PHILIPSBURG--Some 22 employees of jewellery chain Little Switzerland won their court case against the company that had sent them home without pay since December 2017.
Smiles and tears of joy were on the faces of workers who learned their fate after their lawyer Jelmer G. Snow of BZSE Attorneys-at-Law explained the verdict handed down by the Court of First Instance on Friday. The Court ordered their employer to pay their due salaries, with interest, including a legal increase of at the most 10 per cent.
Little Switzerland’s holding company World Gifts Import B.V. had pleaded with the Court to reject the claims. The Little Switzerland stores in St. Maarten suffered extensive damage due to Hurricanes Irma and Maria, which struck St. Maarten in September 2017.
Little Switzerland sells jewellery and luxury watches in more than 30 locations in the Caribbean, including St. Maarten.
The hurricanes severely damaged Little Switzerland’s Front Street and Harbour stores, which led to no or hardly any turnover since. Whereas the Harbour store has partially reopened in the meantime, the Front Street store, which is currently under reconstruction, remains closed until July/August 2018, lawyer Daniella Engelhardt of Van Eps Kunneman Van Doorne law office stated on behalf of the company.
She said renovation of the Front Street store, which was severely infested with mould, would cost US $1.3 million.
After Irma, Little Switzerland paid wages to all its workers for a period of three months, as this was covered by the company’s business interruption insurance. As it had not been able to reopen its business and the three-month period expired on December 7, 2017, Little Switzerland said it was forced to suspend further payment of wages to all employees who were not working as of that date.
The company called a general staff meeting on November 28, 2017, during which employees were presented with the option to terminate their labour agreements, “seemingly in an effort to bid their workers farewell,” as attorney Jelmer Snow of BZSE law office said, or to stay in the jeweller’s employment, but without payment of wages.
In the meantime, the company said, it would be doing everything in its power to become operational again “as soon as possible, not only for commercial reasons, but also to be able to provide you with the opportunity to start performing your work again,” World Gifts Vice President for Human Resources Mike Cooney wrote in a letter to workers on December 8, 2017.
According to Little Switzerland, the principle of “no work, no pay” is explicitly set in the Civil Code of St. Maarten, and as it would have been impossible for the employees to resume sales work and as the impediment to performing work in this case was not Little Switzerland’s fault, it was the employer’s position that this principle, which is also included in the workers’ employment agreements, applies.
Act of God
In most employment agreements the company has included a so-called calamity provision which states: “In the event the Employer is unable to make use of the services of the Employee – due to a calamity (fire, hurricane, rain, or any Act of God) or any occurrence beyond control of the Employer, whether or not for the risk of the Employer – for a period exceeding three months, the Employer will only be obligated to pay the applicable minimum wage to the Employee for said period. If such calamity or occurrence should last longer than three months, the Employer’s obligation to pay wages shall cease.”
Windward Islands Federation of Labour (WIFOL) contested Little Switzerland’s appeal to the “no work, no pay” clause and the resolutive condition in the labour agreements.
The union retained lawyer Snow, who confirmed that the main rule of “no work, no pay” is correct, but that Little Switzerland “seems to forget” that the employee who is willing to work retains the right to claim his wages if the employer does not make use of his or her services.
Snow pointed out an almost comparable situation after the passing of Hurricane Luis in 1995, in which the High Court of the Netherlands ruled that, although Luis was an Act of God and neither the employer nor the employee had any effect on its occurrence, the decision of the employer, in this case Port de Plaisance Hotel Operations N.V., to lay off some of its employees was not, and that, therefore, the clause in question was unlawful.
Attorney Engelhardt said it was no easy decision to keep the Front Street store closed. “This is a case of force majeure and does not concern a normal business risk. It concerns very exceptional circumstances with unforeseeable risks. Irma was extremely powerful, and its results also last for much longer. Never has the tourism sector been hit harder. It is very quiet on Front Street, even with the reopened stores.”
She said this in response to statements that other stores, including Diamond International, had already reopened and were back in business, whereas Little Switzerland is not.
In its ruling the court stated that Little Switzerland cannot make use of the Calamity Provision in this case as this would ultimately result in the termination of the labour agreement on the sole ground of a decision by the employer. The court deems that in violation of the “closed system” of the termination of labour agreements in St. Maarten’s law.
The court also noted that the employer did not take action to terminate the employees’ contracts. When they refused to sign the termination agreement the employer did not request permission to end the collective labour agreement nor was the case brought before a judge.
The court also stated that a period of three months after the calamity is the maximum and reasonable time after which an employer must recommence payment of salaries. That is based on experience with previous hurricanes in St. Maarten. It is generally the rule that companies can reopen their doors within three months of the passing of a hurricane.
The court did not see the exceptional strength of Irma as a reason to prolong the term of three months. Besides, the court noted that the company had not made use of the Calamity Provision directly after Hurricane Irma, as it continued paying salaries during those first three months.
Therefore, the court ruled that Little Switzerland must pay the employees’ salaries from December 6, 2017, until the labour agreement is terminated. The court added that any payments for work done for their employer since September 6 not related to their usual duties and/or work done for other employers can be subtracted from the final amount to be paid out.
