The National Minimum Wage Order is in conflict with the law

Dear Editor,

I returned home last Sunday after a visit overseas and have read the National Minimum Wage For Regular Working Hours (For All Workers in Guyana) Order No 5 of 2013 signed by the  Minister of Labour and would like to make a few comments and observations and seek some clarifications.

The Order prescribes the minimum wage payable to every person employed in Guyana, whether daily, weekly or monthly paid, and states that where a person is in receipt of a higher rate, that rate shall continue to be paid. The Order states also, that the normal work week shall be forty hours not exceeding five days.

Question:  Would sectoral Minimum Wage Orders continue to be made?

The reason for asking is that this Order disturbs the differential between categories of workers in the sectoral minimum wage orders made by the Minister in 2012, eg, a labourer and a sales representative will now receive the same wage. Workers not covered by sectoral orders will be similarly affected for there is nothing in the Order to say that persons receiving above the national minimum shall be granted an incremental increase of a certain percent. On the contrary, the Order states that a worker receiving a higher rate shall continue to be paid such rate. So, an unskilled, semi-skilled, skilled and clerical worker in an enterprise may all end up receiving the same rate.

Trainees are not excluded from the Order; as such, the trainer and trainee, say in a garment factory, may now receive the same wage although the minimum wage order for garment factories provides separate rates. Would a trainee nurse now receive thirty-five thousand dollars ($35,000) per month?

Some sectoral minimum wage orders provide for a worker to be paid for the entire week, notwithstanding that he did not work for the entire week. However, he can be paid for days worked based on the following calculation: Minimum rate divided by 6 plus 25 per cent of such lesser rate.

With the work week now being five days I respectfully submit that those orders should have been amended to reflect the new number, or the instant order could have had a clause saying so or those clauses could have been repealed as they might no longer be relevant. This anomaly needs to be corrected.

Clause 5 of the Order states “any hours of work [should be ‘hours worked’] beyond the normal hours shall at a minimum be paid at the rates set out in the Labour (Conditions of Employment of Certain Workers) Act, No 18 of 1978, the Factories Act [should be Factories (Hours and Holidays) Act] Cap. 95:02, or any other law or any collective bargaining agreement in force. “There is no longer a Factories Act.

Both Acts state that a worker shall be paid for hours worked beyond the normal hours at 1½ times the rate he would, but for that section, be paid. Instead of naming those two Acts and making life difficult for employers, especially the thousands of small entrepreneurs/employers, in locating the Acts and if able to locate, to understand them; would it not have been better to just say that all hours worked beyond the normal hours shall be paid for at 1½ times the basic rate?

Or, were those two Acts intentionally named so that not only hours worked beyond the normal hours are captured but they are intended to silently capture overtime payment for Sundays and public holidays as well?

Act 18 of 1978, which provides for working conditions in the hospitality industry, eg, hotels, restaurants etc, states that workers shall be paid a minimum of 1¼ times his rate of pay for all hours worked on Sundays and public holidays; the Factories (Hours and Holidays) Act, which covers workers in factories, states that workers shall be paid two times (double) their rate of pay for working on Sundays and the following public holidays ‒ Christmas, Eid-ul-Azha, Easter Monday, Good Friday, Labour Day and Phagwah, and for all other public holidays at 1½ times and if any holiday falls on a Sunday the following day.

If this is the intention, then, which of the two Acts would apply? The Factories (Hours and Holidays) Act provides a greater benefit than Act 18 of 1978. It should be noted that, except for workers covered by these two Acts, Sundays and public holidays are normal working days for workers and do not attract overtime payment. Are all workers to benefit now from overtime payment (premium) for working on Sundays and public holidays? Employers and employees need to know.

The Order states that the normal work week shall be 40 hours and shall not exceed 5 days. One employer I know contract his employees to work 6 hours per day 6 days per week ie, 36 hours; his employees will now work 30 hours per week for the same salary for he cannot unilaterally increase their daily hours or reduce their salary but must reduce the days to 5.

What about the law that states that workers, eg, restaurant workers, have to be paid overtime for working more than 7 ¼ hours per day? Can employers move to 8 hours per day, 40 hours per week? I think not, for an order cannot amend a substantive law. Those employers will have to continue paying overtime after 7 ¼  hours per day and not after 40 hours per week.

The Order conflicts also with other laws including the Factories (Hours and Holidays) Act that provides for overtime to be paid after 8 hours per day; the order requires overtime to be paid after 40 hours per week. The order cannot supersede the law. How would payment for the 6th day be calculated? Employers affected are required to obey the law as well as the Order. How?

Employers generally may be saddled with an unmanageable wage bill, eg, a worker who was paid $240,000 per month for working 6 days, 48 hrs per week will now have to be paid $312,000 for working the same hours. Calculation – 40 hours x 4 weeks = 160 hrs per month; $240,000/160=$ 1,500 per hr x 160 hrs = $240,000; normal pay, overtime 8 hrs per week x 4 = 32 hrs per month x 11/2 times = 48 hrs; $1,500 x 48 hrs = $72,000. Overtime pay – $240,000 + $72,000 = $312,000. Can GuySuCo afford to work the managers 5 days per week or the increased cost? Does the police force have the manpower or financial resources to comply?

Single parents, who are security guards, nurses, etc, who earn the minimum wage or a little above and have to work at nights and employ persons to take care of their elderly parents or children have to pay those persons the minimum wage, what they themselves earn plus find money to travel. So, they either leave the job and become a burden on the social system, or leave the children alone at home and pray they don’t play with matches.

Companies with contractual obligations such as garment factories that manufacture clothing for US companies may be negatively affected. US companies use companies here to manufacture because of low production cost. If the cost goes up or delivery dates are not met they may very well move their business to Asia and other countries where costs are lower; hundreds of workers, mostly females, can be on the breadline. The PSC statement is relevant. Some Caribbean islands have free zones to facilitate employment.

Mr Roshan Khan congratulated the government for making the order but in the same breath asked the government to fund the cost; like a son who takes his father to the store and tells him “Father, you did well for your children, order what you want, but please pay for it.” But he is right; what about security firms having contracts with private companies? Do they abort the contracts and face bankruptcy and/or litigation or do the principals fund the difference and raise the price of goods and services? The increase, based on the 2012 minimum wage order for security guards is over 44 % + overtime after 40 hours. They should have been given adequate notice to renegotiate contracts.

Allow me to deal a little with the construction of the order. The order is headed –

‘ORDER – made under – national minimum wage for regular working hours (for all workers in Guyana). ORDER – made under section 8 of the Labour Act Cap. 98:01.’

Surely the-first ‘made under’ is an error.

The heading states – “for all workers in Guyana” and Clause 3 states that for the avoidance of doubt it shall apply to but not be limited to sectors or activities mentioned in the schedule.

The schedule has done the opposite of that intended, for it has created doubt; for instance -’Taxi Service Dispatchers’ is listed, but not the drivers. So, do proprietors of taxi services understand that drivers are excluded?

All workers in Guyana means all workers, and the schedule was not necessary.

Further, the schedule is headed ‘Categories of workers’ but sectors and industries are listed, not categories of workers, another error.

The marginal notes need to be corrected also.

Can the order apply to all workers in Guyana? If so, can an explanation be given as to how it will apply to persons employed under a contract for service. It would have been better to say all workers employed under a contract of service.

The heading is not consistent with Clause 1 and should not have been there in the first place but should have been captured in a clause, say Clause 3.

The Explanatory Note states that there is a prescribed wage for public servants. Can the date and number of the order prescribing such a wage be given? I am unaware of such an order.

What I know is that on August 23, 1977, the government and the Guyana Trades Union Congress entered into an agreement providing a minimum wage for 1977, 1978 and 1979. The rates were paid for 1977 and 1978, but in 1979, the government, using a statement in the agreement that said it was an act of faith, did not pay saying that the workers did not keep the faith.

When GuySuCo, which had paid workers an increment effective January 1, 1979, withdrew it in May, 1979, and reverted workers to their 1978 salary, NAACIE, through its member SeeramTeemal went to court and the court ruled that Teemal had to be paid.

The government reacted by enacting the Labour (Amendment) Act, No 9 of 1984, making the 1977 agreement legally enforceable and providing that the salary for 1979 be kept at the 1978 level.

The union, this time through Mohamed Ali et al, went to court challenging the constitutionality of the Act. The court struck down Section 28C of the Act which sought to invest the GTUC with the statutory right to bargain on behalf of public sector employees and section 7 which deemed the 1977 agreement legally enforceable and sought to keep wages for 1979 at their 1978 level.

Government went to Parliament again and enacted the Constitution (Amendment) Act No 1 of 1988, but it is stated therein that the amendment shall not be deemed to validate Section 28C or Section 7 of the Labour (Amendment) Act, 1984.

The Agreement of 1977 was, therefore, not prescribed by order nor legal. I once again ask to be enlightened.

I now deal with an important point that can impact on the legality of the Order. The Order was made under Section 8 of the Labour Act, Cap 98:01. The Act requires certain procedures be gone through before the Minister can make an order under Section 8, and I don’t think those procedures were observed.

The Act states that whenever the Minister deems it expedient to regulate the wages paid in any occupation in Guyana he may appoint an advisory committee to investigate and make recommendations as to the minimum rates of wages which should be payable. On considering the recommendations of the committee the Ministry may, subject to negative resolution of the National Assembly, make an order prescribing the minimum rates.

However, before the Minister makes the order he is required to publish notice of his intention to make the order, of the place where copies of the draft order may be obtained, and the time which shall not be less than thirty days, within which any objection with respect to the draft order must be sent to the Minister. There are other procedures necessary if there is any objection.

If the all the procedures were observed I unhesitatingly apologise to the Minister.

From the news I learnt that a sub-committee of cabinet was appointed, but that committee could not function as the advisory committee, neither could the Tripartite Committee of the ministry as that committee is chaired by the Minister himself. The law requires the committee include representatives of employers and employees and a chairman, all appointed by the Minister. The committee is required to submit its report in writing signed by the members.

I submit that if the procedures were not followed the order may not stand if challenged in a court of law.

If the procedures were not followed, the Minister should have made the order under Section 9A of the Act, as that section, which was inserted in 1978, allows the Minister to make an order without appointing an advisory committee or going through the above procedures.

The Order prescribes a 40 hour, 5 day work week. Another fundamental flaw, for hours of work cannot be prescribed under Section 8 or by an Order. It has to be done by regulation made under Section 28 of the Act. Section 28 empowers the Minister to make regulations prescribing the numbers of hours which may normally be worked by an employee in any week or on any day in any occupation. This may be another ground for the order to be null and void.

In the matter of the Labour (Amendment) Act, 1984, between the Attorney General and Mohamed Ali et al mentioned above, the Chancellor, Mr K S Massiah said that the Minister (Labour) caused Parliament to be in breach of the constitution.

Was the National Assembly caused to be in breach of the law in the instant case since it approved the Order by negative resolution?

As Chief Labour Officer I held, along with my deputy, Dhanraj Sookdeo, a number of consultations with stakeholders on the question of a national minimum wage but we could not find a realistic formula. Put it too low and it is worthless, put it where industries will be forced to downsize and reduce staff and cause social problems was a concern; domestics and caregivers were a challenge.

The national minimum wage with a 5 day work week at one stroke of the pen could be self-defeating. Can a developing country afford to have the wheels of production going for 5 days or increase cost of production by overtime payment and risk limiting access to overseas markets?

A major beneficiary of this order would be the NIS, which will have a guaranteed contribution level of $35,000 per month plus a bonus from overtime.

My observation must not be seen as being anti-worker or controversial, for the intent of the order is laudable and government must be commended for having the political will, but rather is intended to point out some of its implications and deficiencies.

I trust that the Chief Labour Officer will clarify the concerns raised or, better still, if government find my interpretation of the law accurate and the anomalies/errors genuine that they repeal the order and make another order, done professionally, taking all views into consideration as I have been advised by members of the PSC, GMA, the Chambers of Commerce, etc, that their organisations were not consulted but rather that CAGI, which does not represent them, pushed for the order.

Yours faithfully,
Mohamed Akeel