Labour Bill Tries ‘Catches Up’ with the Times, but Doesn’t Go Far Enough
The Intention
In April 2020, when Belize fully entered into a State of Emergency (SOE) due to the Coronavirus Disease 2019 (COVID 19), “Belize LMS Producers Ltd.” [firm’s real name withheld], a food producer with decades under its belt, lost more than 50 percent of its customer base. As is likely true for several non-tourism businesses, the impact on the tourism sector—arguably the hardest hit industry—reverberated throughout the food sector as the precipitous drop in demand from hotels and restaurants meant companies like “Belize LMS Producers” would likewise experience the aftershocks.
Speaking to the proprietor, who we will assign the name Mr. Andrew, it was learnt that the company has (note the present tense “has”) roughly 15 full-time employees, many of whom have been with the company for several years. As Mr. Andrew explains when the understandable lockdown occurred and the revenue base was cut by more than half, it became necessary to hold a tough discussion with the staff on the way forward in terms of their salaries and future with the business, as the company quickly lost the ability to meet the pre-COVID-19 payroll levels. It would indeed be “tough”, because the money available only allowed for two general categories of decisions: (i) reduce salaries and hours, or (ii) cut staff. Of course, it was possible to settle on a blend of both.
Appreciatively, Mr. Andrew explained all 15 employees expressed to him their full recognition of the economic crisis’ impact; after all, they’ve been on the frontline for years. They know the business pretty well. “When sales orders dropped, the employees were there to see it first hand,” Mr. Andrew shared. “They knew that the hit we took was real”.
Preemptively, the proprietor contacted the Labour Department to find out what legal options were available to him. Like the experience of most employers who went this route, they found a Labour Department that would cautiously advise that he could execute the first option (reduced salaries and/or hours) if he had secured the agreement of the staff, with the caveat that the present Labour Act doesn’t expressly provide for it.
With that advice in hand and with the staff’s unanimous consent, by May 1st a workable solution was implemented: No employee was “sent home” (hence the ‘present tense above’), but everyone took a pay cut, along with reduced hours. The means through which that was achieved, however, was via virtually “firing” and “rehiring” the team under new terms. After all, this was the limits allowable under the existing laws.
As alluded to above, one salient problem with the course of action taken by Belize LMS Producers and the dozens of other firms faced with similar conditions: Even with the “winking” of the Labour Department, technically speaking, nothing described above was explicitly covered by Belize’s Labour Laws, which only authorized Redundancy under a COVID-19-like lockdown. Why would it be? When the Labour Act was drafted, no one could have foreseen a COVID-19.
Additionally, Belize LMS Producers was relatively fortunate in that they continued with some level of cash flow. Other employers have reported complete drying up of revenue streams, leaving them unable to pay workers, who they would have preferred to keep on staff. The only recourse was, at the time, the Government’s unemployment relief program. But, as the name of that program implies, the beneficiary had to be “unemployed”. Consequently, several Employers in the zero-revenue situation had deemed it more beneficial to retrench workers so as to enable them to access the relief program. Again, the existing laws did not allow for temporary layoffs, commonly known as furloughs.
The Role of the Amendment
Now! Enter the Labour (Amendment) Bill, 2020.
This amendment to the Labour Act (Chapter 297 of the Laws of Belize), among other things, codifies the practice that Belize LMS Producers and other companies have already been using since at least April this year. Specifically, the amendment to section 116 of the Act reads: “(3) Notwithstanding sub-section (2), an employer may, with the agreement of the employee reduce the gross weekly wages of workers and the maximum weekly hours as a result of—(a) the declaration of a State of Public Emergency under section 18 of the Constitution; [or] (b) measures taken under any other law to protect public health and public safety.”
And there you have it. That which Mr. Andrew and other employers like him had been doing with the sufferance of the Labour authorities during this pandemic, would now be made into law—once the entire Legislative process (including the Governor General’s assent) is concluded.
The amendment also introduces furlough into Belizean legal landscape, which as described above was painfully absent at the start of the Lockdown. The Bill states:
“131A.–(1) An employer may, with the agreement of an employee, place that employee on leave without pay if the economic conditions of the employer have been affected as a result of– (a) the declaration of a State of Public Emergency under section 18 of the Belize Constitution; or (b) measures taken under any other law to protect public health and public safety. (2) The period of time during which an employer may place an employee on leave without pay under sub-section (1) shall be for the duration of the circumstances under sub-section (1)(a) or (b), as the case may be. (3) the period of service and accrual of benefits of a person placed on leave in accordance sub-section (1) shall not be affected.”
Consequently, returning to the case of the zero-revenue companies that had to settle for firing workers so they could have benefited from the “Unemployment Relief” program, this change to the law would allow those employers—with the agreement of the employees—to be temporarily laid off in the event of SOE or other “taken under any other law to protect public health and public safety” (henceforth “Restrictions”).
The section 131A (3) adjustment to the Act also provides protection of affected employees’ accrued benefits, which includes vacation, severance and other benefits that would be due to the worker.
The Limitations of the Bill
While the “good” intentions governing the Bill are a bit conspicuous, speaking in the Upper House recently, the Business-Sector Senator Mark Lizarraga explained that there is room for the amendment to have gone further. For instance, he raised the point that impacted businesses may not see a return of revenues and cash flow immediately after the “Restrictions” are lifted, yet the Bill limits the use of furloughs to the duration of those Restrictions, and conditions salary changes to impacts from the Restrictions as opposed to the more general impacts of COVID-19 itself. From the Business Perspective, that is a valid point.
Actually, the Senator’s point would find support if one looks at similar themed directives given in countries like the United Kingdom, where the language used is much broader. In the UK, for example, furlough is invocable as follows:
“An employee is a furloughed employee if (a) the employee has been instructed by the employer to cease all work in relation to their employment, (b) the period for which the employee has ceased (or will have ceased) all work for the employer is 21 calendar days or more, and (c) the instruction is given by reason of circumstances arising as a result of Coronavirus or Coronavirus disease”.
One would notice that in their case, there are a specific number of calendar days that must be satisfied for something to qualify as “furloughed”. Additionally, it is worth noting that the ability to call upon this provision is NOT limited to the impacts of any government-imposed Restriction, but rather it can be triggered due to impacts of COVID-19.
This seemingly minor change could potentially have significant effects on the tourism sector, for instance, as many tour operators would point to significant losses preceding even the first SOE in April. We could all recall that it was the Center for Disease Control (CDC) that issued its “No-Sail Order” to cruise lines in mid-March. Technically speaking, someone could logically ask whether or not the losses in this sector would satisfy the parameters of the Bill. The Government’s reply may very well be “yes”; however, is there not prudence in moving the law as far away from ambiguities as possible?
Another dubious inclusion in the Bill is the reference to the “economic conditions of the employer” having “been affected as a result of” the Restrictions.
Finally, and to the representatives’ points, it cannot easily be overlooked, especially as it relates to the matter of furlough, that the UK counterpart makes specific reference to the role of the trade unions. Specifically, the UK provision on this matter reads as follows: “An employee has been instructed by the employer to cease all work in relation to their employment only if: (a) the employer and employee have agreed that the employee will cease all work in relation to their employment (such agreement may be made by means of a collective agreement between the employer and a trade union).”
Those stipulations would go on to delineate the parameters of the Employer-Employee agreements to be forged: “The agreement (including a collective agreement) (i) specifies the main terms and conditions upon which the employee will cease all work in relation to their employment, (ii) is incorporated (expressly or impliedly) in the employee’s contract, and (iii) is made in writing or confirmed in writing by the employer (such agreement or confirmation may be in an electronic form such as an email), and (c) the agreement (including a collective agreement) or confirmation is retained by the employer until at least 30 June 2025.”
Now, let’s make one thing clear. The purpose of referring to the examples above is not to suggest a carbon copying of the UK’s terms. The purpose is simply to illustrate the spirit of what is meant behind the statement that the Bill could have “gone further” to minimize ambiguities on both the Employers’ and the Employees’ side of things.
The Call for Consultation
As was made clear from the BCCI’s press release on this matter, there is general support for the overarching direction of the Bill; after all, it is something that dozens of businesses like Belize LMS Producers have been desperately looking for. However, it is difficult to allow that desperation to cause the relevant stakeholders to ignore potential challenges with the Bill’s current form.
As a result, the BCCI believes that the call for consultations, specifically via the Labour Advisory Board (LAB), is a necessary one. It is important that the areas discussed in this BP column and more can be fully ventilated via the tripartite mechanism that has been established under the laws of Belize.