The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Trade Union Congress’s (TUC) leader yesterday backed Government proposals to lift the redundancy ‘ceiling’, arguing it was “ totally inequitable” for workers who had given decades of service to receive the same pay-off as colleagues with the same firm for 12 years or less.

Obie Ferguson, though, told Tribune Business that the TUC was in favour of “lifting” the Employment Act’s 12-month redundancy pay ‘cap’ rather than removing it, as the Government seems to be mulling.

He suggested that the Bahamas instead adopt the ‘ceiling’ employed in Barbados, which he said was 33 months’ redundancy pay for supervisors/managerial staff, and possibly 20-24 months for line workers.

While acknowledging employer concerns that the Government’s proposals might make redundancy ‘cost prohibitive’, and deter entrepreneurs from going into business, the TUC president suggested this problem could be solved if companies ‘budgeted for a rainy day’.

Mr Ferguson also expressed delight that the Government appeared to have adopted his suggestion to create a national Redundancy Fund, which would compensate workers “left hanging” when companies became insolvent or exited the Bahamas without paying their debts.

He added that there was “nothing unusual” about such a Redundancy Fund, although - in deference to employer concerns - agreed that a balance had to be struck between capital and labour.

The Christie administration’s proposal to remove the Employment Act’s redundancy pay ‘cap’ has aroused hostility and opposition from employers, who are arguing that the Government is seeking to convert the private sector into a ‘social safety net’.

The unions, not surprisingly, are in favour of the plan, with Mr Ferguson telling Tribune Business: “We feel as though the removal makes sense because normally redundancy has a relationship with the length of service that an employee has given a company.

“Under the present system we have now, you’re only awarded for a period of up to 12 months if you are a managerial or supervisory worker, or six months if you’re in a non-managerial position.

“Someone who has worked for 25 years or 40 years is given equal pay with someone who has worked for 12 years. It’s totally inequitable for a worker who has given service for 25, 30, 40 years to be compensated with redundancy equivalent to a worker who has given 12 years of service to the same company,” the TUC president added.

“We think that should definitely be amended. The TUC is in favour of lifting the ceiling to something much more equitable.”

Mr Ferguson then came up with his 33 month, and 20-24-month, suggestions based on the regime he believes exists in Barbados.

The Employment Act currently allows line staff two weeks’ severance pay for every year worked up to 12 years, ‘capping’ the maximum payment they are entitled to at the equivalent of six months’ salary plus two weeks’ pay with, or in lieu, of notice.

Managerial staff are entitled to one month’s severance pay for every year worked, ‘capping’ the maximum sum they are entitled to at the equivalent of 12 months or one year’s salary, plus a month’s pay with, or in lieu, of notice.

Many in the private sector view the Government’s proposal to remove the ‘caps’, or upper limits, on statutory severance pay due to Bahamian workers under the Employment Act as another sign that the Government has its priorities all wrong.

For instead of focusing on pro-growth policies that improve the ‘ease of doing business’, the Christie administration is instead increasing business costs by expanding worker benefits and social protections.

The effect of the Government’s proposal, if adopted into law, would be that an employee who had worked for the same company for 30 years is now provided with the equivalent of 30 months’ redundancy pay, determined whether they were line staff or managerial employees.

Mr Ferguson conceded that increased costs, should the Government’s proposal be adopted, were a concern for Bahamian employers.

But, given that they were obligated to “be fair to workers”, Mr Ferguson said companies could “budget for that situation” and create a reserve that would be used to cover redundancy pay.

“In busy periods, when hotels are doing well, they should budget for it,” the TUC president said. “But in the Bahamas they don’t plan and budget, and it takes them by surprise and creates financial strain on the company. If it’s planned for, that should not be.

The Bahamian judicial system has previously ruled that the Employment Act was intended by Parliament to provide a statutory minimum, or floor, for severance payments made to Bahamian workers.

This has resulted in several successful court actions where long-serving employees, who were with their employer for more than 12 years, used common law to obtain greater redundancy benefits than those due to them under the Employment Act.

These cases, coupled with large-scale redundancies at major employers, seem to have prompted the Christie administration to move on the proposed amendments.

The Government, according to the private sector, is also proposing the creation of a ‘Redundancy Fund’ that would compensate employees of those businesses - such as the Royal Oasis - that exit the Bahamas without resolving their liabilities. But all businesses would likely have to make contributions to finance it.

The Bahamas Chamber of Commerce and Employers Confederation (BCCEC) described the idea as “short-sighted and ill-advised”, and Mr Ferguson acknowledged that a “balance” had to be found between worker and employer interests.

Yet he added: “I don’t see anything remarkable about a Redundancy Fund. If the company goes belly up, the workers get some money to tide them over for a reasonable period.

“I don’t think there’s country with unions that doesn’t have a Redundancy Fund. When these companies go belly up, where do you go for a claim?

“Really and truly, by and large, most companies will pay redundancy pay, but you have the odd case where there is no mechanism, no procedure and - even if they have a union - workers are left hanging.”

Currently, staff have to stand in line with other creditors of an insolvent company, as happened with Baha Mar. Yet Mr Ferguson also pointed out that similar situations arose with City Markets, Gladstone Farms and Pioneer Shipping.

“They went belly up and decided not to pay,” Mr Ferguson said. “There should be a piece of statutory legislation to deal with this type of situation.”