By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Employer concerns over an increase in redundancy pay were yesterday branded as "overblown", a senior trade union leader suggesting the current 'cap' should be doubled.

Obie Ferguson, the Trades Union Congress (TUC) president, told Tribune Business that raising the Employment Act's statutory limits on redundancy pay did not impose an immediate or automatic cost increase on Bahamian companies.

He suggested that doubling the existing 'cap' to one year's pay for line staff, and two years for managerial workers, would be a "reasonable" increase - a rise higher than the two-thirds increase proposed by the former Christie administration before it was ultimately abandoned.

Arguing that employers would always react negatively to the proposed expansion of social safety nets, Mr Ferguson expressed optimism that unions and employers could reach "a happy medium" over increasing redundancy pay.

"I commend the Minister of Labour for doing what he is suggesting; that is the proper thing to do," he said, in response to Dion Foulkes' remarks that the Minnis administration wants to 'revisit' the 12-month 'cap' (see other article on Page 3B).

"When you look at the Caribbean, there is a level of redundancy pay that is essential on islands like the Bahamas, where there seems to be a level of uncertainty particularly with respect to redundancy and job security."

Implying that the Employment Act's redundancy provisions were inadequate compared to other Caribbean nations, Mr Ferguson pointed to the 33-week statutory 'cap' in Barbados. "Some of the other Caribbean nations are far more than we have," he added.

At present, line staff remain entitled to a maximum 24 weeks or six months' redundancy pay, gaining two weeks for each year they have been employed up to the 12-year 'cap'. Managers remain at a maximum of 48 weeks, or one month for every year worked up to 12 years.

The Christie administration had proposed increasing these 'caps', or limits, which are intended to provide a statutory floor or minimum by two-thirds. The former government's proposals called for the 'cap' to be increased to 32 weeks (16 years) for line staff immediately, and then to 40 weeks some two years later.

As for managerial staff, the existing 48 weeks (12 months/one year) redundancy pay maximum was to be immediately increased to 64 weeks, then to 80 weeks after two years. However, the proposals foundered amid strong employer resistance and were never made law, but the Minnis administration now wants to re-open discussions.

Mr Ferguson, though, suggested that a 'doubling' of the existing 'caps' to one year (48 weeks) for line staff, and two years (96 weeks) for managerial workers, would bring the Bahamas more into line with the Caribbean average.

"I would say for managers that it should be at least 24 months, and for line workers it should be at least a year," he told Tribune Business. "I don't think that is unreasonable, because Barbados is 33 months. I would like the Government and Minister to consider that as being reasonable."

The TUC president acknowledged the almost-guaranteed negative reaction of employers to any redundancy cost increases, but suggested that such opposition was exaggerated.

"It's certainly overblown," Mr Ferguson told Tribune Business. "There's no need for them to react in the manner in which they're reacting, because it's not an immediate cost to the company.

"It's not like a 10 per cent pay increase. Redundancy is not a cost to the employer. It's only a cost when employees are made redundant, and most companies do not operate with a view to doing that.

"It's not a cost at the moment; it's a cost at the end, and most companies budget for that [redundancy] and make allowances in the budgetary process. It's a cost, but only a potential cost sometime in the future."

Mr Ferguson said it was almost the expected function of employers to resist an increase in statutory redundancy pay, and added: "I agree that the employers are going to react, but I don't think there has ever been an increase proposed that has not been reacted to by employers.

"Their function is to get maximum productivity at the lowest possible cost. Trade unions have to think of the employee and economy. In the interests of the economy it's important we do things and have regard for the social partners. Everyone is involved.

"If we approach we approach it with the level of respect and knowledge required to make a contribution, I think we will find a happy medium that benefits both the workers and the employers."