Lid off the 2012 Jersey Fulfillment industry crash – Business as usual (elsewhere); unemployment for workers (here)

We hear very little about how Jersey’s working class actually live and work and now increasingly don’t work because of unemployment. For the media, they are not worthy of investigation, other than forming the dramatic headlines for the unprecedented levels of post war unemployment. No one cares to look at their lives, struggling to pay high rents, “actively seeking” non existent jobs and dealing with a Social Security Department and Income Support system that was never designed to deal with mass unemployment.

Fulfillment industry collapse

The collapse of the fulfillment industry across the Channel Islands following the removal of the Low Value Consignment Relief (LVCR) on 1^st April 2012, will be well known to sophisticated readers of internet media. We also know there have been numerous redundancies and that unemployment has increased as a consequence, but we have heard nothing about the real tragedy of those workers who spent their lives “picking and packing” in cold warehouses converted from potato sheds.

For many years, Fulfillment was extremely profitable, at least for the companies that provided services for corporations that sold everything from computer memory sticks to contact lenses.

One enterprising Jersey Boy, who made his fortune early, now lives his life as a nomad millionaire, resident on a cruise liner sailing endlessly around the world; his children flown in from their exclusive Swiss Lycee during school holidays to which ever port on the planet daddy’s ship has birthed.

Others involved in the industry have not been so fortunate, including a Jersey Portuguese family of father, mother and son, who brought a recent claim for unfair dismissal to the Employment Tribunal against their former employers.

The EU’s Eastern marches

Some fulfillment businesses went into immediate liquidation, but the more savvy, those with different business models, had plans in place to carry on from other jurisdictions. Professional Film Services Limited (t/a PROFS Ltd), the Respondent in the Tribunal, now carries on from “an undisclosed foreign jurisdiction”. The Tribunal never sought to pry into where that new location might be since it was not legally relevant. The reticence of the company was to protect a business model one step ahead of competitors. The new location was never disclosed but could be somewhere in the EU’s Eastern marches.

According to the Jersey Portuguese family before the Tribunal, the end of LVCR was a bombshell exploding to ruin their lives. Like a bomb from the sky, they really had no idea why it should fall on them. Hard working and committed, working in a drafty shed provided a wage to meet life's necessities. They certainly would have never read Richard Murphy’s blog about the iniquities of VAT scams, or the dangers of building economic activity on sand. Nor would they have known the name of the Economic Affairs Minister or the outcome of an appeal to the High Court against a decision of HMRC to end LVCR to the Channel Islands. Loyal to managers that provided a wage, they could not understand why their hours of work were being cut, then demoted from full time to part time and eventually being selected for redundancy.

Disturbances in Trinity

Lay off day from the Trinity warehouse was 31^st May 2012. The staff were called individually and told their jobs were no more. The news was translated into Portuguese and Polish by supervisors, who themselves were to loose their jobs. The event was a mixture of disbelief, tears and anger. The senior management alluded to, but did not eleaborate upon, an incident that forced them to consider locking the warehouse door. No one was allowed to return inside to collect their belongings, which were brought to the individual as they left.

For many islanders without the skills to find comfortable jobs in the Finance Industry, fulfillment offered a reasonable wage for routine factory type work. It also brought in large numbers of East European migrants to meet the demand for labour. Left high and dry by collapse of the industry, locals, Portuguese and Polish residents alike face a bleak immediate future. Some have found new employment, like the son of the family mentioned above. He is a salesman living by commission. Back to work this very week, the wage was low “but so what, it’s a job” he told the Tribunal and it was better than the boredom at home whilst unemployed.  Social Security’s Job Club had assisted him and he was grateful to find new work.

Precipitous decline

The employer submitted in evidence some interesting statistics that record the rapid, but uneven, decline of the fulfillment industry after the abolition of LVCR on 1^st April 2012. The twelve to six months prior to that date were in fact the peak of orders for that particular company. Once LVCR was abolished, some clients panicked and withdrew immediately whilst others waited to see what would happen. By contrast in Guernsey, where the company also has a warehouse, the end was immediate and dramatic, with virtually 100% redundancy. The Guernsey government did not seek to challenge the ruling of HMRC, unlike Jersey which went to the UK Courts, ultimately unsuccessful but permitting companies to relocate and avoid an unseemly rout.

Ineveitably, the largest clients moved, albeit the business in Trinity still operates from a small corner of the two story warehouse, with 2 remaining clients and 3 part time staff. At its peak, the business employed 21 staff. The days of glory are gone, just like Jersey’s oyster fishery sank precipitously after diseases and over fishing in the 1830’s.

A fascinating insight into commercial decline are the figures submitted in evidence for order numbers, total employee hours and staff numbers over the months after 1^st April:

Month             Orders            Hours      Staff

                                                                Managers;      Full Time;  Part Time;  Agency

March              103,000           3400                2                  9                3          7

April                   31,000           2152               2                  8                 2          Nil

May                   23,000           1723                2                  6                3          Nil

June                   17,400             934                2                  2                3          Nil

July                    16,380             910                ditto            ditto          ditto       ditto

Aug                    10,500                                   1                 2 (30hrs)     3           1

Sept                     3,800            569                 1(part time) Nil               3

Law Report

The legal issue under consideration by the Tribunal was whether the employees were selected in an unfair manner for redundancy. The employees were adamant that their years of loyal service and dexterity at the job warranted better treatment than they received. The Tribunal will produce its judgment in two weeks. Whatever the indignation and sense of injustice the employees felt, the employers made a very convincing case for fair procedures, well documented and approved at each step by JACS.

The management appear to have followed the guidelines and were able to demonstrate this before the Tribunal. The management were well prepared and confident in presentation. Whether they were advised by lawyers in the background was never clear. At any rate, were all employers so meticulous.

"Back to school"

An amusing annedote reached me recently. An employee in the HR department of a large local organisation posted on their Facebook page a photograph of them holding a book "Beginner's guide to Employment Law", under the title "back to school". The HR department were undertaking training. This perhaps explains why so many employers, not just small organisations, but the large ones too, think they know it all because they have HR specialists. Before the Tribunal it soon turns out they have no real conception of fair procedures and simply go through the motions of investigations and appeals, only to have employee legal advisers tear their procedures to shreds. Boards of Directors must be wondering how useful or otherwise are their HR departments.

It would appear that JACS and the CAB are able to provide both employers and employees with the rudimentary information they need to deal with employment issues legally and fairly. Law firms can provide the same service, but their fees, at £350 to £500 per hour, are prohibitive. For small businesses, getting accurate and comprehendable advice is difficult.

Labour's need for political represention in the States Assembly

Clearly there is a lot of downsizing going on. Employers are shedding staff; redundacies are occuring. Perhaps the most humiliatiing is for a department, say of 7 or so people, having to reapply for their existing jobs, knowing only 4 will be rehired. Employers are using the Recession to impose increasing work discipline and achieve restructuring. This is precisely what the government is doing in the Public Sector with its own civil servants, manual workers, teachers and nurses. It explains why employees, individually and through their unions, are beginning to understand the need to have political represention in the States Assembly.

“Unfair dismissal laws “favour employees”, firms complain” (JEP 21 Jan 2013)

Are the employment laws too favourable to employees and disadvantageous to employers? The answer may be yes and no to both.

Recently, the Chartered Institute of Personnel and Development, a body that represents human resources professionals, expressed opinions in the press that “there was bias in the process towards the employee and a lack of consistency in judgments”. From the report, it sounds like ideological griping by small  businesses that have since ever operated an arbitrary hire and fire policy, now facing angry employees who cannot find alternative work and seek redress from their former employer.

The Tribunal does appear to be indulgent to employees and that is part of its duty and function as an expression of industrial democracy. Employees do get to have their day in Court, even if the Tribunal ultimately finds that they have no legal case. In a sense that is part of the process of offering justice to people who are powerless, yet feel a sense of grievance. As citizens they are afforded a degree of equality with employers, at least for a few moments.