The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government was yesterday warned that it will “drive a stake through the heart” of the business community if it forges ahead with plans to eliminate the Employment Act’s ‘cap’ on redundancy pay.

Outspoken businessman, Dionisio D’Aguilar, told Tribune Business that the Christie administration’s proposal to remove the statutory 12-year ‘ceiling’ were the complete opposite of what was needed to revive the Bahamian economy.

Suggesting that “the socialists have taken over the Bahamas”, the Superwash president argued that the Government should be focused on policies to generate growth and create jobs, rather than expanding social safety net benefits.

Expressing surprise that there had not been more “push back” from the private sector, Mr D’Aguilar described the Government’s proposal - which is currently before the National Tripartite Council for discussion - as “absolute madness”.

“Employers are already reeling from the introduction of Value-Added Tax, which has driven up their prices, with business going down as a result,” he told Tribune Business.

“The Government is also talking about National Health Insurance (NHI),and we don’t know where that is going. To even be talking about this, and contemplating the removal of the cap on redundancy, is absolute madness.

“The people in the business community are rolling their heads, and thinking: ‘Do you want to put us out of business, and lay-off all these people?’”

The Employment Act currently ‘caps’ redundancy pay at 12 years with the same company. It 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 up to the same 12-year limit, ‘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.

Removing this limit would dramatically increase redundancy costs for companies that may need to downsize to survive, making the whole exercise cost prohibitive, and potentially encouraging the employer to shut down completely.

For the effect of the Government’s proposal, if adopted into law, would be to match redundancy pay to tenure served.

For example, an employee who has worked for the same company for 30 years would be provided with the equivalent of 30 months’ redundancy pay, the total sum determined by whether they are line staff or managerial employees.

Mr D’Aguilar, though, pointed out that companies already contributed to a ‘social safety net’ for their staff via National Insurance Board (NIB) payments, with many also offering pension plan and group health schemes.

“Now you want us to give two-three years’ worth of pay when we sever them? Come on,” he said. “Do we pay someone 40 months’ pay for working 40 years?

“What does that say about our ease of business? You need to be able to change your employees, inject new life into your business. It need not be an overwhelming cost.”

Suggesting that the Christie administration’s focus and priorities were all wrong, Mr D’Aguilar told Tribune Business: “It’s like the socialists have taken over the country. They want to screw every dollar out of businesses that they can.

“We have no economic growth. This is not about dumping more costs on business. It’s time to make it easier to do business. These people live in a bubble, think we have and endless supply of cash, and every idea they have, we’re expected to roll over and play dead.

“This would drive a stake into the heart of the business community. We may as well shut down and go home. It’s not practical to be in business. It will boggle my mind if they let this happen.”

Mr D’Aguilar said removing the Employment Act’s redundancy ‘cap’ would impose enormous costs on companies every time they let a worker go or rehired someone, given that salaries often stretched into the five-figure range.

He urged the Government to instead refocus its priorities towards growing the economy and making it easier for both Bahamians and foreigners to invest and do business.

“I wish the Government would stop talking about lumping more expenses on business, and start talking about economic growth, getting Bahamians to invest and create some excitement about investing in this country,” Mr D’Aguilar told Tribune Business.

“Right now, there is none. Everybody’s just down. The misery index is very high. It’s not just me saying it: Look at the numbers.”

With unemployment already high and expected to increase following Baha Mar’s 2,000 lay-offs, Mr D’Aguilar said Standard & Poor’s (S&P) had already downgraded its 2016 economic growth forecast from plus-2 per cent to 1.5 per cent.

“This is not the time to be talking about dumping additional expenses on to business,” he reiterated. “Start using your brains think about how you’re going to grow this economy. All the indicators are going in the wrong direction.”

The Bahamas Chamber of Commerce and Employers Confederation (BCCEC) has already expressed its firm opposition to lifting the redundancy pay ‘cap’, arguing that such a move would turn Bahamas-based companies into ‘social safety nets’.

Its official position paper said it would have a “chilling effect” on business and economic expansion, and dissuade many entrepreneurs from “even attempting to do business” if employee severance pay became “a windfall bonus”.

Not surprisingly, trade unionists and the labour movement have thrown their full support behind the Government’s proposals.

Obie Ferguson, the Trades Union Congress’s (TUC) president, said 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.

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’.