Ervin Dean v Bahamas Power & Light

An individual whose employment is terminated by their employer has two possible causes of action in The Bahamas: wrongful dismissal and unfair dismissal. The first depends on breach of contract. The second is a statutory right available to all employees in The Bahamas to be treated fairly upon dismissal, both as a matter of substance and procedure, pursuant to section 34 of the Employment Act 2001 (“the EA 2001”). Two questions are raised by this appeal. The first is straightforward and concerns the adequacy and correctness of the award of damages made to the appellant for wrongful dismissal without contractual notice or an appropriate contractual payment in lieu. The second is whether there is an additional, third, cause of action available to employees in the appellant's position that depends on being dismissed in breach of an asserted contractual right not to have one's employment terminated “unjustly”.

As will become clear from the reasons given below, the Board has concluded that the appeal should be dismissed.

In summary, the Board is satisfied that the trial judge's approach to assessing the award of damages for reasonable notice in this case was wrong in principle and her assessment was one to which no reasonable judge could properly have come. The Court of Appeal was therefore entitled to overturn the award and substitute its own assessment, which has not been shown to be wrong. On the second question, there is no additional third cause of action available to the appellant: the words in his contract, requiring that any dismissal shall not be unjust, have no separate normative force and act simply as a contractual reminder or reassurance to employees that their statutory unfair dismissal rights are not excluded and can be pursued in parallel or combination with a wrongful dismissal claim.

The facts can be summarised shortly. The respondent is the main statutory provider of electricity in The Bahamas. The appellant was employed by the respondent as a senior manager in credit and collections for about 30 years before his dismissal in 2017. He had an unblemished work record with no history of disciplinary proceedings against him and was a loyal employee.

The terms of the appellant's employment were governed by a standard industrial agreement made between the respondent's predecessor (Bahamas Electricity Corporation) and the Bahamas Electrical Managerial Union dated 13 January 2013 (the “Industrial Agreement”) and duly registered in accordance with the Industrial Relations Act 1971. The appellant's contract of employment reflected the terms of the Industrial Agreement.

Article 14 (2) of the Industrial Agreement is central to this appeal. It governs termination of employment. It provides so far as material as follows:

“ARTICLE 14

Termination of Employment

• 1) …

• 2) The Corporation may terminate the services of an employee by giving reasonable notice in writing having regard for the following criteria: length of service, age of employee, status, loyalty, education and training, health and chances of alternative employment; except that the Corporation may make payment in lieu of giving notice. The Corporation shall not, however, terminate an employee unjustly. The Corporation must settle all entitlements to the employee within two weeks of the effective date of termination as determined by the Corporation and will be no less favourable to the employee than the entitlements provided for in the Employment Act [2001].” (emphasis added)

Leaving to one side the emphasised words (the “Corporation shall not … terminate an employee unjustly”), article 14(2) is otherwise clear and straightforward in its operation. The respondent can terminate the employee's service by giving notice in writing that is reasonable for that particular employee having regard to the specified criteria. The notice period may be commuted to a payment in lieu of notice. Any payment in lieu (and all other entitlements) must be paid within two weeks of the effective date of termination and cannot be less than the minimum statutory entitlements specified by the EA 2001.

Articles 15 and 16 of the Industrial Agreement deal with disciplinary dismissals and grievance procedures. Article 15 applies where an employee's behaviour or performance is unacceptable or contrary to his or her obligations. It sets out the steps that may be taken by the respondent in response. These include suspension, investigating the conduct or performance issue, and sanctions up to and including summary dismissal for a major breach by the employee. Where an employee is warned, suspended, or dismissed, written notice must be given “setting out the reasons for the warning, suspension or dismissal” (article 15(17)). Article 16 sets out the process for settling grievances fairly and promptly.

It is now common ground that articles 15 and 16 have no direct bearing on this case. The appellant's employment was terminated without cause so that article 15 does not apply and he raised no grievance to which article 16 could apply. To the extent that the judge relied on article 15(17) she was wrong to do so as the Court of Appeal held.

On 22 September 2017, the appellant was dismissed from his employment by the respondent without cause and with a payment in lieu of notice equivalent to the statutory minimum notice required by section 29 of the EA 2001. By a separate letter of the same day, the respondent notified him that he would be paid his accrued earnings, vacation entitlement, and Christmas bonus. He was also offered an ex-gratia sum (of $20,792.28) in settlement of his claim. The appellant rejected the ex-gratia payment but accepted the other payments.

The appellant pursued a civil claim for breach of contract against the respondent in the Supreme Court of The Bahamas. Although entitled to do so, he did not pursue any statutory claim for unfair dismissal under the provisions of Part IX of the EA 2001, whether in addition to the civil claim or as an alternative to it.

The appellant alleged two breaches of contract in his statement of claim and at trial. Both relied on the express terms of article 14(2). First, he alleged that in making the payment in lieu of notice based on the statutory minimum notice required, the respondent had failed to “have regard for length of service, age of employee, status, loyalty, education and training, health and chances of alternative employment” and thereby failed to make payment in lieu of reasonable notice. Secondly, he alleged that the respondent had terminated his employment “unjustly”.

The appellant particularised his loss in a Reply filed on 18 December 2018. At paragraph 9(b) he claimed:

“i) Monthly salary at $7,508.34 x 74 months = $555,617.16

…

x) Annual Christmas Bonus (1 week) $1,877.00 x 6 years = $11,262.00

Total = $813,648.95”

The appellant succeeded in his claim for breach of contract before the Supreme Court. By a decision dated 14 May 2021, Madam Justice Ruth Bowe-Darville held (in effect) that by making a payment in lieu based on statutory minimum notice only, the respondent acted in breach of article 14(2). The judge regarded the claim as limited to one for breach of contract and not extending to statutory unfair dismissal (for which she said no particulars had been pleaded or given in evidence). It can be inferred from her concise reasons that she held that where a contract affords more generous terms relating to notice of termination than the statutory minimum notice terms prescribed by the EA 2001, those contractual terms apply. The reasonable notice provision in article 14(2) of the appellant's contract did make more generous provision for notice and so should have been applied. Accordingly, the respondent was in breach of contract in making a payment in lieu based on the statutory minimum period of notice.

The judge also recorded the appellant's assertion that his termination was unjust (para 12 of her decision) and his late assertion that the respondent failed to state a reason for his dismissal as required by article 15(17) of his contract and that, accordingly, there was no justification for his dismissal (para 24). The judge's finding of breach of contract does not expressly accept those contentions, though it is common ground that no reason was given for the appellant's dismissal which was without cause. In her later decision dealing with quantum (see the next paragraph), the judge made no separate award of damages based on these asserted breaches of contract.

The judge considered the quantum of damages for breach of contract at a later hearing. By her decision, dated 19 August 2021, she accepted the approach proposed by the appellant of adopting a multiplier of 74 months (6 years and 2 months) stating that this “represents the unexpired term of employment October 2017 to November 2023 (Plaintiff's 60 ^th Birthday)”. The judge held accordingly that the appellant was entitled to damages for breach of contract based on 74 months' notice (amounting to $750,012.58).

The Court of Appeal (The Hon Sir Michael Barnett, President, The Hon Mr Justice Isaacs JA who gave the lead judgment, and The Hon Madam Justice Bethell JA, SCCiv App No.115 of 2021) upheld the judge's finding that the respondent was in breach of contract by making a payment in lieu of notice calculated by...