Good and sufficient cause

What it is

Under the Employment and Industrial Relations Act (Cap. 452), an employer may end an indefinite contract of employment only on grounds of redundancy (article 36(3)) or where there is a good and sufficient cause (article 36(14)). Good and sufficient cause relates to the employee: serious misconduct, for example, or performance problems that have been raised and not resolved.

Where it exists, either side may end the relationship without notice and without the payment that would otherwise be due for failing to give notice (article 36(14)). It also allows a fixed-term contract to be ended early without the payment of half the wages for the rest of the term.

Reasons that can never qualify

The Act does not list what counts as good cause, but it lists what can never be set up as one. An employer may not rely on the fact that the employee (article 36(14)):

• is a member of a trade union, or is seeking office as, or acts or has acted as, an employees’ representative;
• no longer enjoys the employer’s confidence (except for a private domestic employee);
• has married;
• is pregnant, or absent on maternity leave;
• has disclosed information to a designated public regulating body about alleged illegal or corrupt activities by the employer;
• has filed a complaint or is taking part in proceedings against the employer about alleged breaches of law, or is having recourse to the competent authorities; or
• works in a business that has changed ownership, unless the employer proves the termination is needed for economic, technical or organisational reasons entailing changes in the workforce.

The second point matters in senior roles: a bare loss of confidence is not, under the Act, a good and sufficient cause.

Redundancy is a different route

Redundancy concerns the work, not the person, and has its own selection rule within the class of employment. Mixing performance concerns into a redundancy is a common source of disputes.

If the cause is challenged

A complaint of unfair dismissal goes to the Industrial Tribunal, within four months of the effective date of the alleged breach (article 75(3)).