Employment 2014

MULTI-JURISDICTIONAL GUIDE 2014/15

EMPLOYMENT AND EMPLOYEE BENEFITS

© This article was first published in the Employment and Employee Benefits Multi-Jurisdictional Guide 2014/15 and is reproduced with the permission of the publisher, Thomson Reuters. The law is stated as at 1 July 2014.

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Employment and employee benefits in Gibraltar: overview Jessica Calvert and Monika Thys Ramparts

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SCOPE OF EMPLOYMENT REGULATION

1. Do the main laws that regulate the employment relationship apply to:

• Foreign nationals working in your jurisdiction?

• Nationals of your jurisdiction working abroad?

Laws applicable to foreign nationals

The laws concerning employment relationships in Gibraltar apply to all employees working in Gibraltar, whether they are resident or not (a large proportion of the workforce in Gibraltar consists of cross-border workers living in neighbouring Spain).

Laws applicable to nationals working abroad

If employees usually employed in Gibraltar are required to work abroad as part of their employment, then Gibraltar laws continue to apply to their employment. If Gibraltar nationals enter into employment outside of Gibraltar, then the law regulating that employment will depend on the applicable law of the jurisdiction where the employment is based.

EMPLOYMENT STATUS

2. Does the law distinguish between different categories of worker? If so, what are the requirements to fall into each category, the material differences in entitlement to statutory employment rights and are there any maximum time periods for which each category of worker can be engaged?

Categories of worker

Employee. An employee is someone who has entered into a contract to provide services to an employer, whether or not for remuneration. The contract does not have to be in writing, and can be implied rather than express.

Certain categories of employee fall outside the scope of all or part of the legislation (those being sea men, casual workers, domestic workers in a private dwelling house, members of the Gibraltar Police Force, and those employed by the Ministry of Defence).

Self-employed. Self-employed persons are responsible for paying their own taxes and social security contributions.

Entitlement to statutory employment rights

By virtue of the fact that an employment contract exists between an employer and an employee, the statutory rights which relate to the contract will only apply to employees (for example, the right not to be unfairly dismissed and to minimum notice periods).

Self-employed persons are entitled to certain protections under Directive 2010/41 EU on the application of the principle of equal

treatment between men and women engaged in an activity in a self-employed capacity (repealing Council Directive 86/613/EEC), transposed into national law by the Equal Opportunities (Self-employed workers) Regulations 2012. This entitles self-employed workers to protection against discrimination and harassment, and applies the remedies available under the Equal Opportunities Act 2006 to self-employed workers.

Time periods

There are no maximum time periods that any particular category of worker (as set out above) can work in Gibraltar. There are rules concerning how long foreign nationals can work in Gibraltar (see Question 5).

RECRUITMENT

3. Are any grants or incentives available for employing people? Does any information/paperwork need to be filed with the authorities when employing people?

Grants or incentives

Employers can take part in a social training scheme which is available to Gibraltar residents. During the first three-month probationary period the employer will receive remuneration from the Employment and Training Board (ETB) for hiring a Gibraltar resident, provided the employer shows a commitment to hiring the candidate long-term. The scheme is intended to supply qualified candidates to the workplace and covers positions in offices, the construction and building industry, and education.

Filings

Two forms must be filed with the ETB before employment commences:

• Notification of Vacancy. An employer must submit a Notification of Vacancy which sets out basic information about the role a minimum of two weeks prior to the proposed start date. Non-compliance will result in a penalty fine of GIP£1,500. Late filing also incurs a penalty of GIP£10 for every day that the form is filed late.

• Notice of Terms of Engagement. Once employment has commenced a Notice of Terms of Engagement must be filed. This notice must be signed by the employee before it is filed.

BACKGROUND CHECKS

4. Are there any restrictions or prohibitions on carrying out background checks in relation to applicants?

An employer must inform the applicant and obtain their consent prior to carrying out searches relating to an applicant's health, or criminal offences that they have, or are alleged to have, committed.

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This information is classified as "sensitive personal data" under the Data Protection Act 2004. An employer or any third party who carries out such checks will also need to ensure that their processing and storage of that information is in accordance with EU data protection law.

An employer cannot discriminate on the basis of information gathered as a result of these enquiries if to do so would breach the Equal Opportunities Act 2006. With regard to health, it is an offence under the Equal Opportunities Act to discriminate on the ground of disability or pregnancy.

PERMISSION TO WORK

5. What prior approvals do foreign nationals require to work in your country? What information/paperwork needs to be kept or filed with the authorities when they start work?

Visa

As a general rule, if a worker requires a visa to enter the UK, they will require one for Gibraltar in addition to their passport to gain entry.

Procedure for obtaining approval. An application should be made to any British Diplomatic Visa issuing post in the applicant's normal country of residence or in the UK.

Cost. The cost is GIP£30.

Time frame. If the application has been made from outside the UK it can take up to a maximum of 24 weeks, depending on the type of application.

Sanctions. It will not be possible to enter Gibraltar if an applicant is from one of the countries listed as requiring a visa and they do not have that visa (www.visitgibraltar.gi/get-there-visa).

Permits

A foreign national employee who is not classed as an "entitled worker" requires a work permit. An entitled worker is:

• By virtue of their nationality or residence entitled to seek and take up employment in Gibraltar.

• An EEA national as defined in the Immigration, Asylum and Refugee Act 1962.

• A family member of an EEA national as defined in the Immigration, Asylum and Refugee Act 1962.

• Entitled by EU or EEA law to seek and take up employment in Gibraltar.

There is also an exception for Swiss nationals, who do not require work permits for employment in Gibraltar.

Procedure for obtaining approval. Work permits must be issued prior to commencing employment and will not be granted for more than 12 months at a time. Applications must be made to the Director of Employment at the ETB to obtain a work permit. The employer must also return the work permit to the Director of Employment of the ETB within seven days of the date the employment terminates.

Cost. The employer must lodge a deposit with the Director of Employment of the ETB which will provide sufficient funds to repatriate the employee on termination of the engagement.

Time frame. Applications take two to three weeks to process.

Sanctions. A fixed penalty of GIP£1,500 is payable by the employer if he employs a non-entitled worker without a work permit.

Other

Residency permits are required if foreign national employees intend to reside in, and carry out economic activity in, Gibraltar. A residency permit will be issued for a maximum of one year and renewed annually by the Immigration Authorities.

Procedure for obtaining approval. An application must be made to the Civil Status and Registration office under the Immigration, Asylum and Refugee Act 1962.

Cost. The cost is GIP£5.

Time frame. The process usually takes four weeks.

Sanctions. Under the Immigration, Asylum and Refugee Act 1962 a person can be removed from Gibraltar if they do not hold a valid residency permit.

RESTRICTIONS ON MANAGERS AND DIRECTORS

6. Are there any restrictions on who can be a manager or company director?

Age restrictions

There are no express restrictions regarding age, though any directors must be of an age and maturity so that they are able to comply with the statutory obligations of a director.

Nationality restrictions

There are no restrictions.

Other

An undischarged bankrupt cannot be a company director or manager unless granted leave by the same court that declared him bankrupt. Notice must also be given to the official receiver.

REGULATION OF THE EMPLOYMENT RELATIONSHIP

7. How is the employment relationship governed and regulated?

Written employment contract

Contracts do not need be in writing, however:

• A written statement of certain terms and conditions of employment must be provided to employees.

• The engagement (including basic terms and conditions) must be registered with the Employment and Training Board (ETB).

In practice, most companies meet the requirements by using more detailed employment agreements and referencing or incorporating company policies. Certain mandatory terms are required by statute (for example, minimum wage and holiday entitlement).

Implied terms

An employer has a duty under the common law to take reasonable care of an employee's safety, not expose employees to unnecessary risks and to ensure a safe system of work.

Both employer and employee have duties to maintain mutual trust and confidence.

As part of this an employee has an implied duty of fidelity which encompasses a range of specific duties, such as not to disrupt their employer's business, not to compete, and of confidentiality. Such terms are often written expressly in employment contracts in any event.


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A Collective agreements

Collective agreements, information and consultation rights may also apply, depending on the size and nature of the business.

8. What are the main points to consider if an employer wants to unilaterally change the terms and conditions of employment?

An employer must notify the Director of Employment of the ETB and the employee within seven days of a variation.

If an employer has more than 50 employees and wants to make changes to the terms and conditions of employment, then the Employment (Information and Consultation of Employees) Regulations 2005 provide for employees to be consulted, and to be involved in the decision-making process. These regulations transposed Directive 2002/14/EC on informing and consulting employees (Information and Consultation Directive) into national law.

Where an employer is in breach of the regulations and decisions are taken without adequate consultation, any termination or substantial changes to employment have no legal effect until the employer has satisfied its obligations under the regulations.

MINIMUM WAGE

9. Is there a national (or regional) minimum wage?

From 1 August 2014 the minimum wage which applies to employees aged 15 and above is GIP£6.11 per hour.

RESTRICTIONS ON WORKING TIME

10. Are there restrictions on working hours? Can an employee opt out on either an individual or collective basis?

Working hours

A worker's average working time, including overtime, must not exceed 48 hours each week, calculated over a period of 17 weeks, excluding any periods of sick leave, maternity leave or annual leave, unless the employee has chosen to contract out of the Working Time Act 2000.

Employees can contract out of the act if they wish, subject to compliance with certain conditions by their employer.

Rest breaks

Employees aged 18 or over working for more than six hours are entitled to a minimum uninterrupted period of 20 minutes' rest. For those aged between 15 and 18, working daily for more than four hours, the entitlement is a minimum uninterrupted period of 30 minutes. If a worker works for more than one employer, his daily working time must be aggregated.

Shift workers

Night shifts must not exceed eight hours in each 24-hour period.

In any 24-hour period there must be:

• 11 consecutive hours of rest for a worker aged 18 or over.

• 12 consecutive hours of rest for a worker aged between 15 and 18.

In any seven day period there must be:

• Not less than 24 hours of uninterrupted rest for a worker aged 18 or over.

• Not less than two days of uninterrupted rest for a worker aged between 15 and 18.

Employers can vary when rest times should be taken (if, for example, a shift worker is needed to work during what would normally be a rest time, or if due to a change of shift the required weekly rest period cannot be taken between shifts).

HOLIDAY ENTITLEMENT

11. Is there a minimum paid holiday entitlement?

Minimum holiday entitlement

Employers must allow a holiday to every employee who they have employed for four weeks or more.

The minimum paid annual holiday entitlement is 15 days for workers who are both:

• Employed for not less than 48 weeks a year.

• Working five days a week.

However, annual holiday entitlement increases with continuous service to a maximum of 25 days once the employee has been in eight years' continuous service. Schedule 1 of the Employment (Annual and Public Holidays) Order 1969 details the minimum periods of holiday entitlement where weeks worked per year are less than 48, and days worked per week are more than five.

Annual holiday must be allowed to be taken on consecutive days, and any rest day or public holiday which intervenes in a period of annual holiday does not count as a day of annual holiday.

There is no statutory unpaid holiday entitlement in Gibraltar.

Public holidays

There are 12 annual public holidays in Gibraltar. Most of these are set on the same dates as in the UK, but sometimes the dates can vary, and there are also some additional holidays to those applicable in the UK:

• New Year's Day.

• Commonwealth Day (March).

• Good Friday and Easter Monday.

• Worker's Memorial Day (April).

• May Day.

• Spring Bank Holiday.

• The Queen's Birthday (June).

• Late Summer Bank holiday.

• Gibraltar National Day (September).

• Christmas Day and Boxing Day.

ILLNESS AND INJURY OF EMPLOYEES

12. What rights do employees have to time off in the case of illness or injury? Are they entitled to sick pay during this time off? Who pays the sick pay and, if the employer, can it recover any of the cost from the government?

Entitlement to paid time off

Within any 12-month period an employee is entitled to sick leave on full pay for a minimum of two weeks, and thereafter on half pay for a minimum of four weeks, subject to the following conditions:


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• The employee has been continuously employed for at least three months.

• The employee reports his illness within three days of his absence from work.

• The employee supplies a certificate of illness from a medical practitioner.

If an employee is unable to work due to personal injury caused at work during the course of his employment, then the employer cannot terminate the employment for a period of one year without the employee's consent. During this period no right to wages accrues unless the contract of employment states otherwise.

Recovery of sick pay from the state

An employer cannot recover wages paid during sick leave from the government.

STATUTORY RIGHTS OF PARENTS AND CARERS

13. What are the statutory rights of employees who are:

• Parents (including maternity, paternity, surrogacy, adoption and parental rights, where applicable)?

• Carers (including those of disabled children and adult dependants)?

Maternity rights

An employee is entitled to:

• Time off for antenatal appointments without loss of pay, provided she has notified her employer of her pregnancy.

• 14 weeks' maternity leave, which can start up to 11 weeks before the expected due date. A contract of employment can provide for a greater period of time to be taken, in which case the employee can take advantage of the most favourable position, but not run the two periods together.

• If at the start of the maternity leave the employee has a year's continuous employment with that employer, she has the right to return to her job at any time between the end of her maternity leave, and 29 weeks after the child is born.

• The benefit of the terms and conditions of the employment contract continue to apply during maternity leave (except for payment of wages).

• A Maternity Grant, which is a lump sum of GIP£600 for every child born, subject to meeting certain contribution criteria.

• A Maternity Allowance, which is a weekly benefit of GIP£87.64 paid for up to 18 weeks (but not for any period when paid work is done). This is also subject to meeting certain contributions criteria.

• The Government of Gibraltar will also deposit GIP£500 into a children's bond for every child born after 24 June 2013.

• If an employee's position becomes redundant whilst on maternity leave, the employer is obliged to offer the employee alternative employment if a suitable vacancy is available.

Dismissal of an employee because she is pregnant or for any other reason connected with her pregnancy is also automatically unfair.

Paternity rights

There is no statutory right to paid paternity leave in Gibraltar. A father can take "parental leave" (see below, Parental rights) at the time their child is born provided that they give their employer at least 13 weeks' notice of the expected week of childbirth and notify them of the duration of his leave.

Surrogacy rights

There is no legislation providing for the rights of surrogate mothers or parents under a surrogacy arrangement. However, the entitlement to maternity benefits arises where a woman is either pregnant, or has given birth, therefore a surrogate mother would be able to receive the benefits set out above (see above, Maternity rights). Intended parents to a child born to a surrogate mother would not be entitled to the benefits set out above because they will not have been pregnant or have given birth.

Adoption rights

Maternity benefits (that is, the Maternity Grant and Maternity Allowance, see above, see above, Maternity rights) are available to adoptive parents subject to meeting the contributions criteria. Parental leave can also be taken (Parental rights).

Parental rights

An employee with responsibility for a child and with at least a year's service is entitled to take unpaid parental leave. In total, an employee can take four months' unpaid parental leave (but no more than four weeks in any one year) from the date of the child's birth or adoption. The leave can be taken either:

• Up to the time that the child is five years old.

• Where the child is adopted up to five years after the adoption.

Carers' rights

In addition to parental leave, an employee is entitled to take up to five working days in each year as unpaid leave for urgent family reasons (for example, sickness or an accident affecting a member of the employee's immediate family (with that member being a child under the age of 18, a parent, a spouse or a dependant who has no other means of support or assistance)). The employer has the right to request evidence of such sickness from the employee (for example, a medical certificate).

CONTINUOUS PERIODS OF EMPLOYMENT

14. Does a period of continuous employment create any statutory rights for employees? If an employee is transferred to a new entity, does that employee retain their period of continuous employment? If so, on what type of transfer?

Statutory rights created

Minimum time periods of continuous employment apply to a number of statutory rights. For example, an employee can only bring a claim for unfair dismissal if they have been employed for more than one year (subject to exceptions). The minimum notice period that an employee is entitled to receive from his employer on termination of the employment contract also increases with increased length of service. Maternity rights and parental rights are also subject to minimum periods of employment and contribution levels.

Consequences of a transfer of employee

EU principles regarding the transfer of undertakings (Directive 2001/23/EC on safeguarding employees' rights on transfers of undertakings, businesses or parts of businesses (Transfer of Undertakings Directive)) apply in Gibraltar. If there is a transfer of an undertaking, business or part of the same, which was situated in Gibraltar immediately before the transfer, and the transfer is of an economic identity which retains its identity, then any employees transferred with that undertaking will be treated as if there their employment contract was originally made with the party to whom the transfer was made. In other words, the employment contract is not treated as terminated, and continuity of employment is retained.


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A FIXED TERM, PART-TIME AND AGENCY WORKERS

15. To what extent are temporary and agency workers entitled to the same rights and benefits as permanent employees? To what extent are part-time workers entitled to the same rights and benefits as full-time workers?

Temporary workers

Employees with fixed-term contracts can receive the same statutory benefits and rights as permanent employees provided that they meet the minimum length service requirements for those rights and benefits to apply.

However, with regard to unfair dismissal, fixed-term workers are not protected by the legislation. The protection from unfair dismissal does not apply if:

• The contract is for a period of longer than one year (since the protection only applies in any case to permanent employees with more than one year of service (subject to exceptions, such as sexual discrimination)).

• The dismissal occurs due to expiry of the fixed term which is then not renewed.

• The employee agreed to waive the right to not be unfairly dismissed prior to being dismissed.

It can therefore be easier to dismiss a fixed-term employee. Protection from unfair dismissal also does not apply to fixed-term employees where their contract of employment was made before 1 August 1975 and it was not an apprenticeship.

Agency workers

The Agency Workers Regulations 2012 transposed Directive 2008/104/EC on temporary agency work (Temporary Agency Work Directive) into Gibraltar law.

Once an agency worker has worked in the same role for a continuous 12 weeks, during one or more assignments, that worker is entitled to receive the same employment conditions as if they had an employment contract with the employer, including:

• Terms relating to pay.

• Duration of working time.

• Night work.

• Rest periods.

• Rest breaks.

• Annual leave.

However, the right to receive pay does not extend to all payments that a permanent employee would be able to receive from an employee, including (but not limited to) sick pay, pension, maternity or paternity or adoption leave and redundancy.

An agency worker is entitled to use collective amenities made available to employees of the hirer such as a canteen, childcare facilities and transport. They also are entitled to be informed of any employment vacancies with the hirer.

A pregnant agency worker is entitled to paid time off for antenatal appointments, though the worker must provide certification from their midwife, nurse or medical practitioner evidencing the pregnancy.

Part-time workers

Part-time workers are entitled to the same rights and benefits as full-time employees since rights accrued tend to be dependent on length of service with a particular employer.

With regard to benefits that are provided by the government, these correlate to the number of weekly social security contributions, so whether a worker works part-time or not is not a factor. Benefits that are provided by the employer are at the discretion of the employer, and it is usual to scale down the benefits pro rata according to the number of hours worked by a part-time worker compared to someone working full-time.

DATA PROTECTION

16. Are there any requirements protecting employee privacy or personal data? If so, what are an employer's obligations?

Employees' data protection rights

An employee's personal data is protected by the Data Protection Act 2004 which transposed the EU requirements relating to data protection into national law (Directive 95/46/EC on data protection (Data Protection Directive)).

Employers' data protection obligations

An employer must ensure that the way in which it (and any third party employed by it) collects, uses, stores and processes personal data is in accordance with the Data Protection Act 2004.

An employer can only transfer employee personal data outside of Gibraltar if it is being sent to another EEA country without having to ensure any safeguarding of the data. If the data is being sent outside the EEA, the country to which it is being sent must have adequate protections in place regarding the treatment of personal data.

DISCRIMINATION AND HARASSMENT

17. What protection do employees have from discrimination or harassment, and on what grounds?

Protection from discrimination

Under the Employment Act employees can bring an action at an industrial tribunal if they are discriminated against on the grounds of sex (in particular, in relation to their marital or family status). The principle applies to job applications (including selection criteria), training, working conditions and pay. Claims should be brought within six months of the alleged act being complained about.

The Equal Opportunities Act 2006 allows employees to bring claims at the industrial tribunal or the Supreme Court for discrimination on the following grounds:

• Sex.

• Pregnancy or maternity leave.

• Religion or belief.

• Racial and ethnic origin.

• Sexual orientation.

• Age.

• Disability.

• Victimisation.

The Equal Opportunities (Self-Employed) Workers Regulations 2012 also provides for self-employed workers to have the same remedies available to them as are available to employees.


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Protection from harassment

It is unlawful for an employee to be subject to harassment under the Equal Opportunities Act 2006. Employers must ensure that their employees are not subject to harassment, and that they take steps to prevent a third party from subjecting employees to harassment. Public authorities also have a general statutory duty to eliminate harassment at work.

An employee who is subject to harassment can take their complaint to either the industrial tribunal or the Supreme Court. An employer is vicariously liable for the actions of its employees, and therefore a claim can also be brought against an employer where the act of harassment was carried out by a fellow employee.

WHISTLEBLOWERS

18. Do whistleblowers have any protection?

Section 45M, Part IVA of the Employment Act provides protection to employees who make disclosures in the public interest (protected disclosures). A protected disclosure is one that is made by an employee where they reasonably believe that any of the following either have occurred, are currently occurring or are about to occur:

• A criminal offence.

• Failure to comply with a legal obligation.

• A miscarriage of justice.

• An endangerment to health and safety.

• Damage to the environment.

• Information evidencing any of the above is being concealed.

The employee must be reasonable in making the disclosure, meaning that he must:

• Make the disclosure in good faith.

• Believe the allegations to be true.

• Not be making the disclosure for personal gain.

• Believe that it is reasonable for the disclosure to be made.

Provided that it was reasonable for the employee to make the disclosure, an employee has the right not to be subject to any detriment from his employer if he makes a protected disclosure.

If an employee does suffer any detriment then he is entitled to take the matter to an industrial tribunal, which must be done within three months of the detriment being suffered (unless it was not reasonably practicable to present the complaint within this time frame).

TERMINATION OF EMPLOYMENT

19. What rights do employees have when their employment contract is terminated?

Notice periods

The first week of any employment is by statute a probationary period, and can be terminated at the end of that week without notice. After the first week of service the minimum notice periods (in relation to employees that are employed for an indefinite period of time) vary, depending on length of service and the frequency at which the employee is paid.

Employer notice

If an employee is paid fortnightly or more frequently than fortnightly, then the minimum notice periods that the employer can give relate to the employee's length of service as follows:

• Continuous employment of less than two years: one week's notice.

• Continuous employment of between two years and up to five years: two weeks' notice.

• Continuous employment of between five years and up to eight years: four weeks' notice.

• Continuous employment of between eight years and up to ten years: eight weeks' notice.

• Continuous employment of more than ten years: 13 weeks' notice.

For all other employees the minimum notice periods are:

• For up to eight years' continuous employment: one month's notice.

• For between eight years to up to ten years' continuous employment: two months' notice.

• For more than ten years' continuous employment: three months' notice.

Employee notice

The minimum notice period that an employee can give to its employer is either:

• One week, if they are paid fortnightly or more often than fortnightly.

• One month for all other employees.

The minimum notice periods for employers and employees apply regardless of any contractual agreement to the contrary.

If there is "good and sufficient cause", for example, gross misconduct, an employer can dismiss an employee, and an employee can leave his employment, without notice and without any liability to make any payments.

However, an employee's lack, loss or impairment of skill, ability or efficiency which results in a situation where it is impossible to fulfil the employment contract, or the employer's loss of confidence in the employee, are not adequate reasons for the employer to dismiss the employee for "good and sufficient cause".

Severance payments

In relation to contracts of service for an indefinite period of time:

• If an employer fails to give the requisite notice, he is liable to pay the employee a sum equal to the wages that he would have received for that notice period.

• If an employee fails to give the requisite notice, it is also liable to pay the employer a sum equal to the wages that would have been payable to the employee for the correct period of notice.

In relation to fixed term contracts, the terminating party must pay 50% of the sum that would have been paid over the unexpired period of the contract to the other party.

Procedural requirements for dismissal

The employer must file a Notice of Termination at the Employment and Training Board within seven days of the dismissal. If the employer fails to do so it can be liable to pay a penalty of GIP£375.


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20. What protection do employees have against dismissal? Are there any specific categories of protected employees?

Protection against dismissal

Employees with more than 52 weeks' continuous employment must only be dismissed for a good reason. Where an employee is dismissed without good reason, they can claim unfair dismissal. The employer has the burden of demonstrating that an employee has been dismissed for a good reason, which can include:

• A reason related to the capability or qualifications of the employee for performing work of the kind he was employed to do.

• A reason related to the conduct of the employee.

• A redundancy situation.

• That the employee could not continue to work in the position without contravention (either by him or his employer) of a duty or restriction imposed by or under any enactment.

An unfairly dismissed employee is commonly entitled to compensation, although reinstatement and re-engagement are also available remedies.

Protected employees

An employee must have more than 52 weeks' continuous employment to claim unfair dismissal, unless they have been dismissed for an automatically unfair reason (for example, pregnancy or membership of a trade union).

REDUNDANCY/LAYOFF

21. How are redundancies/layoffs defined, and what rules apply on redundancies/layoffs? Are there special rules relating to collective redundancies?

Definition of redundancy/layoff

A dismissal is considered to be a redundancy if the dismissal is for a reason not related to the individual concerned, or for a number of reasons all of which are not related to the individual concerned.

Procedural requirements

Procedural requirements apply if an employer wishes to dismiss five or more employees within a period of 90 days (a collective redundancy).

Redundancy/layoff pay

The Conditions of Employment (Redundancy Pay) Order 2001 sets out the minimum redundancy payments as follows, which increase with length of service:

• Two weeks' pay for each year of service, up to five years.

• Three weeks' pay for each year of service between five and ten years.

• Four weeks' pay for every year of service beyond ten years.

• For employees over the age of 41, an additional two weeks' pay for each year of service completed whilst over the age of 40.

The maximum redundancy pay must not exceed one year's wages, and there is no entitlement to redundancy pay before an employee has completed one year of service.

Collective redundancies

The employer is obliged to:

• Consult employee representatives (including union representatives), at least 60 days before the first dismissal.

• Discuss ways to:

- avoid redundancies;

- mitigate the consequences;

- reduce the numbers being dismissed.

• Confirm in writing to the representatives and Minister for Employment:

- the reasons for the proposed redundancies;

- the number of dismissals;

- its methods of selecting employees for redundancy;

- its procedure for carrying out the dismissals; and

- its calculation of redundancy payments.

EMPLOYEE REPRESENTATION AND CONSULTATION

22. Are employees entitled to management representation (such as on the board of directors) or to be consulted about issues that affect them? Is employee consultation or consent required for major transactions (such as acquisitions, disposals or joint ventures)?

Management representation

There are no requirements under Gibraltar law for employees to be represented at management level.

Consultation

Employers must consult:

• Individuals in redundancy situations.

• Employee representatives if proposing to make five or more people redundant.

• Employees or employee representatives, if they might be affected by certain transfers related to a business (transfer of undertakings).

• Employees, before making certain changes to pension schemes.

• Employee representatives about arrangements for promoting, developing and checking the effectiveness of measures to ensure the health and safety of their employees.

The Employment (Information and Consultation of Employees) Regulations 2005 establish a general framework for informing and consulting employees. In certain defined circumstances, employers must elect one representative per 50 employees (or part of that number: for example, 125 employees will require three employee representatives). The number of representatives must be at least two and not more than 25.

Major transactions

Employee consultation is required where there will be a transfer of undertaking, but only in so far as the employees may be affected. There is no requirement for employees to consent to a major transaction.


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23. What remedies are available if an employer fails to comply with its consultation duties? Can employees take action to prevent any proposals going ahead?

Remedies

Employees can present their complaint to the industrial tribunal. It is also possible for an employee to bring a claim for damages against their employer in the Supreme Court.

Employee action

Employees cannot prevent any proposals from going ahead but they can present a complaint to the industrial tribunal if an employer is in breach of its consultation obligations.

CONSEQUENCES OF A BUSINESS TRANSFER

24. Is there any statutory protection of employees on a business transfer?

Automatic transfer of employees

There is an automatic transfer of employees where there is a transfer of undertaking or business situated in Gibraltar immediately before the transfer to another person where the transfer is of an economic entity which retains its identity.

Protection against dismissal

If an employee is dismissed either before or after a transfer of undertaking, and the reason for the dismissal is the transfer or a reason connected with the transfer that is not an economic, technical or organisational reason, then the dismissal is deemed automatically unfair and the employee can take his claim to the industrial tribunal.

Harmonisation of employment terms

Any purported changes to the terms of employment after the transfer will be void if it is found that the sole or principal reason for the variation is the transfer itself, or a reason connected with the transfer, that is not an economic, technical or organisational reason requiring changes in the workforce.

EMPLOYER AND PARENT COMPANY LIABILITY

25. Are there any circumstances in which:

• An employer can be liable for the acts of its employees?

• A parent company can be liable for the acts of a subsidiary company's employees?

Employer liability

Under the common law an employer is vicariously liable for acts of its employees committed within the remit of the employee's contract with the employer.

In addition, the Agency Worker Regulations 2012 specify that any acts of an employee, whether committed without the employer's knowledge or as an agent for the employer, will for the purposes of these regulations be deemed to be an act of the employer.

Parent company liability

A parent company will not be liable for the acts of a subsidiary company's employees.

EMPLOYER INSOLVENCY

26. What rights do employees have on the insolvency of their employer? Is there a state fund which guarantees repayment of certain employment debts?

Employee rights on insolvency

Certain payments are guaranteed by the Insolvency Fund in the event of the employer's insolvency (see below, State guarantee fund).

State guarantee fund

The Gibraltar Development Corporation (Employer's Insolvency) Regulations 1991 provide for payment of the following to employees in the event of an employer's insolvency (payments are made from the Insolvency Fund):

• Wages.

• Bonuses or commissions remaining unpaid (calculated based on the average bonus or commission received in the 13 weeks prior to the insolvency, and the total amount that can be paid for wages and bonuses or commissions is subject to a cap of eight weeks' wages).

• Holiday pay.

Where an employee has had his employment terminated and the employer is insolvent the following payments can be made from the Insolvency Fund:

• Amounts payable in lieu of notice periods.

• Compensation due under an industrial tribunal award.

• Redundancy pay.

HEALTH AND SAFETY OBLIGATIONS

27. What are an employer's obligations regarding the health and safety of its employees?

An employer has a duty to ensure, so far as is reasonably practicable, the health, safety and welfare at work of all its employees. Matters that must be considered include:

• Plant and systems of work.

• Use, handling, storage and transport of articles and substances.

• The provision of information, instruction, training and supervision.

• Maintenance and condition of the workplace, including access.

• The working environment.

Employers must undertake a risk assessment to identify measures for complying with health and safety regulations, and where there are more than five employees those findings must be recorded. Employees must be consulted regarding any health and safety issues, including the introduction of new measures and technologies. Employers must also ensure that adequate procedures are in place for reacting in the event of serious or imminent danger, and notify employees of those procedures.


Country Q&

A TAXATION OF EMPLOYMENT INCOME

28. What is the basis of taxation of employment income for:

• Foreign nationals working in your jurisdiction?

• Nationals of your jurisdiction working abroad?

Foreign nationals

Non-resident employees pay tax on any income accruing in and/or derived from Gibraltar. However, if they live in Gibraltar but work exclusively outside Gibraltar, they do not pay any income tax.

If a director is not ordinarily resident in Gibraltar and is also present for less than 30 days in a tax year, no tax is charged on income from that director's fees. There is a similar exception for non-resident employees and self-employed individuals whose duties and/or activities are exclusively undertaken outside Gibraltar.

Nationals working abroad

Income tax in Gibraltar is only charged on profits accruing in or deriving from Gibraltar. Therefore, whether or not a Gibraltar national pays income tax in Gibraltar on income earned whilst abroad will need to be assessed on a case-by-case basis.

29. What is the rate of taxation on employment income? Are any social security contributions or similar taxes levied on employers and/or employees?

Rate of taxation on employment income

Income tax is charged on:

• Gains or profits from any trade, business, profession or vocation.

• Gains or profits from employment, including any allowances, privileges or benefits-in-kind.

• Rents, premiums and any other profits arising from property.

Gibraltar has a dual tax system with differing rates of tax. Ordinarily resident taxpayers are free to elect between the two systems and all taxpayers (whether on the gross or allowance based system) with earnings of less than GIP£10,500 per year fall outside of the income tax system with no income tax payable:

• The gross income based system. Under this system, the rates of tax below are applied to gross salary after deduction of the following allowances if applicable:

- GIP£1,200 in respect of pension contributions;

- GIP£6,000 for first time home buyers where the home purchase has been made in that tax year; and

- GIP£2,500 in respect of private medical insurance.

• For individuals earning GIP£25,000 or less, the tax rates applicable are:

- for the first GIP£10,000 of taxable income: 6%;

- the next GIP£6,000 of taxable income: 20%; and

- the balance: 28%.

• For individuals earning more than GBIP£25,000, the tax rates applicable are:

- for the first GIP£17,000: 16%;

- from GIP£17,001 to GIP£25,000: 19%;

- from GIP£25,001 to GIP£40,000: 25%;

- from GIP£40,001 to GIP£105,000: 28%;

- from GIP£105,001 to GIP£500,000: 25%;

- from GIP£500,001 to GIP£700,000: 18%;

- from GIP£700,001to GIP£1 million: 10%;

- for amounts over GIP£1 million: 5%.

• The allowance based system. Under this system, tax is calculated on the remainder of salary once all relevant allowances have been deducted.

• The tax rates applicable are:

- for the first GIP£4,000 of taxable income: 15%;

- for taxable earnings between GIP£4,001 and GIP£16,000: 18%; and

- the remainder of taxable income over GIP£16,000: 40%.

• All allowance based taxpayers benefit from an automatic tax cut based on the higher of GIP£300 or 2% of the tax bill.

• Every taxpayer is entitled to tax allowances or deductions with a minimum total deduction of GIP£3,700. Men aged 65 and over and women aged 60 and over have minimum allowances of GIP£10,887. In addition to a minimum personal allowance of GIP£3,100, other allowances are available which can significantly reduce the amount of taxable income relating to:

- a dependant spouse or relative;

- a deduction for residence in Gibraltar;

- child allowance (whether educated in Gibraltar or abroad);

- home purchase;

- children attending pre-school;

- medical insurance.

Special tax status is also available for certain qualifying individuals:

• For those coming within qualifying category 2, a maximum of GIP£29,080 and a minimum of GIP£22,000 tax is payable in each year of assessment.

• The taxable income of a high executive possessing specialist skills is capped at GIP£120,000, above which no tax is payable.

The Commissioner of Income Tax will calculate the tax due based on the system which is the most beneficial to the taxpayer, irrespective of the taxpayer's election at the beginning of the year. Where a taxpayer opts for the gross income based system and the spouse does not, the availability of allowances to the spouse is restricted.

Social security contributions

Employees must pay 10% of gross earnings as social insurance subject to:

• A minimum of GIP£5 per week (or GIP£21.67 per month).

• A maximum of GIP£25.16 per week (or GIP£109.03 per month).

The self-employed pay 20% of gross earnings, subject to:

• A minimum of GIP£10 a week (or GIP£43.33 a month).

• A maximum of GIP£30.17 a week (or GIP£130.74 a month).

Payments received on maternity leave are exempt from employee and employer social insurance contributions.

Individuals aged 60 and over (and those whose statutory occupational retirement age is earlier than 60) who are in insurable employment are also exempt from paying the employee's share of social insurance contributions. Employers will continue to be required to pay their share of this contribution.


Coun

try

Q&

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BONUSES

30. Is it common to reward employees through contractual or discretionary bonuses? Are there restrictions or guidelines on what bonuses can be awarded?

This is dependent on the industry that an employee works in. Financial services and online gaming are two of the major industries in Gibraltar and in both it is common for employees to be rewarded with either contractual or discretionary bonuses. There are no restrictions on the amounts that can be awarded.

INTELLECTUAL PROPERTY (IP)

31. If employees create IP rights in the course of their employment, who owns the rights?

Ownership

The employee's contract of employment usually outlines ownership of the main IP rights created by an employee during his term of employment. Unless otherwise agreed in writing, ownership automatically devolves to the employer.

Compensation

For patents registered before 1 January 2005, an employee can claim compensation from his employer where an invention created in the course of that employee's employment was patented, and that patent is of outstanding benefit to the employer. The UK Patents Act 2004 extended the grounds on which a claim could be made, so now, the value of the invention itself as well as the value of the patent can also be taken into account where an employee makes a claim for statutory compensation.

Main steps

A clause should be incorporated into the contract of employment stipulating that the employee must do all of the following:

• Acknowledge that all IP rights created in the course of employment are created for the employer's benefit.

• Execute all documents, make all applications and do all acts and things as may be necessary/desirable to:

- vest the IP rights in the works;

- register the IP rights in the name of the relevant company.

• Defend the company against claims that works embodying IP rights infringe third party rights, and protect and maintain the IP rights.

• Waive any moral rights in the IP rights to which the employee may now, or may at any future time, be entitled.

Depending on the employee's role, it may be appropriate to incorporate a clause appointing the relevant company as attorney in the employee's name and on their behalf. This is so that the company can execute documents and use the employee's name to obtain the benefit of all IP rights for which an employee may be responsible. The power of attorney must be executed as a deed.

RESTRAINT OF TRADE

32. Is it possible to restrict an employee's activities during employment and after termination? If so, in what circumstances can this be done? Must an employer continue to pay the former employee while they are subject to post-employment restrictive covenants?

Restriction of activities

During employment implied terms under common law will apply to the contract of employment which would restrict an employee's activities (see Question 7). For example, an employee has to act in good faith and has a duty of fidelity. The extent to which these implied terms are allowed to impact on the employee's activities should be considered on a case-by-case basis.

Post-employment restrictive covenants

It is possible to restrict an employee's actions after employment, but any restrictions must be proportionate to comply with EU law. Each matter will be taken on a case-by-case basis, taking into account the seniority or position of the employee whose employment has come to an end, the likely contacts that the employee would have made, and the information that the employee would have gathered during his employment. The geographical extent of any restrictive covenant should also be considered carefully to ensure that it is proportionate.

An employer is not obliged to pay a former employee while they are subject to post-employment restrictive covenants.

PROPOSALS FOR REFORM

33. Are there any proposals to reform employment law in your jurisdiction?

There are no proposals for reform at the current time.

ONLINE RESOURCES

Laws of Gibraltar

W www.gibraltarlaws.gov.gi

Description. This website contains most of Gibraltar primary and secondary legislation.


Country Q&

A Practical Law Contributor profiles

Jessica Calvert, Senior Associate

Ramparts T +350 200 68450 F +350 200 68451 E [email protected] W www.ramparts.eu

Professional qualifications. Legal Practice Course 2002; England and Wales Solicitor, 2005; Admitted to the Bar, Gibraltar 2011

Areas of practice. Commercial contracts; gaming; real estate.

Non-professional qualifications. LLB(Hons), Leeds University

Languages. English

Monika Thys, Practice Manager

Ramparts T +350 200 68450 F +350 200 68451 E [email protected] W www.ramparts.eu

Areas of practice. Human resources; finance; project management and marketing.

Non-professional qualifications. BA, Business Communications, Università Cattolica in Italy (Brescia); Masters, International Relations, Sussex University (Brighton), UK

Languages. English, French, German, Italian, Polish, Spanish

Documents

Employment 2014