What not to forget when an employee leaves
First Published in The Bermuda Chamber Of Commerce Newsletter (Chamber Insider), July 2021.
There are many practical and ‘housekeeping’ matters that employers need to deal with when an employee’s employment comes to an end, some of which are expressly required by law. In this article we look at some of those issues which can often be overlooked.
Certificate of Termination
Under Section 22 of the Employment Act 2000, employees are entitled to receive on request a ‘Certificate of Termination’, containing the following:
- employer’s name and address;
- nature of the employer’s business;
- duration of the employee’s employment;
- capacity in which the employee was employed;
- wages and other remuneration payable at the date of termination; and
- where the employee so requests, the reason for the termination.
Immigration
Under Section 61AB of the Bermuda Immigration Act 1956, the most recent employer of a person whose work permit has expired or has been revoked is responsible for the costs of repatriating the employee and their qualifying dependants to their place of origin, unless the parties agree otherwise.
Further, the Department of Immigration requires employers to submit a written ‘Notice of Termination’ when a work permit holder leaves their employment, containing the following:
- employee’s full name;
- date of termination;
- date on which the employee left or is planning to leave the island, if known; and
- reason for the termination.
The Notice must be provided to Immigration within 7 working days of the work permit holder’s last day of employment.
The employer must also return the original work permit paper document and work permit card. If the original copies cannot be returned, the employer should explain why.
Health insurance
In certain circumstances, an employer is obliged to continue health insurance cover for an employee after their employment has terminated. If an employee for whom the employer is required by law to provide health insurance leaves their employment, then under the Health Insurance (Cover) Regulations 1971 the employer must provide the mandatory minimum health insurance cover for 4 weeks after termination. This obligation ceases if the employee becomes compulsorily insurable by any other employer within that 4-week period.
It is therefore important for an employer to know whether, and when, a departing employee will be commencing work with another employer who will provide health insurance.
Reminder of contractual obligations
When an employee leaves it is important to ensure they are aware of any obligations that they continue to owe to the employer post-termination. For example, employees will usually be subject to express contractual confidentiality obligations which continue to apply after they leave. Certain employees may also be subject to restrictive covenants which prevent them from doing certain things for a period of time after termination, such as working for a competitor or dealing with their former employer’s clients.
As part of the termination arrangements, the employee should be reminded in writing of their ongoing obligations. It is also prudent for the employer to instruct the employee to provide a copy of any such contractual obligations to any prospective new employer, so that the new employer is aware of their existence.
Company property
When an employee leaves they should be required to return any company property or documentation in their possession, to help avoid its misuse or unauthorised disclosure. This applies not only to physical equipment (laptops and phones, for example) and documents, but also to any electronic documentation that they may have access to outside of the company’s IT systems; the employee should be asked to confirm that they have permanently deleted any company documentation that they might have sent to a personal email account, for example, ideally after providing a copy to the company.
It would be prudent to ensure that the employee signs a letter to confirm that they have complied with their obligations in this regard.
This issue has particular significance at the moment, when many employees have been working from home and so may have taken company property off the company’s premises.
Directorships
If the employee also holds a directorship with the company, or another group company, then it is advisable to request that they sign a letter resigning from their directorship on termination. This is because, for individuals who are both employees and directors, a directorship does not generally terminate automatically when the individual’s employment ends.
The requirements of the Companies Act 1981 relating to the removal of directors can be demanding and take some time to comply with and relevant provisions of the company’s Bye-laws will also need to be considered. As such, the simplest way to resolve this matter is to ensure the individual signs a resignation letter.
Final payment
Under Section 18(5) of the Employment Act 2000, an employer must pay to a departing employee any remuneration or benefits which are outstanding on termination within 7 of from termination or, if longer, the next interval at which the employee would have been paid had the employment continued (i.e. the next normal payroll date). Employers should therefore ensure that the employee’s final payroll is scheduled to be paid in compliance with this requirement.
This article serves as a useful reminder of the some of the important practical issues employers should address when one of their employees departs. If you would like further information on any of the issues discussed in this article, you can contact a member of our Employment Practice: Bradley Houlston ([email protected]) or Jordan Knight ([email protected]).
