The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

A Supreme Court judge yesterday demolished the hotel union’s case against the Meliá Nassau Beach Resort, finding that the hotel was not obligated to pay staff a 15 per cent gratuity for serving all-inclusive guests - something he said would amount to “a gratuitous giveaway”.

Justice Roy Jones allowed Baha Mar to claim one major victory, although perhaps not the one it wanted given the continuing dispute over its $3.5 billion project, ruling the resort could withhold gratuity payments from its non-managerial employees if there was no agreed gratuity rate or formula.

The Bahamas Hotel, Catering and Allied Workers Union (BHCAWU) had argued that Melia’s decision to place all-inclusive related gratuities into an escrow account, after the two sides were unable to agree a rate cut from 15 per cent to 8 per cent, had severely impacted members whose take-home pay was drastically reduced.

Hotel union executives yesterday appeared to be in a state of shock over the comprehensive nature of their Supreme Court defeat.

Its secretary-general, Darren Woods, said the union was not yet in a position to comment on the ruling and was meeting with its attorneys yesterday  afternoon to dissect it.

Meanwhile, the Melia confirmed it was making provision to pay out the gratuities held in escrow to its staff, ensuring all received what was due following yesterday’s Supreme Court ruling.

Pablo Cogolludo, the Melia’s acting general manager, said in a memo to employees: “Throughout this dispute, we have always maintained that our intention was not to deprive you, our employees, of the gratuities which we know you work very hard to earn.

“Our sole objective was to find a fair and equitable way of dealing with the all-inclusive gratuities, which would enable us to secure long term viability and sustainability of our business and, at the same time, ensure that you are not financially worse off by the introduction of this new business model.”

Mr Cogolludo added: “I am delighted to inform you that today’s ruling means that we are now able to properly establish the all-inclusive (AI) gratuity rate and distribution formula, and apply those to the funds collected in the escrow account.

“This means that within the next few days we will be able to pay backdated all-inclusive gratuities to all eligible employees.

“We are very acutely aware of the financial difficulties this situation has put many of you in. I want to assure you that we will make these calculations and the payment an absolute priority, so that you do not have to experience any further delay in receiving your money.

“I hope that receiving this ruling today will enable us to turn the page and allow us to focus on the most important thing, our guests. Thank you for your patience and service whilst we were dealing with this matter.”

Justice Jones gave the Melia and Baha Mar’s Cable Beach Resorts virtually all the declarations they were seeking.

Apart from finding that the 15 per cent gratuity was not contractually payable to employees without agreement on the rate and calculation formula, he also ruled that there were “no pre-conditions” to operating the Melia “exclusively” as an all-inclusive prior to such an agreement.

And, in the absence of a gratuity rate agreement prior to the expiration of the last valid industrial agreement in 2003, the gratuities were not part of the Melia staff’s individual employment contracts.

In denying all the union’s claims, the only ‘win’ that Justice Jones allowed it was a denial of the Melia’s claims for “unlawful contractual interference” with the resort’s business.

Justice Jones said “a lamentable feature” of the case was the failure of both sides to agree on the all-inclusive gratuity rate and formula, which “led to a climate of extraordinary uncertainty which undermined the trust that is an essential ingredient to their partnership”.

For the Melia, an agreement was “critical to its survival as a going concern”, with “possibly incendiary consequences” resulting in them withholding gratuity payments.

“Frayed tempers exploded to uncover the veiled limits of their patience, their shared misunderstanding and the depth of the gulf separating them on this contentious issue,” Justice Jones found.

The dispute resulted in “a full blown work stoppage”, with staff at the Aqua Restaurant stopping work and refusing to serve guests on December 11 and 17, 2014.

And, on December 24, the union president, Nicole Martin, and council member, Perry Cox, both made calls to senior Baha Mar executives threatening strike action that would “affect the entire island”.

Baha Mar said at the time that it was forced to cease the normal gratuity payments at the Meliá after 10 months of failed negotiations failed to reach an agreement with the union on a new arrangement. 

The dispute ultimately led to the strike threats during the busy Christmas and New Year period, forcing the resort to secure an interim injunction restricting employees from taking industrial action. That injunction was extended on February 11 until the trial and judgment, and was discharged yesterday.

   Justice Jones found that although the union had entered into a new collective bargaining agreement with the Bahamas Hotel Employers Association (BHEA) in 2003, that agreement was never registered under Section 49 of the Industrial Relations Act, meaning it was deemed to be ineffective in law.

He held that based on all the available evidence there was no agreed rate and distribution formula at the resort or its predecessors during a valid industrial agreement.

    The union’s attorneys, led by Harvey Tynes QC, maintained that the “practice and custom” of the resort and its predecessors - the Radisson and the Sheraton - suggested that non-managerial employees were entitled to a 15 per cent gratuity because this was implied in their individual employment contracts.

They argued that by the expressed and continued payment of the 15 per cent gratuity, the Melia and its predecessor brands unilaterally introduced a new policy. The effect of that new policy was that the 15 per cent applied to the all-inclusive guests and there was no need for a new industrial agreement.

The policy, they said, began when the Radisson first introduced the concept and continued when the Myers Group assumed its management.

However, Justice Jones concluded that  the 15 per cent gratuity was paid from at least 2004 at the Radisson to all-inclusive workers and continued at the Sheraton for at least one year.     

He accepted evidence that the gratuity payments were made for the purpose of maintaining good relationships with the non-managerial employees; that the service charge  payable to the non-managerial employees arises from an employment relationship; and that the rate applicable to an all-inclusive programme was subject to the contractual terms arising from the negotiations of an agreed rate and distribution formula.

    “From all this I conclude that the payment of 15 per cent gratuities for the all-inclusive programme to non-managerial employees at the Meliá Nassau  Beach hotel represents nothing more than a gratuitous giveaway,” said Justice Jones.

“There can be no about that in the absence of an agreed rate and distribution formula, the resort is not obligated to pay gratuity charges for all-inclusive guests to non-managerial employees based on an implied term in their contract of employment.”