The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A trade union leader yesterday said statute law dealing with redundancy pay needed urgent reform because it was “just not fair” to long-serving workers who had remained with the same company for decades.

Obie Ferguson, the Trades Union Congress (TUC) president, told Tribune Business that the limits set by the Employment Act meant that a redundant worker employed for 35 years was only entitled to the same pay-off as a colleague hired for 12 years.

He agreed, though, that redundancy pay reforms could not occur in a vacuum, and the impact on both the private sector and wider Bahamian economy must be “considered”.

Mr Ferguson also conceded that unions and employers were “grappling” with the development of a new redundancy pay formula, and would likely have to reach a compromise that “accommodates both sides”.

“We’re trying to come up with a redundancy package that would be reflective of the real situation,” Mr Ferguson told Tribune Business.

“Under the present legislation, if you are employed for 35 years, you are paid the same redundancy pay as if you are paid for 12 years. That is wrong.”

The Employment Act currently sets a 12-year limit, or ‘cap’, on the redundancy pay an employee is entitled to under statute law.

Managerial staff receive one month’s salary for every year worked up to 12 years, giving them a maximum 13 months, once the one-month notice or payment in lieu of notice is accounted for.

Line staff can receive a maximum six months’ pay under the Employment Act if they have been with the same company for 12 years or more, plus another two weeks of ‘notice pay’.

However, several attorneys - Mr Ferguson among them - have been successful in winning greater compensation for longer-serving employees by initiating common law actions.

The Bahamian courts have upheld that workers who have served a company for longer than 12 years can sue for greater, and better, benefits under common law.

They ruled that the Employment Act was intended by Parliament to set a minimum, or ‘floor’, rather than cap the amount of compensation redundant employees are entitled to. But not all workers can afford an attorney.

“If you go with the statute as it stands, it is going to give you a maximum of 12 months,” Mr Ferguson reiterated. “That can’t be right if the guy worked for you for 35 years, and you make him redundant. The amount he is entitled to must be more.

“It is just not fair for someone who has worked 35 years for you, and you only pay him the same as someone whop worked for you for 12 years. It’s unfortunate for that formula to persist.”

Edison Sumner, the Bahamas Chamber of Commerce and Employers Confederation’s (BCCEC) chief executive, earlier this week revealed to Tribune Business that the Government, private sector and unions were discussing potential reforms to the Employment Act’s ‘redundancy’ section.

The talks are taking place in the Tripartite Council, which acts as the forum for all labour matters, and includes representatives from each of the three groups.

“It’s something employers and unions are grappling with,” Mr Ferguson told Tribune Business on the redundancy pay issue.

Noting that the Employment Act had now existed for 14 years, the TUC president said that while reform was necessary, the full implications of any change had to be understood.

“I think it’s time to take a look at it, also considering the country and business side of it,” Mr Ferguson said. “We and the employers are going to have to grapple with it, and find a way to accommodate both sides.

“We’re not going to get everything we want, but we have to find a solution. It’s a fundamental change. I don’t think the employers will be sitting, twiddling their thumbs, but the parties will find some way to come to an amicable arrangement.”

Mr Ferguson said other “major concerns” included the exclusion of gratuities from the definition/calculation of ‘redundancy pay’, which created major problems for hotel and restaurant employees, who earned the majority of their income from tips.

And provisions in the Employment Act prevented laid-off workers from receiving both their redundancy pay and gratuities, even though they had “earned it and worked for it”. The TUC leader said workers should be entitled to both.

When it came to discussions on a minimum wage increase, Mr Ferguson said this was one of the few areas where the Government appeared to lead the private sector.

Comparing the latter’s $150 per week minimum wage with that of the public sector’s $210, he told Tribune Business: “This is the very first time in the Bahamas where the Government pays more money than the private sector.

“Normally, the private sector sets the tone for the Government, but the Government is leading the way on the minimum wage.”