Further to meetings held recently to review the draft Labour Code 2003, please find attached a draft AHTA Position Paper outlining the Association's concerns and comments.
All members are asked to review the attached document and send any comments to the AHTA by July 23, 2004 latest. The AHTA Position Paper will then be sent to Government requesting a meeting with all the Ministers to review the Draft Labour Code 2003.
Please note that participation from every AHTA member in this process is of critical importance. If you have not had time to review the Draft Labour Code 2003, please be aware of the following:
1. According to the proposed Labour Code 2003, it would be a CRIMINAL offence to contravene any statutes of the Labour Code. As a result, any offender, both employer and employee, could end up with a CRIMINAL RECORD, for even the most minor offence.
2. The draft Labour Code 2003 imposes a BACKDATED liability on ALL employers that could end up costing businesses MILLIONS OF DOLLARS and even force some businesses to close their doors.
3. Much of the Draft Labour Code 2003 offends several provisions in Anguilla's Constitution and the fundamental Rights of the Person.

Background

First established in 1981 as a small organization representing the interest of a few of the island’s accommodation properties, the Anguilla Hotel and Tourism Association (AHTA) is today recognized as Anguilla’s largest and oldest trade association and the leading voice of the country’s hospitality industry.

Members of the AHTA represent all aspects of the tourism industry in Anguilla. Accommodation Members comprise a wide range of properties from small intimate inns and guesthouses to large world-renowned luxury resorts and villas.

Allied Members represent the full spectrum of hospitality and tourism products and services including airlines, restaurants, watersports enterprises, trade and consumer publications, financial institutions, utilities and communications companies, public relations agencies, art galleries, property management companies, attractions and local entrepreneurs.

Membership in the AHTA currently stands at 86 full and strategic partner members. According to a report released in May of this year prepared by the Ministry of Finance Statistical Unit1, AHTA members directly employ a total of 4,660 full-time and part-time employees representing 37 per cent of total employment on the island. Consequently, the AHTA represents both the largest number of employers and employees in the country.

According to a Labour Force Survey conducted by the Government of Anguilla in September 19992, one quarter of all workers on Anguilla were employed directly in the hotel and restaurant sector. If you factored in all the people who worked in the ancillary and support service industries to the tourism industry such as fishing, construction, real estate and transport, the total percentage of persons working in Anguilla dependent on the tourism industry is more than 60 per cent.

In 1999, the World Travel and Tourism Council (WTTC) released a report ranking the top countries in the world according to percentage of total workforce employed in the hospitality industry. Anguilla ranked number one in the world with a total of 64.1% of its total workforce employed in the travel and tourism sector3. While that number has dropped slightly this year, with Anguilla now ranking fifth in the world, the message is still very clear; tourism touches every man, woman and child on Anguilla and impacts the economic and social development of this country.

AHTA Position with Existing Labour Code

Over the years, the AHTA has expressed concern over the inequalities and imbalances currently contained in the Labour Code. We have worked closely with the Labour Department to address several issues relative to the employer-employee relationship in the hospitality industry.

While primarily an organization that represents the interests of businesses in the tourism sector, the AHTA has often been an advocate for better working conditions and greater parity for the workers of our industry.

On many occasions we have argued for the need for a review of the Service Charge Scheme as the Labour Code regulates only the distribution of Service Charge and not the collection. Our organization sees this as fundamentally flawed and we are concerned that the Labour Code does not consider Service Charge as part of wages from a political standpoint, which has allowed Governments to imply that wages in this sector are lower than elsewhere. In the draft Labour Code 2003, there are 13 different categories of industry outlined in an effort, we believe, to propose different minimum wages according to sector with particular emphasis on the hotel sector.

We have noted with concern however that even the existing and draft Labour Codes are confused regarding the issue of gratuities as wages. In the Definitions section of the documents “Gross Wages” includes gratuities but “Wages” does not. A Service Charge dollar spends like any other dollar. However since Government refuses to acknowledge that Service Charge is in fact remuneration, we are concerned that a minimum wage system will be imposed that excludes Service Charge resulting in the average wage in the tourism sector becoming further above all other similar industries on the island.

While it is generally agreed that the existing legislation does little to protect the interests of employees and encourages disparity between employer and employee, it has always been understood that the Office of the Labour Commissioner was established to maintain the fair equilibrium between employers and employees. In the new draft proposal, the position of the Labour Commissioner seems to be leaning strongly in favour of employees in all matters and the Code appears to encourage the formation of Trade Unions to further separate this position from its current status as a reconciling force in any disputes or disagreements. This inequity would create a huge imbalance in all sectors of business, as there would no longer be a level playing field in labour negotiations.

In 2001, the AHTA was asked to participate in the Promalco initiative organized by the International Labour Organization in an effort to bring together Government, workers/trade unions and employers in a tripartite agreement that would promote greater understanding and harmony between the three groups. For the past two years we have supported the Promalco Agreement and have worked with ILO at improving labour relations in Anguilla. Unfortunately, the draft labour Code 2003 undermines the spirit of the Promalco project and erases the advances we have made in this area.
Business Climate in Anguilla 1995 to Present

Prior to the passage of Hurricane Luis in September 1995 Anguilla enjoyed the enviable position as the fastest growing destination in tourist arrivals among all Caribbean islands4. Visitor Arrivals had jumped by more than 30 per cent, visitor expenditures had grown to an all time high and investment in the tourism industry enjoyed a never before seen increase5. Then, on September 5th, 1995, Hurricane Luis ravaged Anguilla and nearly destroyed the sizable gains that the island had made to that point. The following year, in 1996, Anguilla a saw an 11 per cent decrease in tourist arrivals and a 15 per cent drop in total visitor arrivals.

While Luis had caused some destruction to our tourism plant, the greatest damage was exacted on our image and reputation. Over the next three years Anguilla survived seven more hurricanes and was dealt another devastating blow in November 1999 with the passage of Hurricane Lenny. Despite a very resilient industry that was able to withstand the natural forces caused by these storms, we have not yet rebounded from the negative publicity that these storms created and we are still struggling to rebuild our market share.

World events have also impacted tremendously on our tourism sector over the past few years. The September 11th 2001 terrorist attacks in the United States, the Iraq War earlier this year and the downturn in the US economy have overwhelmed our industry to the point that a July 2002 report released by Government indicated that there was an increase in unemployment in Anguilla as a result of our troubled hospitality sector.

For the past eight years Anguilla has struggled to get back the visitor arrivals that it enjoyed pre-Luis. While there have been signs of recovery, most notably in 1997 and 2000, we still have not achieved the arrival figures of 1994 which stood at 125,780 total visitors. Ironically, in March 1995 the Anguilla Tourist Board released a report prepared by Coopers and Lybrand, which forecasted a 5 per cent annual increase in visitor arrivals over the next 10 years. To date we have not been able to reach any of those projected numbers.

2003 figures are not encouraging. Visitor arrivals are down three out of the first four months of the year. Hotel occupancy figures show that half of our total hotel rooms are sitting empty, during a period that is supposed to be our busiest time of the year. Since the events of September 11th, 2001 the trend is to more last minute bookings and more consumers looking for bargains and deep discounts on hotel accommodations. Hotels are getting less and less revenue out of their rooms every day.

It is with this perspective and against this backdrop that the members of the AHTA reviewed the Draft Labour Code 2003 in May of this year. A series of meetings were held to discuss the draft legislation and a special meeting was held with legal advisors for counsel on the legal and Constitutional aspects of the document. While we believe that the entire draft legislation needs to be reviewed and rewritten, the following clauses are of particular concern to our membership:

Clause 4 (3)The Application of the Code should be universal. There should be no exemptions allowed, as this would create an unfair advantage to those not governed by the Code. Except in a very narrow situation, of which we cannot envisage, there should be no exceptions to the Labour Code Act.

Clause 5 Criminal proceedings should only be considered in cases where employers are negligent resulting in an employees health and safety being compromised and where there are contraventions to the health and safety code. All other cases under the Labour Code Act should be civil proceedings.

Clause 8 The AHTA’s position is that the Labour Commissioner should be a totally independent person. Realizing however that the Commissioner is selected among the Civil Servants workforce, any occasion where the Commissioner must act in a quasi-judicial manner, those duties should be carried out by an independent body.

Clause 14This clause is in conflict with Anguilla’s Constitution and bestows even greater power upon the Labour Commissioner and his office than even the police have.

Offends sections 1,7,8 and 9 of the Consititution and calls into question areas of unlawful seizure, removes the Right of Appeal.

Clause 15 Contravenes the Right to Appeal and the Right to a Fair Hearing provided in the Constitution.

Clause 17 This clause is very arbitrary. Due to the nature of our industry, we believe that it is fundamentally wrong for an inspector to enter a place of business without prior notification.

Clause 18 This clause should also apply to the Commissioner of Labour. In this regard, the Inspectors and the Commissioner of Labour should have to withdraw in cases of conflict of interest.

Clause 20 In sections (a) and (c) the word “reasonable” should be included.

(a) permit the inspector reasonable access to any place or undertaking to be inspected.

(c) grant the employees and their representatives, every reasonable facility for communicating freely with the inspector when on a visit of inspection

Given the nature of the hospitality industry an unexpected inspection could severely disrupt operations and inconvenience guests. Reasonable provisions would therefore be at a time that would cause the least disruption in business.

Clause 23 This clause is in opposition with the spirit of the Promalco initiative, which the Government of Anguilla endorses and is an active participant in its development.
The potential for employees to abuse the provisions allowed for in this clause against his/her employer makes this section extremely dangerous.

Clause 25 Why should the Labour Commissioner or Inspectors be exempt from proceedings?. “Good Faith” is a very subjective notion and can easily be abused to the detriment of employers. Public officials should be held equally as accountable under the law as the people they serve.

Clause 26 (a) This clause violates a persons right to confront his/her accuser and the Right to Fair Hearing. In this regard we feel the following clarification should be added to this sub-section:

“ request the parties to meet him jointly, or by agreement of both parties, separately.”

Clause 29 The Tribunal should be totally independent of ministerial influence. The Arbitration Tribunal should therefore be appointed by the Public Service Commissioner.

In addition, the Code should reflect need for a swift resolution by the Arbitration Tribunal, as employees must be paid until a final decision is rendered, which could then become a serious financial burden for employers.

Clause 30 (1)The highlighted alternative provisions are preferable. In addition, the Chairman of the Tribunal must be independent and have a judicial background.

Clause 38 Sub-sections (7) - (11) : These provisions grant extraordinary unconstitutional powers to the Advisory Committees.

Clause 42 (3)The term “reasonable” should be defined bearing in mind that Clause 50 refers to a maximum work week, including overtime, of 60 hours.

Clause 44 (2) This sub-section creates additional costs for employers who would need to provide severance pay and other benefits where there currently is no such provisions in place.

For example, under the draft legislation, if an expatriate were to renew his/her contract after initial 12 month period, the contract would then become open-ended and therefore entitling employee to severance pay and other benefits.

As it is drafted this clause restricts both employee and employer to various employment options.

Clause 46 Under current legislation, everyone is entitled to a maximum two three(3) months probationary period. Under the proposed draft Code, this provision would be restricted to Supervisory level positions.

Clause 46 (1)Should be amended to correspond with Clause 46 (2) (b).

Clause 47 (2)This clause does not take into account the reality of the hospitality industry and is very specifically restrictive to the hotel sector.

The statement should be amended to read:

“The standard work week shall be forty hours”.

Clause 49 (1)Due to the necessity to cover all aspects of hotel operations, there are occasions whereby an employee will work more than an eight hour shift on certain days, but no more than 40 hours per week. Overtime should therefore only be calculated on the weekly total, as in the current legislation. This restricts the employer’s ability to offer employees for example a four- day workweek of ten hours per day.

Clause 49 (5)Under the current legislation, weekly paid employees were automatically excluded from premium payments on the basis that their standard pay compensated them for a certain amount of overtime. The draft legislation does not differentiate between hourly and weekly/monthly paid employees except as to status. This change could force an employer to pay extra overtime to weekly paid employees, whose remuneration already allows for such extra hours.

Clause 53 (b)As it is written this statement is contradictory. The word “not” should be removed and the statement should read:

“ the public holiday was one of his scheduled work-days.”

Clause 44 (4)The wording of this clause encourages any employer who collects service charge to stop doing so and consider increasing the employee’s basic wage by a set amount in order to conform with section 40.

Clause 60 (1)A period of 4 weeks does not necessarily comprise one month. As an alternative, the words “calendar month” should be included to provide better clarity.

Clause 64 (3)The calculation should allow for a “major” fraction, not any fraction.

Clause 65 (1)The term “payment of any kind” suggests that meal allowances, transportation and other benefits would need to be paid during holidays and therefore should be removed.

Clause 61 The issue of maternity leave has been omitted from the draft legislation under this clause. Should be included to limit allowable maternity leave benefits.

Clause 77 (3) As drafted, the provisions under this clause sub-section are arbitrary and subject to abuse.

Clause 82 (h)What does the term “other civic obligations” mean? Need for more clarification and definition.

Clause 83 This clause is extremely subjective. Employers must fulfill a set of requirements to dismiss an employee however this clause allows employees to just walk off the job. An employee can claim unfair dismissal where no dismissal actually occurred. The clause must have clear definition of what constitutes “constructive dismissal”.

Clause 85 (3)This clause is highly prejudicial to employers. Where an employer reasonably (and therefore honestly) believes a factual basis to exist, this ought to be a sufficient defense.

Clause 87 (1)Civil servants are required to retire at the age of 55. How can the Government insist on a mandatory retirement age for the public sector and not grant the same right to the private sector? There should be a definitive date of retirement at 65 years of age, with the option of an extension following mutual agreement between employer and employee.

Clause 88 (1)The word “valid” should be removed and replaced with the word “any”.

Clause 93 (1)It is impossible to comply with this sub-section. For example, under current legislation, Service Charge can only be paid out at the end of the month. Additionally, employees must hand in their uniforms in order to receive their final pay.

Clause 94 (3)This sub-section should be amended to read:

“shall have priority over secured or preferential creditors”

or

“shall have priority over all unsecured creditors”

Clause 96 (4)This section requires more clarification. Does it refer only to the Certificate of Employment or does it include any verbal communication as well?

Clause 97 (j) the word “approved” needs to be included to read:

“approved leave without pay”

Clause 98 (1a)In cases where there are secret or closed negotiations, it would be impossible to provide one month notice of sale. Also, the term “affected” is redundant since all employees would be affected by the disposition.

(1b) Where the successor-employer offers continuity of employment with all past service taken into account and no change in terms of condition of employment, there is little incentive for any employee to wish to carry forward his/her service when given the opportunity to receive a windfall payment.

In the normal course of business some employees leave, some have their employment terminated, some retire and some die. Under the draft legislation none of the employees in these categories would necessarily receive severance pay.

There is great concern that this clause imposes an unconstitutional, backdated burden on all sectors as in Clause 113.

Clause 98 (4)This clause is outrageous and likely the most onerous provision in the draft legislation. The inheritance of a business due to the passing of an owner should not trigger any form of severance payments. Similarly, the sale of a body corporate wherein the successor-employer offers continuing employment on the same terms and conditions to any employees should not require such payments to those that remain.

This clause would impose an unreasonable burden to majority owners and would discourage future investment in the hotel sector. If enacted, this provision would immediately depreciate the value of each and every property/business on Anguilla. Additionally, what would constitute a “majority” ownership given the various ownership arrangements available in the hotel sector?

Clause 102 (3) and (4): We believe this clause to be unconstitutional and infringes the Right to Fair Trial. Once again, this clause is prejudicial to employers. Both employer and employee should have to adhere to the same restrictive provisions.

Clause 104 (7) Why should an employer continue to accept unsatisfactory performance from an employee and pay them for 90 days after a warning? The period should be no more than 30 days.

In addition, we feel that the existing warning system should be retained. Ie. 1 verbal and 2 written warnings before dismissal can occur. This would ensure greater security for the employee.

Clause 105 (2) This is not a sensible clause. For example: A tennis court repairman may work 65 days per year for four years. Under the draft legislation, he would be entitled to severance pay, which is not the intention or function of severance pay.

Clause 105 (3) How can an employee who has worked for ten years NOT be entitled to Old Age Benefits under the Social Security Act?

Clause 106 (1) We believe that the word “not” should be included in the first line so that the sentence would read:

“ …and who is not paid on a piece-work basis…”

Clause 113 This entire clause is subject to Constitutional review and should be deleted. It creates a backdated liability that has never previously existed and for which employers have not been given the opportunity of creating a fund. In particular the idea that someone who has been dismissed under section 102 should then be entitled to gratuity is absurd.

Observations and Recommendations

The draft Labour Code 2003 reflects more industrialized society development. It does not speak to a society in which more that 60 percent of its workers are employed in the hospitality industry nor does it relate to the particular needs of Anguilla.

The post of Labour Commissioner was originally established to act as a mediator between employer and employee so as to promote more harmonious labour relations in Anguilla. The draft Labour Code 2003 moves away from that original concept and would encourage more acrimonious labour negotiations.

Much of the document offends several provisions in Anguilla’s Constitution and at least four or five clauses in the fundamental Rights of the Person.

While much of the exisiting legislation remains fundamentally the same in the draft proposal, there are many small changes that will have major impact on the business sector.

In the draft Labour Code 2003, the Government imposes new responsibilities on the private sector that previously never existed. As a result, there would be serious consequences to business accounts due to a number of backdated obligations.

The institution of Criminal proceedings as opposed to Civil proceedings creates a very dangerous business climate and is not conducive to a healthy employment environment. The threat of a criminal record to any offender of the Labour Code, even the most minor offence, would certainly not encourage future private sector investment and/or development.

The AHTA strongly recommends that Government undertake a series of meetings and workshops with employers to review every section of the Code.

The AHTA further recommends that the Labour Code be reviewed and redrafted to reflect a more equitable system of addressing labour issues, one that would be in the interests of both employers and employees.

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