• Raises alert on tourism job contracts

• But union chief says no ‘major alarm’

• Hotel union works on skills database

By NEIL HARTNELL

and YOURI KEMP

Tribune Business Reporters

A Cabinet Minister yesterday voiced “serious concern” about the increasing insertion of so-called ‘non-compete clauses’ into employment contracts for hotel and tourism management executives.

Elsworth Johnson, minister of financial services, trade and industry and Immigration, told reporters he had taken up the issue with Cabinet colleagues and labour officials given that it appeared to represent an undue restraint on trade in a small economy such as The Bahamas.

“The other thing that I note that is a serious concern, and this is something where I also spoke to the minister of labour, (Dion Foulkes), the director of labour, (John Pinder), is where there is a strange thing in a contract of a non-compete clause,” he added.

Mr Johnson questioned “how does” the hotel industry in The Bahamas have non-compete clauses for senior executives given the relatively small size of an economy where tourism represents more than 50 percent of gross domestic product (GDP). 

Obie Ferguson, the Bahamas Hotel Managerial Association’s (BHMA) president and labour attorney, told Tribune Business that the use of non-compete clauses in employment contracts had increased in recent years but had not risen to the point of causing “major alarm”. 

His union, which represents middle management in the hotel sector, had first seen such clauses two years ago. Acknowledging that they do serve a legitimate purpose, Mr Ferguson nevertheless said they could become problematic if an impacted employee is made redundant due to the property’s closure and is not released from this clause, as it will bar them from immediately seeking new jobs.

“It seems to be on the increase, but it is not to the point where it is causing a major alarm,” he told this newspaper of the industry’s use of non-compete clauses. “It is certainly on the increase. I saw a couple almost two years ago. I saw signs of it coming in. I didn’t react to it because I thought it may be a one-off issue.

“It may be a problem if there are circumstances that cause you not to be employed, but it has not been to the point where I have become somewhat concerned about it. I thought I may be putting something more than it really is on it.”

Non-compete clauses typically prevent senior resort management, workers with specialist skills and/or access to commercially sensitive information from abruptly leaving their employer and going to work for a major rival. They are instead normally required to take a break of a year or two years before they can do so.

These stipulations are typically used to prevent employees taking trade secrets, sensitive data or clients from their former employer when they move to a rival, thereby giving the latter a competitive advantage. They are also used in mergers and acquisitions to prevent top management in the target firm from leaving immediately to start a rival business and/or take clients with them.

Mr Ferguson, though, suggested that non-compete clauses could become “totally unfair” if a worker subject to such restrictions was terminated or made redundant through no fault of their own, such as the hotel property’s closure. In such circumstances they would be barred from seeking new work unless released from these provisions.

If such a release was not forthcoming, Mr Ferguson said the former employer should pay the affected worker for the duration of the non-compete clause when such situations arise as they are being “prevented” from obtaining alternative employment.

“If you go and work you can expose yourself to potential breach of contract,” he added. “They should be paying that worker under such circumstances for the non-compete clause, whether that period be one or two years, or amend the contract to let them go.”

Mr Johnson, meanwhile, said he is encouraging the Bahamas Hotel, Catering and Allied Workers Union (BHCAWU) to create a database of resumes for furloughed industry workers.  

He added that he has “concerns” over hotel workers who are not categorised by their skill-sets, saying: “I have reached out to the president of the Bahamas Hotel, Catering and Allied Workers Union (BHCAWU), and I was concerned with matters that were coming across my desk. I asked him whether or not they had a database of all of their members and intended members with resumes.” 

Darrin Woods, the BHCAWU president, told Tribune Business he had spoken to Mr Johnson and the union has “nearly completed” this worker database which has been under construction for the past three weeks. 

He added: “When workers write for these various disciplines in terms of work permits and stuff, we’ll be able to supply them with names, resumes and so forth with persons in particular from our bargaining unit.” 

Mr Johnson said: “Let’s say if they have another trade like plumbing, and that is identified, they can share that with the Department of Immigration, labour and the hotel industry. Because I have persons that I know, for example, that are a sous chef, but persons are making [work permit] applications for a sous chef.

“So he [Mr Woods] has gotten on that, and he has some young persons who are working with him and now they’re going to be contacting all of their members to have that database. We want people to come and live and work in The Bahamas where we don’t want Bahamians to be sidelined.”