Anguilla is the only territory in thirteen or fourteen CARICOM countries which does not provide severance benefits for workers who have been retrenched. That is regarded as a big issue and was one of the findings of Mr. Clive Pegus, the Labour Reform Consultant, at the start of his assignment to revise Anguilla’s Labour Laws and develop a new Labour Code. He made the statement at a public forum at St. Gerard’s Conference Centre on Wednesday evening, May 8.
“There is no provision in the law right now for severance benefits. We are operating in circumstances where redundancies are much more common than they used to be, and the absence of legislation creates some uncertainty and a lot of hardship for workers,” he said. “This is particularly in the case of those workers who have worked for most of their working life at a particular establishment. So there is no legal framework.
“Some companies – mainly those regional and international companies that already have some sort of policy in the place where they operate – may provide what is offered in those countries, but others are not offering anything to the workers. The employers themselves would needsome guidelines in the law as to what is a reasonable formula.”
Mr.Pegus said a matter to be considered would be whether the legistration for severance benefits would make provision for service given by workers prior to the enactment of the new legislation – that is whether it would have “retrospective or retroactive effect.”
The Labour Reform Consultant continued: “Let’s assume that the Act comes into place on August 1, and a company wishes to retrench a worker at the end of October – and that worker has been employed since 1980. The employer would want to know if he has a responsibility for paying severance benefits for all those years when there was no law concerning severance benefits. We would therefore need to have a lot more discussions from employers to find out what their views are – and to consider those views – and see how best we can arrive at some practical, sensible and workable solution.”
Mr.Pegus explained that there were two different systems in place with respect to the payment of severance benefits. One is where employees contribute a percentage of their gross wage or salary to a severance fund, administered by the Social Security Office, for eventual payment of severance benefits for retrenched persons. The other system is where employers are required to pay the severance benefits not out of a severance fund, but out of their own budget.
“We have to think in terms of that and I have started a conversation with Social Security,” he added. “They have to consider certain issues, and I would want to hear from them about what would be the practical difficulties they could see in such systems, and which system would be the better one for Anguilla.”
The public consultation, which covered various matters, attracted much discussion during the question and answer period.
