By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Outraged businesses have reacted with fury to an Industrial Tribunal decision that effectively gives all Bahamian workers an extra week of paid vacation annually.

Harrison Lockhart, the Tribunal’s president, in an August 28, 2013, decision, ruled that the minimum paid vacation entitlements in the Employment Act did not include the 48 hours (two days) per week of rest that all employees are entitled to.

As a result, Mr Lockhart found that workers entitled to a minimum two weeks’ paid vacation per year were really allowed a minimum ‘14 working days’ or almost three weeks. And those workers eligible for three weeks’ paid vacation, under his determination, are really entitled to 21 working days or more than four weeks off.

To-date, all Bahamian employers and workers have operated on the basis that the ‘two week’ and ‘three week’ paid vacation legal minimums include the ‘48 hours of rest’. As a result, staff have received only 14 and 21 consecutive days off, respectively.

With labour costs already the biggest expense item for most Bahamian businesses, adding an extra week’s paid vacation per employee to the mix will send these through the roof. The Industrial Tribunal’s ruling could also not come at a worse time for many companies, who are still grappling with the Budget’s new and increased taxes, plus the impending Value-Added Tax (VAT).

Mr Lockhart’s ruling stemmed from a seemingly innocuous determination he was asked to make over the industrial agreement between the Central Bank of the Bahamas and the union representing many of its staff. The union had asked him to determine whether, under the agreement, the Central Bank could base vacation entitlement upon an employee’s length of service.

The Tribunal president began his ruling by defining the Employment Act definition of vacation. He noted that the Act gave employees, who have been with their employer between one to seven years, a minimum two weeks paid vacation per year, while those employed for over seven years were entitled to three weeks.

Mr Lockhart, though, noted that section nine of the Employment Act required every employee to be given at least 48 hours rest per seven-day week.

He determined that this period, equivalent to two days, was not included in the vacation period specified in the Employment Act because it represented ‘time of’ to which workers were already entitled.

“In all the circumstances we are therefore satisfied that the term ‘two weeks’ as provided in the Act means 14 days, and ‘three weeks’ as provided for in the Act means 21 working days,” Mr Lockhart ruled.

“It would be illogical to interpret the provisions of the statute otherwise. The provisions of vacation as provided in the Act could not be reasonably construed as including those days off to which an employee is already entitled.”

The ramifications of Mr Lockhart’s decision are potentially wide-reaching, and effectively tear-up a 12-year understanding of how the Employment Act - and its statutory provisions - should be interpreted.

This appears to have also been recognised by the Government, as Tribune Business understands that the Industrial Tribunal decision was circulated to employers and trade unions by the Ministry of Labour.

Chester Cooper, the Bahamas Chamber of Commerce and Employers Confederation’s (BCCEC) chairman, reacted swiftly in expressing “grave concerns” over the “far reaching” implications the ruling would have for private sector costs.

He added that requiring employers to give all staff an extra week’s paid vacation, apart from adding to an already-high cost burden, would further reduce productivity in an economy where employee output is already perceived as relatively low.

And Mr Cooper also warned that the Tribunal’s decision - if allowed to stand - could undermine the Bahamas’ economic competitiveness and efforts to position itself as an international business centre.

“The BCCEC notes the interpretation of the Employment Act by the president of the Tribunal in regard to ‘vacation’ and ‘vacation entitlement’,” Mr Cooper said.

“With respect, we have grave concerns as to its implications for all employers, the business community and the cost of doing business generally. We are of the view that the impact will be far reaching, and there are consequent negative implications for productivity and the Bahamas’s competitiveness as an international business centre.”

Hinting that the BCCEC would be prepared to appeal the Tribunal ruling to a higher court, likely the Court of Appeal, Mr Cooper added: “We have already began dialogue with the International Labour Organisation, International Organisation of Employers and the Employment & Labor committee of the BCCEC.

“We are further seeking legal advice on the matter, and expect to launch a swift, definitive and tangible response in due course utilising all option of recourse available to us under the law.”

Other employers were also alarmed. Robert Sands, Baha Mar’s senior vice-president of external and government affairs, told Tribune

Business: “Without being armed with all the facts, it would have major cost implications if this matter stands. The industry and related industries are currently looking into this matter,”

Mr Lockhart, in his ruling, recommended that the Central Bank industrial agreement’s clauses on vacation entitlement be changed to reflect the realities of his Employment Act determination - increasing union members’ paid vacation entitlement by an extra week annually.

He also said vacation entitlement could not be linked to the scales employed in the industrial agreement.

However, Wendy Craigg, the Central Bank of the Bahamas’ governor, confirmed that the Tribunal decision would be appealed by the financial services regulator.

“We are looking at this matter very closely, and we are going to appeal, because we’re not clear as to how this conclusion was reached based on the matter presented,” she told Tribune Business. “We need to get more clarification as to how this addresses the matter presented to the Tribunal. Our position is that vacation is an earned concept.”