Bermuda & its Legal System
Bermuda is the oldest and largest self-governing dependent territory of the United Kingdom. The fishhook shaped, sub-tropical archipelago of 20.5 square miles in total land area is approximately 21 miles long and 1 mile wide, and its 6 main islands are connected by bridges. The island is situated in the Atlantic Ocean, some 650 miles due east of Cape Hatteras, North Carolina and some 774 miles southeast of New York.
Bermuda is a British Overseas Territory. It is self-governing with its own constitution and government. The local population is approximately 64,000, comprised of the following demographics: 54% Black, 31% White, 8% Multiracial, 4% Asian, 3% Other. The official language is English.
Executive authority in Bermuda is vested in the Queen and is exercised on her behalf by the Governor of Bermuda after consulting with the appropriate Minister of the Government of Bermuda. The United Kingdom retains responsibility for the defence and foreign relations of Bermuda.
The Government of Bermuda was reconstituted by the Bermuda Constitution Order 1968 which came into force in 1968. The Constitution is an overriding constitution, which means that no domestic legislation or principle of common law may derogate from it.
The Bermuda Constitution provides for a Westminster style of bicameral representative government comprising the House of Assembly and the Senate. There are thirty-six (36) electoral constituencies in Bermuda, each of which is represented in the House of Assembly by a directly elected Member of Parliament (“MP”). The Senate consists of eleven (11) Senators each of whom is appointed by the Governor for the life of the Parliament (which can be no more than five (5) years).
The person who commands the majority of the thirty-six (36) MPs (in practice, the leader of one or other of the two (2) main political parties in Bermuda) becomes the Premier and then forms a Cabinet of twelve (12) Ministers chosen from both the Senate and House of Assembly. Each member of Cabinet is sworn into office by the Governor of Bermuda.
The Bermuda Legislature enacts and controls all Bermuda’s internal affairs and laws. However, certain UK Acts apply to the extent that they have been specifically extended to Bermuda or have survived since they originally became Bermuda law in 1612. The laws of Bermuda are based on the common law legal system of England and Wales, and therefore decisions of the English Court of Appeal and House of Lords are highly persuasive authority in the Bermuda Courts.
The Magistrates’ (lower) Court and the Supreme Court of Bermuda are the trial courts and the latter includes a Commercial Court. The Court of Appeal entertains appeals from the Supreme Court, and there is a further right of appeal in certain cases to the Judicial Committee of the Privy Council in London. Decisions of the Lord Justices of the Privy Council are binding on all Bermuda courts.
The capital and business center of the Island is the City of Hamilton and almost all international companies in Bermuda have their principal office there. The Bermuda dollar is tied to the United States dollar at par and both currencies are used interchangeably on the Island.
Bermuda’s two (2) largest economic sectors are offshore insurance and reinsurance, and tourism. The Island has no corporation or profits taxes, withholding taxes, capital gains or capital transfer taxes, and is widely regarded as a premier offshore financial center. It has enjoyed a long history of political, economic and social stability, and its international business sector has successfully overtaken tourism as the country’s economic mainstay. Bermuda is a prominent domicile for captive insurance companies and one of the world’s most important reinsurance markets.
All companies establishing a presence in Bermuda and hiring employees must be registered with the Registrar of Companies, which is responsible for tracking, processing and administering companies, including local companies, exempted companies, overseas companies and foreign sales corporations. A company that is not registered may not hire employees locally. If a foreign company is overseas and hires employees through an agency in Bermuda, the agency is usually deemed to be the employer for the purposes of Bermuda law.
Employees in Bermuda must be Bermudian, a spouse of a Bermudian, a holder of a Permanent Resident’s Certificate (“PRC”) or must have a work permit issued by the Department of Immigration. Foreign workers are protected by the same employment laws and generally pay the same taxes as local workers, save that pension contributions under Bermuda legislation are not mandatory for foreign workers. Employers must also provide health insurance to their employees, paying at least fifty percent (50%) of the premium.
There are no maximum working-hour regulations, save that employers must provide employees who work more than five (5) consecutive hours with a thirty (30)-minute meal break, and must provide a rest period of at least twenty-four (24) consecutive hours in each week, excluding certain categories of employee. Overtime pay is mandatory for hours worked in excess of forty (40) hours unless the parties have contracted out of the requirement (in which case the contract must state this in writing), or the employee is a professional or managerial employee whose Statement of Employment indicates that his annual salary has been calculated to reflect the fact that his regular duties are likely to require him to work, on occasion, more than forty (40) hours a week.
In 2022 the Government announced that a statutory minimum wage will be enacted into law for the first time in 2023 and will be set at between $16 and $16.40 per hour. In addition, hospitality workers, whose income is a combination of wages and gratuities, are to be paid a minimum of $12 and $12.30 per hour.
Every employee has the right to be (or not to be) a member of a trade union of their choice, or to refuse to be a member of a trade union. An employer who interferes with these rights commits an offence.
The Trade Union and Labour Relations (Consolidation) Act 2021 (“TULRA 2021”) was enacted to consolidate the Trade Union Act 1965, the Labour Relations Act 1975 and the Labour Disputes Act 1992, and to establish a comprehensive employment and labour code. The statute establishes, inter alia, a single Employment and Labour Relations Tribunal (“Employment Tribunal”) for all employment, trade union and labour matters, with hearings and decisions now available to the public. Further, it introduces civil penalties for offences. If there is a union agency shop, it must now be stated in a worker’s contract that he must either join the union and pay membership dues, or pay contributions in lieu of membership, up to fifty per cent (50%) of which may be donated to a charity of the worker’s choice instead.
Under the Human Rights Act 1981 (“HRA 1981”), discrimination and harassment on the basis of any of the human rights protected characteristics (race, gender, place of origin, etc.) are prohibited, and sexual harassment is also an offence.
Restrictive covenant clauses are only enforceable to the extent that they are reasonable to protect the employer’s legitimate business interests (e.g., trade secrets, clients and key personnel) in terms of time, geographical scope and scope of restriction. Non-solicitation clauses (of the former employer’s clients and employees) are more readily enforceable than non-competition clauses.
An employer in Bermuda does not have the right to terminate an employee “at will” (i.e., without just cause) and such a clause in an employment contract is unlawful and unenforceable. An employee may only be dismissed for a valid reason such as ability, performance, conduct or operational requirements (e.g., redundancy). If the termination is for an invalid reason or for no reason or for an unlawful reason (e.g., discriminatory), it is an unfair dismissal meriting a statutory complaint to the Employment Tribunal.
The contractual notice period (or payment in lieu of notice) must be respected in most cases of termination. The notice period will not apply to an employee who is on a fixed-term or project-based contract or who is serving his probationary period, or whose work permit is coming to an end. In addition, statutory redundancy pay (severance allowance) must be paid if an employee is terminated by reason of redundancy when a statutory condition of redundancy exists.
An employee may elect to bring a common law claim for breach of the employment contract, including for wrongful dismissal, in the Supreme Court for damages. The limitation period is 6 years.
Alternatively, an employee may file a complaint with the Department of Labour Relations (including for unfair dismissal) if he asserts that the employer has breached a provision of the Employment Act 2000 (“EA 2000”). The complaint must be filed within six (6) months of the date of the alleged breach.