RK’s Security will begin the termination of all government contracts starting this Saturday with the rest being terminated on July 15 following the implementation of a new minimum wage and the 40-hour work week from July 1st .
CEO Roshan Khan today stated that the new minimum wage of $35,000 per month had made it impossible to operate the contracts. The Private Sector Commission had earlier raised concerns that security contracts and other agreements drawn up using the pre-minimum wage rates would be in jeopardy.
He emphasised that the new minimum wage and the 40-hour work week were welcome, but it was the short period of adjustment time given.
Khan said that the implementation of the new minimum wage and the 40-hour work week was done so without a buffer period to adequately prepare security service providers to work out a strategic plan to cover additional operating costs. He told Stabroek News that government contracts are acquired through a tendering process and a budget would have already been worked out for the year in relation to operating costs. He stated that the terminating of government contracts had to be done as some private contracts have already been abrogated because clients are not willing to bear the additional costs that are arising. He made the comments at the company’s headquarters at Charlotte Street.
Khan noted that up to 120 employees will be affected by the company’s decision to terminate government contracts. He noted that the termination will begin with 15 contracts. He noted that for private contracts there can be a renegotiation of the contract price however for the government contracts if the contract is sent to retender that could take three months to a year to finalize. “I have waited a year before tendering has finished and I’ve gotten a contract…while the tendering is happening we can’t be providing services,” Khan stated.
He said that currently the average hourly operating cost is approximately $300 and with the new wage policy in place that cost could soar to $350 to $500 taking into account overtime pay along with the minimum wage increase. He noted that “to operate economically,” and maintain allowances including uniform and travel the hourly rate had to be adjusted significantly and with the July 1 implementation for government contracts with a set cost this was not possible.
Khan said that he has gone to the government and written to the Ministry of Finance to offset the incurring new operational costs but has yet to hear back from them. Khan said that the government has lapsed significantly in the implementation of the new policy and as a result security service providers will be forced to terminate contracts and let go of employees.
He noted that the wage increase meant that NIS contributions also had to increase and as the employer RK was responsible to ensure that employee benefits did not suffer.
Khan stated that he was notified of the changed working conditions on May 29 after the decision was made formal the day prior by members of a tripartite committee. As a result Khan noted that he was left stunned by the July 1 implementation.