The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Removing the Employment Act’s ‘cap’ on redundancy pay will “cripple and/or bankrupt most businesses” in the Bahamas, the Chamber of Commerce has warned, resulting in mass lay-offs and company closures.

The Chamber, in a December 20, 2016, letter to director of labour, Robert Farquharson, spelt out the negative consequences for the Bahamian economy should the Government move ahead with its controversial labour law reforms.

The letter, written by Chamber chief executive, Edison Sumner, details proposals to increase the redundancy pay for both line and managerial staff by two-thirds, or 67 per cent, some two years after the reforms are enacted.

The labour-friendly proposals call for line staff notice pay to be increased from the current two weeks to three weeks, with that for managerial employees also increased - from the present one month to five weeks.

Line staff are currently entitled to a maximum 24 weeks or six months’ redundancy pay under the Employment Act, gaining two weeks for each year they have been employed up to the 12-year ‘cap’.

However, the Chamber letter says the proposals, which have purportedly come through the National Tripartite Council, call for the ‘cap’ to be increased to 32 weeks (16 years) immediately upon enactment of the reforms.

And, ultimately, the ‘cap’ for line staff redundancy pay is to be increased to 40 weeks some two years after the Employment Act amendments are passed.

As for managerial staff, the existing 48 weeks (12 months/one year) redundancy pay maximum that they are due currently under the Employment Act is to be immediately increased to 64 weeks. Should the proposals pass, the ‘cap’ will ultimately be lifted to 80 weeks after two years.

Should the reforms ever be passed into law, they will effectively make downsizing cost prohibitive for most Bahamian companies. Firms needing to reduce their workforces to survive may find it easier simply to close their doors entirely, sending home even more Bahamians.

This was not lost on the Chamber, with Mr Sumner warning: “We do not agree with this recommendation because an increase in redundancy pay will result in significant cost increases for an employer.

“In this present uncertain economic climate, an employer cannot shoulder any additional financial burden. Moreover, the costs associated with the increase are not quantifiable.”

Just to emphasise the point to Mr Farquharson and the Government, Mr Sumner added: “Employers are charged with the responsibility of making practical decisions for the viability of their business.

“A business which remains open is one where employees remain employed. However, this recommendation threatens to cripple and/or bankrupt most businesses, especially small businesses, in the Bahamas, resulting in lay-offs and business closures.”

Mr Sumner said the removal of redundancy pay ‘caps’ in the Employment Act were “economically untenable”, and threatened to further deter job-creating investment and business expansion in a climate were the private sector is already bedevilled by uncertainty.

He and the Chamber also came out strongly against proposed reforms that will require all employers to notify the Minister of Labour, and the ‘recognised bargaining agent’ if the workforce is unionised, should they plan to make “one or more employees” redundant.

The planned amendments to the Employment Act require companies to give 30 days’ notice to the Minister and trade union, and should they fail to comply with this, “they will be required to pay each affected employee 30 days’ basic pay in lieu of notice” in addition to what they are due under the law.

Outlining four key points in opposing this, Mr Sumner wrote: “This will impede the effective management of an employer’s business and will result in the unnecessary interference by a third party.

“Many business establishments on the Family Islands do not have a recognised bargaining agent, and consultation with the Minister will be an arduous and cumbersome process.”

Mr Sumner added that the payment of additional compensation to employees, should companies violate the 30-day ‘notice period’, was “economically untenable”.

“We are advised that the Supreme Court of the Bahamas has determined that an employer has the sole and unfettered control over its operations and the management of its business,” Mr Sumner said.

“Consequently, a recognised bargaining agent is not allowed to interfere with the management and/or operation of the employer’s business.”

The Chamber chief executive added that the Code of Industrial Relations already governed an employer’s obligation to notify the Minister of Labour and relevant trade union in the event of redundancies. As a result, there was no need to include it in the Employment Act.