Good morning, Mr. Speaker, I am pleased to introduce in the Honourable House today, a Bill entitled the Employment Amendment Act 2025 which proposes to clarify the calculation of paid leave for employees who receive gratuities and service charges (hereafter referred to as other gratuities) as part of the minimum hourly wage rate.
Mr. Speaker, prior to the enactment of the Employment (Protection of Employee Tips and Other Gratuities) Amendment Act 2023 on 1 March 2024, there was no definition for a gratuity or service charge in the Employment Act 2000 (the “Principal Act”) and both were considered, in some industries, to fall within the general term of ‘tip’ and did not constitute wages.
Mr Speaker, from the introduction of the Employment (Minimum Hourly Wage) Order 2023 (the “Order”) in June 2023 until 29 February 2024, employees who received other gratuities were remunerated at the minimum hourly wage rate of $16.40 for all paid statutory leave entitlements.
Mr. Speaker, the Employment (Protection of Employee Tips and Other Gratuities) Amendment Act 2023, which came into force on 1 March 2024, introduced the term ‘other gratuities’ which differentiates tips from gratuities and service charges and, as such, other gratuities now constitute wages. This means that the calculation of paid statutory leave entitlement for employees who receive other gratuities and whose wages vary from week to week has fundamentally changed.
Mr Speaker, although the Order permits an employer to use other gratuities to supplement the minimum hourly wage rate, it was never intended for other gratuities to be included in the definition of “a week’s wages” pursuant to the Principal Act. When the Order came into force, it was intended that all statutory leave entitlements be remunerated at the minimum hourly wage rate.
Mr Speaker, it quickly became evident that the Employment (Protection of Employee Tips and Other Gratuities) Amendment Act 2023 had the unintended consequence of defining other gratuities as wages resulting in the paid statutory leave entitlement for employees who receive other gratuities and whose wages vary from week to week being calculated by taking the average wages earned over the previous twelve weeks worked.
For clarity Mr Speaker, the Principal Act defines a week’s wages as follows:
Section 3 Interpretation
“a week’s wages” in relation to an employee whose wages vary from week to week, shall be calculated by taking—
(a) the average wages earned by him over the previous twelve weeks, or
(b) in any case where he has worked for less than twelve weeks, the average wages earned by him over the time that he has worked.
Mr. Speaker, interpreting other gratuities as “wages” impacts the calculation of a week’s wages for employees who receive other gratuities in a way that is extremely unpredictable. It creates uncertainty and has presented an undue financial burden for businesses as it adversely affects an employer’s ability to calculate and budget for employee costs.
Mr Speaker, recognizing the challenge the Employment (Protection of Employee Tips and Other Gratuities) Amendment Act 2023 created, the Ministry sought advice from the Attorney General’s Chambers on the best way forward. A meeting was held with one of our industry partners, the Bermuda Hotel Association, whose members employ a large number of affected employees, and they too provided an independent legal opinion that they obtained highlighting the challenges described.
Mr Speaker, I convened a special meeting of the Labour Advisory Council (“LAC”) to discuss the concerns raised with the intention of reaching a consensus that aligned with the Ministry’s initial legislative intentions; to ensure that all persons are remunerated at at least the minimum hourly wage rate for all paid statutory leave entitlements.
Mr. Speaker, the members of the LAC agreed that the paid statutory leave entitlement for employees who receive other gratuities should be amended particularly where the other gratuities supplement an employee’s minimum wage rate.
Mr. Speaker, although the definition of “a week’s wages” has been narrowed by the Bill to exclude other gratuities, such other gratuities previously received will not factor into the paid leave entitlement beyond the required minimum hourly wage rate still to be met by the employer in accordance with the Order.
Mr. Speaker, it should be noted that the Bill will have retroactive effect to coincide with the 1 March 2024 enforcement date of the Employment (Protection of Employee Tips and Other Gratuities) Amendment Act 2023. However, the Bill provides that any payment of other gratuities which took place between 1 March 2024 and now shall not constitute an overpayment to which an employer is entitled to be reimbursed.
Mr Speaker, it is envisioned that the impact of the Bill will continue to build upon the values that the Ministry of Economy and Labour holds, which are to foster meaningful relationships with our industry partners while maintaining an equitable workforce.
Thank you Mr. Speaker.