By Fay Simmons

Tribune Business Reporter

jsimmons@tribunemedia.net

Plans to mandate that Bahamian employers must finance redundancy insurance as part of proposed reforms to employment legislation have been put on hold for now, it was confirmed yesterday.

Keenan Johnson, legal consultant to the Ministry of Labour and the Public Service, said the proposal - which would have required employers to set aside funds to cover potential future redundancy payments to staff - raised significant  private sector concerns especially for small to medium-sized businesses.

Speaking at the Bahamas Institute of Chartered Accountants (BICA) Accountant’s Week, Mr Johnson said imposing such a requirement would be similar to forcing businesses to take out an insurance policy and create an additional financial burden at a time when many are already grappling with high and increasing operating costs.

He added that the Government is seeking to achieve a balanced approach that protects employees without harming smaller businesses, and the redundancy bond will not be included in the new employment legislation, though it remains under consideration for future review.

“As you can appreciate, there were many concerns with this, particularly for small to medium-sized businesses. Essentially, this would be like imposing an insurance requirement on them. We need to find a way to balance the approach so it doesn’t have a detrimental impact on smaller employers who are already paying their bills and doing what they are supposed to do,” said Mr Johnson.

“We don’t want to create a situation where they are effectively taxed because of what other companies did or may do. This is still under consideration and will not form part of the new employment legislation.”

Mr Johnson said the redundancy bond concept was inspired by past corporate failures, including the CLICO and City Markets collapses, where employees were left without redundancy pay after companies failed. The idea was to require employers to set aside a small monthly fund, essentially an insurance reserve, to ensure employees could receive their redundancy payments even if the company became insolvent.

“Anyone remember the CLICO issue and City Markets? This concept was born out of that situation; the idea that a company may go bankrupt and, once it ceases to exist, its employees are made redundant. But in some cases, even though employees are being made redundant, the employer simply does not have the funds to pay their redundancy,” said Mr Johnson.

“The concept of a redundancy bond is almost like insurance, requiring the employer to pay a certain amount each month so that, in the event of liquidation or redundancy without funding, there is a reserve to make those employees whole.”

Mr Johnson said another recommendation discussed during the consultation - paid mental health days - was also rejected for now. However, unpaid mental health days are being considered. He said the focus is to first recognise the concept and importance of mental health, while ensuring a balance of the interests of both employees and employers.