Jersey Employment Cases of Interest

Dix v Sigma Group Limited [2021] JRC 159

A very interesting case about a workplace pension scheme. By way of executive summary, in 1988 the employer established a defined benefit pension scheme for the benefit of such directors and employees as the employer admits to the scheme (the Defined Benefit Scheme). It was not uncommon at that time for workplace pensions to be defined benefit (sometimes knows as final salary) schemes. In 2003, when the only provider of defined benefit schemes in Jersey ceased to offer those products, it offered the employer the opportunity to move to a defined contributions scheme (the New Scheme). To sweeten the offer, if the employer chose to move to the New Scheme, the provider would make a one off incentive payment of £337,420 into New Scheme on the basis that the employer kept the New Scheme in place for a minimum of 5 years. The employer agreed to convert the Defined Benefit Scheme to the New Scheme. The rules of the New Scheme made it clear that on a transfer out of the New Scheme or its winding up, the scheme provider would pay out the bid value of the underlying units at the time of the transfer.

Due to financial difficulties encountered by the employer a decision was taken to keep the New Scheme going for 5 years (to ensure that the incentive payment would not be clawed back) but then the New Scheme would be wound up.

Pursuant to the rules of the scheme, upon it being wound up, the proceeds of the scheme were to be applied in the following order (1) to pay all of the costs and expenses of the trustees of the scheme; (2) in securing pensions for the members in accordance with the rules; and (3) if any balance remains after securing the pensions for the members, it may be given to the employer.
When it came to the closure of the scheme, the employer continued to be in financial difficulty. The directors considering their legal obligations to its employees and creditors and decided that the members of the New Scheme should only receive a cash equivalent transfer value and that the employer would retain the balance of the monies in the New Scheme for itself.

The Claimant in this case considered this to be a breach of trust by their employer. The Court wholeheartedly agreed. The rules of the New Scheme made it clear that there was an obligation to secure as far as possible, pensions for the members of the amounts that they were entitled to under the scheme. The cash equivalent transfer values did not secure the benefits the members were entitled to.

Action Point

This case highlights the obvious point, namely pension scheme funds cannot be regarded as funds available to an employer to satisfy cash flow issues. Whilst there may be cases where it is not financially viable to continue to provide those pension schemes, an employer must use the funds located in those schemes for their original purpose, namely for securing pensions of its members.

Costa v Graham House Limited [2020]TRE208

An interesting interim judgment regarding the use of the Tribunal’s power to grant extensions of time. It demonstrates that the Tribunal will not grant extensions of time without justification. In this case, the Respondent alleged that they were unable to meet the deadline set down in certain procedural orders due to ill health but failed to submit medical evidence to demonstrate this.
Action Point: This case demonstrates that there must be a justifiable reason for seeking an extension of time order from the Tribunal and that the Tribunal will not grant such orders lightly.

Action Point

This case demonstrates that there must be a justifiable reason for seeking an extension of time order from the Tribunal and that the Tribunal will not grant such orders lightly.

De Sousa v SGB Hire (Channel Islands) Limited [2021] TRE039

The Claimant was partly successful in their claim for unpaid wages due to the Respondent’s failure to call a key witness over concerns about their ability to ‘stick to the truth’.

Action Point

Witness evidence can make or break a tribunal claim. It is of vital importance that all of the key individuals at the centre of a tribunal claim provide witness evidence as far as possible. From an employer’s perspective, if there are concerns about a witnesses’ ability to stick to the truth (and they are an employee) this can be investigated as part of an employer’s disciplinary procedure.