Government Approves Order for Implementation of Minimum Wage
Published 15th February 2016, 3:27pm
The Government has approved the Labour (National Minimum Basic Wage) Order, 2016 which details how the minimum wage will be implemented starting 1 March 2016 when the Order comes into effect. Although significant legislative reform is currently underway as it relates to the Labour Law, the Government took the decision to implement a national minimum wage by way of an Order from Cabinet in accordance with Section 20 of the current Labour Law (2011 Revision). In order to give the community 9 months’ notice prior to its implementation, the 1 March 2016 implementation date was first announced by the Premier, Honourable Alden McLaughlin, Jr, in the Legislative Assembly back in May 2015. As of 1 March, employers will be required to operate under the approved guidelines in the Order.
The Order speaks specifically to how the minimum wage regime works; how it should be applied for employees under a registered gratuities scheme; how it affects live-in domestic employees; and how employers should compensate employees who are working on a commission basis.
The Minimum Wage Order, which was published as an extraordinary Gazette on Friday, 12 February, includes the following pertinent provisions:
- The minimum wage payable to all employees (except those service employees of an employer who has a gratuities scheme in place that has been approved in writing by the Director of Labour and Pensions) is CI$6 per hour gross;
- Any employer who has a gratuities scheme in place that has been approved in writing by the Director of Labour and Pensions must pay service employees a minimum of CI$4.50 per hour gross directly from the employer;
- The minimum wage payable is applicable to every hour worked within a standard work week or standard work day, depending on the defined pay period;
- Any employer with a live-in household employee is allowed no more than 25 per cent or CI$1.50 per hour as an in kind credit for providing accommodations and utilities for the employee. This means the employee shall be paid a minimum of CI$4.50 per hour gross in monetary compensation;
- Any employer with employees working on a commission basis may use no more than 25 percent or CI$1.50 per hour to be allocated from the commission earned by the employee to be put towards making the National Minimum Basic Wage of that employee. That is, the employees must be paid a minimum of CI$4.50 per hour gross directly from the employer. However, including commissions in the computation of the wages of an employee must not prevent that employee from receiving all commissions earned.
- No employee, including service employees, live in household domestics, and commission based employees, must receive less than their respective National Minimum Basic Wage when the employer calculates their sick, vacation, maternity or any other applicable leave. For the avoidance of doubt, the employer of a live in domestic employee may continue to calculate any allocated in kind benefits for accommodations and utilities during leave periods.
“This formal adoption by Cabinet culminates the work of the Ministry and Government which began in February 2014. First of all, I must express my sincerest gratitude on behalf of the Ministry and the Government to the members of the Minimum Wage Advisory Committee (MWAC) for bringing our country to this historic occasion. Their contribution was necessary and indeed invaluable to this process,” said the Honourable Tara Rivers, Minister of Education, Employment and Gender Affairs. “As a country and Government, we have a responsibility to the members of our local workforce to help to ensure that their minimum needs can be met in light of national, economic and social conditions. Based on the research compiled and the economic analysis conducted by the MWAC, the guidance provided by the experienced labour economist acting as a technical advisor, and considering the input from all persons who participated during the process, the Government has agreed that $6 per hour is an appropriate rate to use at this time to achieve this.”
The Order was drafted to incorporate the spirit of the recommendations contained in the MWAC report which was presented and subsequently accepted by the Government in 2015. However, because the current definition of wages in the Labour Law (2011 Revision) does not include gratuities, the Minimum Wage Advisory Committee’s recommendation to allow no more than CI$1.50 of gratuities to be used toward making the CI$6.00 minimum wage will be appropriately addressed in the revised legislation. Based on the numerous comments received on the draft Labour Relations Bill, 2015 which was put out for public consultation last year, the Labour Relations Bill is currently being amended, and it is anticipated that a revised Labour Relations Bill will be available sometime in March.
Minister Rivers said a balance had to be struck when deciding on a national minimum wage. In fact the composition of the MWAC itself had representation from independent persons, employers and employees, and its membership was gender balanced and represented a wide range of ages, including a youth perspective.
“Determining the appropriate minimum wage was definitely a balancing act. The Government had to consider the impact on both employers and employees. Through the work of the MWAC, the Cayman Islands - Economic Vulnerability Threshold (CI-EVT) was established. This threshold represents the minimum amount that a worker needs to earn in order not to slip below the poverty line, and this was determined to be CI$5.22 per hour per Income Earner,” explained Rivers. “Keeping in mind that the goal of having a national minimum wage is to address exploitation and provide real relief to the lowest paid workers, we obviously did not want to set the wage below the CI-EVT figure; in fact, we did not want to introduce a minimum wage whereby people may end up living on or fall below the poverty line, in the event of any unforeseen changing economic conditions. However, at the same time, we did not want to put employers in some industries in a position where they could not afford to hire workers because the minimum wage is too high. Therefore, it was determined that $6 per hour is a reasonable minimum wage given those considerations. The truth is that for many of the low wage employees in the Cayman Islands, the new minimum wage will actually mean an increase in salary, and this means they will be better equipped financially to provide for themselves and their families.” Rivers went on to stress that, “As a country, we cannot continue to facilitate the importation or perpetuation of poverty in our society, and this is one way in which the Government has chosen to address this issue.”
Minister Rivers stated that the National Minimum Basic Wage represents the lowest acceptable wage that an employee should earn in exchange for his or her labour in the Cayman Islands, but not necessarily the ideal or appropriate wage for some jobs or industries. “The minimum wage is the absolute wage floor in which employers and employees can agree to; however, the parties are free to and should negotiate for wages and compensation that are reasonable given the economic conditions, the nature of the job, the industry standards, etc.”
In order to ensure that having a minimum wage is meeting the needs of the country and the stated policy objectives, it is expected that the National Minimum Basic Wage will be studied and reviewed on a regular and intermittent basis going forward. It is anticipated that the monitoring and evaluation procedure for the minimum wage will also be addressed in the revised Labour Relations Bill.
The Ministry and Department of Labour and Pensions have produced a list of Frequently Asked Questions (FAQ) relating to the minimum wage (see attached) which will be available on the Ministry’s website (www.education.gov.ky) and the Department of Labour and Pensions website (www.npo.gov.ky) along with The Labour (National Minimum Basic Wage) Order, 2016. Members of the public can also call the Department of Labour and Pensions for more information at 945-8960, and the Department has a Confidential Tip Line (945-3073) to report employers who are not paying employees the National Minimum Basic Wage or committing other breaches of the Labour Law.