After suffering “immense loss” as a result of the new minimum wage, security firm RK Security has terminated 11 of its 15 government contracts.
Founder and CEO of the firm Roshan Khan told Stabroek News yesterday that on Thursday, the company handed over security services to the management of the 11 locations and officially pulled all personnel. He did not mention what has happened to the over 120 employees who were servicing the contracts.
He had given the government a month’s notice to allow them to put provisions in place and he told Stabroek News that he did not want to be a hypocrite since his original contention was that the government had given an inadequate amount of time and failed to raise their contract amount to facilitate losses that the firm would suffer as a result of the new minimum wage.
The National Minimum Wage For Regular Working Hours (For All Workers in Guyana) Order No 5 of 2013 was signed by the Minister of Labour and came into effect on July 1. It provides for a 40-hour work-week and a minimum wage of $35, 000.
Khan told Stabroek News recently that because of the tendering process, the four remaining contracts would still not be operating at a profit but RK would not be providing the service at a loss either. He said that after writing government officials again after publicly declaring that RK would sever all contracts on July 15, he decided to give a month’s notice.
The CEO said that for the four remaining contracts, the company is still awaiting word from the government to see if the contract amount would be raised or addressed. So far, none of the offices where he had provided services has responded. He said that many of the contracts were 10 to 12 years old and there was the issue of loyalty but RK could not continue to operate with 15 government contracts unless the fees were raised to incorporate the additional charges for wages.
Khan said that from July 1 to August 8, RK’s suffered an “immense loss.” However, he was unable to give an estimate of the additional operating costs. When asked if his firm is fully compliant with the new labour laws including the $35 000 monthly minimum wage and the 40-hour work week, he said yes.
With regards to the wage increase, he said that all employees who were previously making under $35 000 had their salaries raised and for those making over that sum, it remained the same. Khan noted that if employees saw otherwise, he would encourage them to come forward.
In July, Khan held a press conference where he stated that the new minimum wage and 40-hour work week would see operating costs rise from $300 an hour to up to $500 an hour. He had said that security contracts went through a tender process which meant that the contracts were agreed upon within the parameters of a specific budget and with the additional costs, the government would also have to increase the contract amount.
He had noted that after multiple letters to the affiliated ministries and government offices, RK’s would be forced to pull contracts if there was no favourable response. He had received criticism that the company was willing to forego the jobs of over 100 employees instead of absorbing the cost until the end of the contracts at which point they could be retendered.