the proposed redundancy, and consider ways of avoiding redundancy. Where the employer proposes to dismiss as redundant five or more employees within a 90-day period, collective consultation requirements are triggered.
The employer must consult employee representatives (being either trade union representatives, or employee representatives elected in accordance with the requirements of the Employment Act) at least 60 days before the first dismissal. The consultation will include a discussion of ways to avoid redundancies or mitigate the consequences of the redundancies.
The employer must also notify the Director of Employment (appointed under the Employment Act) in writing of the:
Minimum statutory notice periods the employer must give vary depending on the employee's length of service.
If the employee is paid monthly, notice periods are as follows:
If the employee is paid more often than monthly, notice periods are as follows:
Employment contracts can provide for longer notice periods and for payment in lieu of notice.
Dismissal Without Notice and Breach of Contract Claims
Employees can be dismissed without notice in cases of gross misconduct. Otherwise, failure to provide appropriate notice will give rise to a claim for wrongful dismissal. Fixed-term employees who are dismissed before the expiry of their contract are entitled to 50% of the sum that would have accrued during the unexpired period of the contract.
The employer must file a Notice of Termination with the Employment Department within seven days of dismissal.
To avoid breach of contract claims, the employer must comply with any contractual obligations regarding termination. A fair process must be conducted to avoid claims for unfair dismissal. Although not a statutory requirement, the Employment Tribunal will consider the process followed by the employer.
Different considerations will apply in cases where dismissal is on the grounds of capability or redundancy.
Generally speaking, an act of gross misconduct is considered to be serious enough to overturn the contract between employer and employee, so justifying summary dismissal.
It's still vital that the employer follows a fair procedure as for any disciplinary offence.
Failing to establish the facts before taking action and holding a meeting with the employee, and denying the employee the right to appeal is highly likely to be considered unfair at an employment tribunal and lead to a claim against the employer.
The conditions regulating compromise contracts in respect of complaints presented to the Employment Tribunal of harassment or discrimination are set out in Section 62(2) of the Equal Opportunities Act. The conditions under this section are that:
A person is a relevant independent adviser for the purposes of this section:
But a person is not a relevant independent adviser in relation to the complainant:
Any two persons are to be treated as connected:
It is unlawful to discriminate against employees on the basis of any protected characteristic under the Equal Opportunities Act 2006. The protected characteristics are as follows:
Employees are protected from (Equal Opportunities Act 2006):
Breach of a notice term whether express or implied, and breach of a contractual disciplinary procedure are examples of grounds for wrongful dismissal claim. The remedies available for wrongful dismissal are damages and equitable remedies such as a declaration and an injunction will only be granted if damages would be inadequate.
Legislation in Gibraltar, in particular the Equal Opportunities Act 2006, outlaws discrimination in the workplace on the basis of:
Discrimination may take the form of direct discrimination, indirect discrimination, harassment or victimisation. Almost all categories of workers are protected from discrimination including employees, contract workers, past employees or workers and those applying for jobs or in the process of going through recruitment procedures.
Any termination which can be shown to be due to a discriminatory reason will be unlawful.
There is no cap on awards for discrimination or harassment and a successful applicant may be awarded damages, including damages for injury to feelings.
Standard forms are available on the Department of Employment website and are required to be completed and sent to the Department of Employment.
An employee may make a claim to the employment tribunal if they think someone has treated them unlawfully, eg, their employer, a potential employer or a trade union. Unlawful treatment can include:
Making a Claim
A claim has to be made to the Tribunal within three months of employment terminating or the problem occurring.
To make a claim, a Claim Form need to be completed and submitted to the Tribunal Secretary. The Tribunal Secretary will send a copy of the Claim Form to the respondent and a blank Response Form for them to complete. The respondent then has an opportunity to file a response. The employee will receive a copy of the response.
Once the Tribunal has accepted a Claim Form and any Response, it will appoint a mediator.
Arbitration is possible and pre-dispute arbitration agreements are enforceable.
A Tribunal may, on its own initiative or on application, make a costs order or a preparation time order, where it considers that a party (or that party’s representative) has acted vexatiously, abusively, disruptively or otherwise unreasonably in either the bringing of the proceedings (or part) or the way that the proceedings (or part) have been conducted; or any claim or response has no reasonable prospect of success.
A Tribunal may also make a costs order or a preparation time order where a party has been in breach of any order or any of the Employment Tribunal (Constitution and Procedure) Rules, where a hearing has been adjourned or postponed on the application of or as a result of the conduct of a party.