Thomas v Fort Knox Bermuda Ltd

• Jurisdiction: Bermuda
• Judgment Date: 18 March 2010
• Date: 18 March 2010
• Docket Number: Civil Appeal 2008 No. 23
• Court: Court of Appeal (Bermuda)

In The Court of Appeal for Bermuda

Before: Zacca, P; Evans, JA; Stuart-Smith, JA

Civil Appeal 2008 No. 23

BETWEEN:

ALLISON THOMAS

Appellant

v

FORT KNOX BERMUDA LTD

Respondent

Mr M Diel for the Appellant

Mr B Adamson for the 1st Respondent

Mr A Martin for the 2nd Respondent

The following cases were referred to in the judgment:

Johnson v UnisysICR [2001] ICR 480

Wallace v United Grain Growers Ltd (1997) 152 DLR (4th) 1; 39

Thomas v Cayman Islands National Insurance Co [2007] CILR 96

Robinson v Elbow Beach HotelBDLR [2005] Bda LR 8

Abstract:

Damages for breach of employment contract - Termination with one month's pay in lieu of notice - Reasonable notice period - Unfair dismissal - Contrast between UK and Bermuda legislation

JUDGMENT of EVANS, JA

1. This is an application for leave to appeal from a Ruling (in Chambers) by Mr. Justice Bell dated 3 December 2009. On the First Defendants' application, he struck out one of the Plaintiff's heads of claim against the First Defendants, who are his former employers, on the ground that that claim was bound to fail.

2. The Court indicated, at the hearing of this application on 8 March 2010, that it would hear full submissions from both parties and, if leave to appeal was given, would treat it also as the hearing of the appeal.

3. The Plaintiff was employed as the First Defendants' Chief Operations Officer from about September 1999 until 1 November 2005. On that date, his employment was terminated with immediate effect, and he received one month's salary in lieu of notice.

4. He commenced this action in 2006 claiming damages for breach of his employment contract. The Statement of Claim alleged that it was an implied term of the contract that he was entitled to receive reasonable notice of termination and that a reasonable notice period was not less than nine months.

5. The Statement of Claim also included the claim which is disputed in these proceedings. Paragraph 8 read -

8. Further and in the alternative the termination of the Plaintiff's employment is in breach of the Employment Act 2000.

6. The First Defendants applied to strike out that paragraph and, as stated above, Mr. Justice Bell granted that application. On 17 December 2009 he refused the Plaintiff's application for leave to appeal, which is now renewed before this Court.

7. Meanwhile, the First Defendants had produced a letter dated 27 February 2002 which, they contend, sets out the Plaintiff's terms of employment. Attached to the letter was a copy of their "Employee Handbook" (or Employee Manual) which set out "details of the Company's policy and other terms of your employment, including, but not limited to:

Notice periods".

8. Under the heading "Resignations or termination of employment" the Manual provided -

Should it become necessary for the company to terminate employment for reasons other than causemonthly paid employees will receive one month's notice or payment in lieu of notice.

If an employee feels that he has been terminated for improper reasons, he shall have the right to appeal that decision through the employee complaint procedure.

9. So far as we are aware, no reasons were given for the termination notice handed to the Plaintiff on 1 November 2005. We should emphasise that this application is concerned solely with the allegation made in paragraph 8 of the Statement of Claim that the First Defendant acted in breach of the Employment Act 2000 ("the Act").

The Act - Termination of Employment

10. The pleading does not indicate what particular provision(s) of the Act are alleged to have been breached, but as will appear below the reference is to section 18. That section was amended in 2006. It appears in Part IV of the Act headed "Termination of Employment" and under the sub-heading "General Provisions". In its original form, it provided -

Termination of employment"

18. (1) Except as otherwise provided by sections 25 to 27, an employee's contract of employment shall not be terminated by an employer unless there is a valid reason for termination connected with -

(a) the ability, performance or conduct of the employee; or

(b) the operational requirements of the employer's business, and unless the notice requirements of section 20 have been complied with.

(2) Subsection (1) does not apply where

(3) An employee's contract of employment may be terminated by the employee for any reason in accordance with the notice requirements of section 20.

11. Section 20 of the Act sets out minimum periods of notice in writing which in the present case would be one month. Subsection (2) provides that the statutory notice periods do not apply inter alia when the employer is entitled summarily to dismiss an employee under the Act. The circumstances in which the employer is entitled to dismiss without notice for serious misconduct are set out in section 25, and for "unsatisfactory performance" in section 27. Those are the two sections to which section 18 is expressly made subject (see above). Section 21 provides for payment of wages etc. in lieu of notice.

12. Following sections in Part IV of the Act are headed "Unfair dismissal" (section 28), "Constructive dismissal" (section 29) and "Redundancy etc." (section 29 and following). Section 28 reads -

Unfair dismissal

28 (1) The following do not constitute valid reasons for dismissal or the imposition of disciplinary action (paragraphs (a) to (i) include matters such as race, sex, religion, age, trade union activities etc).

(2) The dismissal of an employee is unfair if it is based on any of the grounds listed in sub-section (1).

The issue

13. The issue raised for decision is whether the Plaintiff is entitled to claim damages for breach of the statutory right given by section 18(1) that his contract was not to be terminated except for a valid reason, even where the required statutory and/or contractual notice was given, or wages paid in lieu of notice.

14. The parties apparently are not agreed as to whether the case is governed by the original or by the amended version of section 18, but neither contends that any of the differences are relevant for present purposes. As amended by section 5 of the Employment Amendment Act 2006, section 18(1) reads-

18 (1) An employee's contract of employment shall not be terminated by an employer unless there is a valid reason for termination...