Employers Condemn Plan For ‘Dangerous’ Redundancy Bond

Employers condemned as “dangerous” and “untenable” proposals that would require all Bahamian companies to provide financial security in advance for employees’ termination pay.

Odecca Gibson, executive director for the Bahamas Hotel Restaurant and Employers Association, which acts as the sector’s bargaining agent in industrial negotiations with trade unions, branded the requirement for businesses to pay a “bond” or finance some form of “redundancy insurance” for their workers as “perhaps the most controversial” of the Government’s planned labour law reforms.

Addressing the Bahamas Hotel and Tourism Association’s (BHTA) quarterly directors meeting, she argued that resorts, tourism operators and the entire private sector “are literally left defenceless” because no information has been provided on how such redundancy protection will be implemented or operate in practice.

Warning that time is running out for the Bahamian business community to challenge the proposal, with the Ministry and Department of Labour planning to hold public consultations on all the proposed reforms on October 7 in New Providence, and Grand Bahama the following day, Ms Gibson warned the proposal will heap another “unnecessary cost burden” on employers – many of whom are struggling to survive.

And she also cautioned that imposing a redundancy “bond” or insurance will effectively act as a tax on employment, potentially deterring companies from hiring at a time when the number of unemployed workers increased by almost 9,000 over the seven months to January 2025. The requirement, if implemented, would likely force companies to set aside thousands of dollars.

Proposals for a “redundancy” bond or insurance are nothing new, however. Obie Ferguson, the Trades Union Congress (TUC) president, has called for the creation of a National Redundancy Fund to be established ever since the Royal Oasis’s last owner shuttered the resort in 2004 and exited the country leaving behind some $22m in liabilities – including unpaid staff termination pay and other benefits.

Mr Ferguson has argued that The Bahamas mandate that foreign investors coming to do business here set aside what would effectively be a performance bond – held in escrow – that could be used to compensate employees and other creditors should they ultimately flee this nation and take all assets and funds with them. The latest proposal is strikingly similar to this.

However, Peter Goudie, the Bahamas Chamber of Commerce and Employers Confederation’s (BCCEC) labour division head, yesterday told Tribune Business that he “totally objects” to the latest redundancy insurance proposal because it is akin to “making good companies pay for bad companies'” sins.

Pointing out that well-run and managed employers would be forced to pay monies for something their staff are unlikely to ever need, he agreed that the “bond” or insurance is simply another tax being imposed on already hard-pressed companies. “Just what we need: Another tax. Geez,” he said.

Ms Gibson yesterday suggested the redundancy “bond” or insurance was never included in the ‘White Paper’ of potential reforms that emerged from last year’s July 30-31 labour symposium – an event she described as “feisty”, as potential changes to the Employment Act and Industrial Relations Act were examined. 

She also asserted that it was never discussed at the actual symposium itself, although Mr Goudie said the change was included in the ‘White Paper’. “Now perhaps the most controversial recommendation is one that was never included in either the symposium or found itself in a ‘White Paper’,” Ms Gibson asserted.

“And this is the first time we are seeing it. It’s the introduction of a provision for redundancy insurance. We were not provided with specific details about it, although we raised questions concerning what is being contemplated.

“What is being contemplated by the Government of The Bahamas is to introduce a bond or insurance for businesses to ensure that employes receive redundancy or termination benefits when the employer closes down or shuts down its business or goes into insolvency.”

The proposal thus seeks to expand the safety net for Bahamian workers and their families by ensuring employers cannot shirk, or escape, their responsibilities to pay redundancy and other due benefits by closing their operations and disappearing. However, it imposes yet another cost burden in an environment where the cost and ease of doing business remain major issues.

Ms Gibson added: “Our specific queries were who will manage this process? How will employers be assessed to determine what types of contribution will they make to the bond, because they are using the term ‘insurance’?

“When the bond assessments are done and submitted to the Government of The Bahamas, will those funds find themselves in the consolidate fund or be separated? We all know that if the sums go into the consolidated fund they are lost, so the objective of protecting the worker will ultimately be lost because then you will have to go to the Government of The Bahamas to seek the compensation that these supposed employees will have lost as a result of the redundancy exercise or insolvency process.”

Given the information vacuum surrounding the redundancy “insurance” issue, Ms Gibson continued: “And so, at this stage, we have not received answers. The [National] Tripartite Council has not received answers. So, at this stage, this is, in my view, the most dangerous recommendation made by the Government, Labour because we have no details.

“If it is included in the public consultation process in October, and it goes before Cabinet and Cabinet approves, it means all opportunities to make representations concerning the introduction of this concept will be lost. We continue to advocate through the Tripartite Council to see if we can get this issue addressed.

“All the other recommendations made impose additional costs to owners, on our employers and employer groups, but I do believe that we strongly protested against the introduction of an employer bond because there are no details and we need certainty to see if that is something the employer group, the stakeholders can actually manage,” Ms Gibson said.

“Until we get that answer we are literally left defenceless and we cannot make proper representation to the Government of The Bahamas as to why the concept itself is untenable. It places an unnecessary burden on employers and, at the end of the day, it’s the employers who hire.

“If we place employers in a position where they cannot hire because of all the additional costs, which will trickle down as a result of the effect of changes to the Employment Act, and trickle down through the amendments to the Industrial Relations Act, then we leave employers in a very difficult position as to how to ensure their businesses survive.”

Mr Goudie voiced similar concerns, telling Tribune Business on the redundancy proposal: “I totally object to that, and I will tell you why. I totally object to that because we are making good companies pay to make up for a few bad companies and bad apples. Why should a good company have to have a bond and pay an insurance premium? I have a problem with that, I really do.

“I don’t know of any other country that has this, and I’ve been in this business for years. Why would we want to do that? To penalise a good company and make them pay money to an insurance company for something that they don’t need? This is what they are effectively doing. They’re telling me they don’t care who you are; you’re going to have to pay this.

“It’s another cost. We have all sorts of issues with the cost and ease of doing business in this country, and somebody wants to tax us more? You turn around and tax me for something I don’t need? That doesn’t make any sense to me. I don’t get it. What it is is a tax. Just what we need. Another tax. Geez. It’s just a lot of nonsense.”

Ms Gibson, meanwhile, said reforms such as extending maternity leave to 14 weeks have also made it through from the ‘White Paper’ to the upcoming October public consultation. Accommodations have also been made for adopting and breast-feeding mothers, while it is proposed that fathers will be able to take two weeks’ paternity leave “once every three years”.

Other changes to the Employment Act propose introducing “mental health wellness leave” of three unpaid days per annum, while a paid daily work “break” will also be mandated. And, while an employer and employee can agree to the latter working up to 10 hours per day, overtime has to be paid for two hours as this exceeds the standard eight-hour day.

A requirement for a minimum eight-hour break between shifts is also included in the proposed reforms. The Employment Act revisions also “eliminate” the current distinction in section ten concerning overtime for workers who receive the majority of their pay in tips, while managers and supervisors will now “be given time off for overtime hours worked”.

As for the Industrial Relations Act, the proposals include strengthening the “conciliation process” involving employer/employee disputes by giving the Department of Labour “more power to address those matters that really have no merit proper to being referred to the minister and, subsequently, to the Industrial Tribunal. 

By Neil Hartnell
Tribune Business Editor