FINANCE Minister Dr Nigel Clarke is adamant that security companies have a duty to pay their guards at the new minimum wage rates, while making the point that business arrangements come with both profit and risks, in reference to whether the Government will adjust its contracts with security providers to factor in the new minimum rates which took effect in April.
“The companies are obligated by law; they are standing on very shaky ground to use that as an excuse or argument [not to pay new rates]. That defence will not stand up. The reason why the prospect of profit exists is because risk also exists. In other areas of the economy when prices adjust, unless your contract provides for it, you can’t just come and say I want to negotiate the contract sum. You want your Government to be vigilant with the revenue of the country, and not to part away with things that aren’t contractually due. Those companies have an obligation to pay their workers at the new minimum wage level,” Dr Clarke stressed. He pointed to the recent court ruling in the claim brought against Marksman Security Limited by the National Housing Trust, noting that although that case pertained to another matter, this should “bring them [security companies] to their senses.”
The Supreme Court rules in favour of the guards that they are employees, not independent contractors. There is speculation that the ruling could cause an immediate 50 per cent increase in the cost to private security providers that would be passed on to clients.
Concerns that some guards were not being paid at the new rate were raised by Member of Parliament for St Andrew South West Dr Angela Brown Burke, and supported by Opposition Leader Mark Golding during discussions on the first supplementary estimates for the 2022/23 fiscal year at Tuesday’s meeting of the Standing Finance Committee of the House of Representatives.
Brown Burke said, “There is an opinion that there are individuals who are working in the ministries and government agencies who are still not being paid the most applicable minimum wage; I’m referring to a number of security officers who are working in the ministries. Many are thinking that the Government would have a responsibility to ensure that even when individuals are employed by a third party that the current minimum wage is what is being offered.”
Golding, meanwhile, pointed out, “There are people in the industry working who have not received the benefit of that increase because their employer contracted on the basis of a certain cost which existed when the contract was signed, and have not been prepared to absorb the loss because it is not earning anything more from the Government for its services under that contract. There is no provision in the contracts with the Government for an adjustment to take account of that increase, and the risk of that is passed through to the workers, because they’re not going to get that increase. They’re still being paid on the basis of the minimum wage that prevailed before the most recent adjustment.”
He said he agreed that the security companies are so obligated, but there is an imbalance in bargaining power between the guards and the companies, which means employers can deny workers their increases. “There is no clear recourse to the workers that’s easily available to ensure that they get paid at the full rate and the employers [are] saying I can’t pay you at the full rate because I have a contract priced on what I was paying you before,” said Golding.
In February, the Government announced a 28.5 per cent increase in the national minimum wage, moving it from $7,000 to $9,000 per 40-hour work week. Cabinet also approved an increase in the minimum wage of security guards, adjusting wages for their 40-hour work week to $10, 500, up from $9,700.
Golding said since the guards are stationed at State agencies, the Government could be proactive in intervening to regularise the situation.
Dr Clarke said the cost of regularising those arrangements is of less concern than protecting companies against business risk, but that “there may be a greater good to be considered which is the lives of the individuals who are being affected. To the extent that it is brought to my attention through the respective ministries, I would be happy to take a look at that”.
So far the health ministry has indicated that it is negotiating with firms that provide security services across the health sector, with a view to adjusting rates, in order to accommodate the new minimum wage. Speaking at a meeting of the Public Administration and Appropriations Committee last week, permanent secretary Dunstan Bryan said it is not clear yet what impact the Marksman court ruling will have on the negotiations.