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Thursday, 1 December 2011

The Curious Case of 'Legal Tender' & Employment Statute

Shortly after the issuance of this note Zimbabweans
stopped entering legal contracts and used silver
as a medium of payment on Common Law contracts.
So after my recent post regarding my decision to cease employing persons, I received a letter two days later informing me that the Social Security department wished to come and inspect my employee records to ensure that they were being kept in accordance with the law.

Naturally I have taken the trouble to review my situation and ensure that as far as possible everything is up to date and as required. There had been a few changes to the legislation since last I looked but one point caught my eye in particular Article 44(a) of the Employment (Jersey) Law 2003 sets out a simple basis of distinguishing a Common Law contract from a Statutory Law employment contract.

No consideration arising from any Common Law contracts that I should offer will be made in legal tender, they will be made in troy ounces of fine silver or fine gold, I make no claim that this is legal tender. Since any employment contract must by virtue of the law include a consideration expressed in terms of Legal Tender, the absence of any such consideration removes the contract from the scope of the statute.

Legal tender is a medium of payment allowed by law or recognized by a legal system to be valid for meeting a financial obligation, notice it says the legal system, it does not state that it is the only 'lawful medium of exchange'. Under Common Law everyone is free to enter into a contract for whatever consideration they wish.

Therefore contracts which employ a lawful medium of payment other than legal tender naturally falls outside the scope of the statutory law.
EMPLOYMENT (JERSEY) LAW 2003
PART 5
PAYMENT OF WAGES
44    Wages to be paid in legal tender
Subject to Article 45 wages shall be paid to an employee –
(a)     in legal tender;
(b)     by payment into an account at a bank, being –
(i)     an account standing in the name of the person to whom the wages are due, or
(ii)    an account standing in the name of that person jointly with one or more other persons, or
(iii)   at the express and unsolicited request of the employee, and with written authority, signed by the employee, an account in the name of a third party who shall not be directly or indirectly associated or connected with the employer;
(c)     by payment by postal order;
(d)     by payment by money order; or
(e)     by payment by cheque,
and, subject to the preceding provisions of this Article, shall not be paid in the form of promissory notes, vouchers or coupons or in any other form alleged to represent legal tender.

Note also that any payment made in a currency other than legal tender which under the LOI (1835) SUR LA MONNAIE is English currency only but also includes Jersey currency under the CURRENCY NOTES (JERSEY) LAW 1959. The BANK NOTES (JERSEY) LAW 1955 also excludes Scottish, Northern Irish, Guernsey and Isle of Man notes from constituting legal tender.