Layoff period temporarily extended to 7 months! Severance must be paid if jobs not restored by Oct 31
In light of the COVID-19 crisis, government has moved to temporarily extend the territory’s maximum layoff period from the usual three months to seven months.
Provisions to facilitate this move was made in the Labour Code (Amendment) Act 2020 which passed in the House of Assembly on Thursday afternoon, June 12.
Labour Minister Vincent Wheatley said the crux of the amendment is to insert a new subsection — Section 107(4) — which now allows employers to lay off their staff for beyond the previously-allotted three months before they are allowed to disburse severance pay.
Wheatley said: “The proposed extension will allow an employer to lay off an employee for a period beginning 14th March — which coincides with the cancellation of all cruise ships calls to the Virgin Islands and represents the first stage in the closure of our borders — and not to exceed 31st October 2020.”
“This is with expectancy that if the employee is not reinstated, severance would be payable immediately on or after 31st October 2020,” Wheatley added.
The Labour Minister said he believes the amendment will be beneficial to both the employer and the employee, stating that it will alleviate the burden on employees to seek alternative permanent employment while allowing for businesses to identify the necessary funding for a severance, where applicable, during the COVID-19 period.
Not a win-win for all
During the debate of the legislation — before it passed — senior Opposition legislator Julian Fraser challenged Wheatley’s claim that the amendment was beneficial to both the employer and employee.
“Who is this Bill really benefiting?” Fraser questioned. “Is it benefitting the employer or the employee? Don’t tell me it’s benefitting both [and that] it’s a win-win. It can’t be.”
“If you are supposed to pay an individual severance after three months and you are extending it to six months, it has to be benefitting the employer. What is an individual going to do being unemployed for six months? He’s going to look for a job and if he finds a job in the fourth month, it means that he doesn’t get severance pay does it,” Fraser added.
Severance pay should be protected
The Opposition legislator, therefore, urged Wheatley to include a section in the amended legislation that protects the severance pay of employees who seek temporary work from other employers during their layoff period.
“They (employees) want to make sure that if they go out and find a job, they are going to get their severance pay. And when you say you are making it clear, I want to see it in legislation. Don’t say it here and when you go in the legislation you can’t see it in there,” Fraser argued.
Will be addressed in Committee Stage
In response to Fraser’s comments, Minister Wheatley said he will be addressing the issue during the Committee Stage of the proceedings, which happens when the entire House privately convenes to carefully examine every clause a Bill and make any changes, as necessary.
“That is one adjustment that we have to make to make sure that these employees, who are put in an extended period, be allowed to work without affecting their severance in any way.”
Coming out of the Committee Stage, changes were indeed made to the amended legislation.
As of May 27, some 767 persons in the territory have been reported as laid off and 165 terminated because of COVID-19.
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