Sherry-Ann McGregor, Contributor

Sherry-Ann McGregor

It may well be that most persons are employed to companies rather than individuals. For this reason, the legal issues which become relevant upon the death of one's employer may not often arise.

The death of an individual employer brings a contract of employment to an end in accordance with established common-law principles and pursuant to Section 11 of the Employment (Termination and Redundancy Payments) Act. What does this really mean?

When an employer dies, the employment contract may be treated as having come to an end by reason of redundancy, and the appropriate benefits may become payable. However, it is not in all circumstances that redundancy will result. In particular, where the employer died leaving a will under which he appointed an executor, his executor may continue to operate the business immediately after his death.

What should the executor do?

Within six weeks after the employer dies, the executor may continue the business under the arrangements which were in place at the time of the employer's death. However, within that time, he must decide whether to make the redundancy payments which will flow as a natural consequence of the death of the employer or take the following steps in an attempt to continue business and avoid having to make the redundancy payments:

An offer must be made in writing to the relevant employee to renew the contract or to re-engage him or her under a new contract of employment.

The terms of the renewed contract or the new contract as to the employee's capacity or place of employment must be similar to the provisions of the contract which existed at the time of the employer's death.

If the employee unreasonably refuses the offer, he or she will not be entitled to redundancy payments.

In order to rely on this provision, the renewal or re-engagement must take effect within six weeks after the death of the employer.

In the English case of Ranger v Brown (1978), the employer died in 1976 and, for approximately three months after his death, his widow carried on the business and paid his employees. The business was then sold to a company for which the employees continued to work. The employees sought redundancy payments from their employer's widow, and initially obtained an order in their favour.

On appeal, that order was reversed and the court instructed the employment tribunal to consider whether there was an express or implied agreement between the widow and the employees to continue their employment after the employer's death. This issue was to be determined based on the length of time which had elapsed since the employer's death and the circumstances of the case, generally.

In light of Section 11 of the Employment (Termination and Redundancy Payments) Act, our courts would determine the issue by considering whether there was a written offer from the executor of the employer's estate to renew the contract of employment or re-engage the employees under new contracts.

In the absence of such written offer, the court is likely to find that the employees were dismissed by reason of redundancy.

Sherry-Ann McGregor is a partner and mediator with the firm Nunes, Scholefield, DeLeon & Co. Send feedback and questions to lawsofeve@yahoo.com.