April 23, 2021

Cayman Islands Government approves order for implementation of Minimum Wage

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MinimumWageblogFrom The Cayman Islands Ministry of Education, Employment and Gender Affairs

Grand Cayman, Cayman Islands – The Government has approved the Labour (National Minimum Basic Wage) Order, 2016 which details how the minimum wage will be implemented starting 1 March 2016 when the Order comes into effect. Although significant legislative reform is currently underway as it relates to the Labour Law, the Government took the decision to implement a national minimum wage by way of an Order from Cabinet in accordance with Section 20 of the current Labour Law (2011 Revision). In order to give the community 9 months’ notice prior to its implementation, the 1 March 2016 implementation date was first announced by the Premier, Honourable Alden McLaughlin, Jr, in the Legislative Assembly back in May 2015. As of 1 March, employers will be required to operate under the approved guidelines in the Order.

The Order speaks specifically to how the minimum wage regime works; how it should be applied for employees under a registered gratuities scheme; how it affects live-in domestic employees; and how employers should compensate employees who are working on a commission basis.

The Minimum Wage Order, which was published as an extraordinary Gazette on Friday, 12 February, includes the following pertinent provisions:

• The minimum wage payable to all employees (except those service employees of an employer who has a gratuities scheme in place that has been approved in writing by the Director of Labour and Pensions) is CI$6 per hour gross;
• Any employer who has a gratuities scheme in place that has been approved in writing by the Director of Labour and Pensions must pay service employees a minimum of CI$4.50 per hour gross directly from the employer;
• The minimum wage payable is applicable to every hour worked within a standard work week or standard work day, depending on the defined pay period;
• Any employer with a live-in household employee is allowed no more than 25 per cent or CI$1.50 per hour as an in kind credit for providing accommodations and utilities for the employee. This means the employee shall be paid a minimum of CI$4.50 per hour gross in monetary compensation;
• Any employer with employees working on a commission basis may use no more than 25 percent or CI$1.50 per hour to be allocated from the commission earned by the employee to be put towards making the National Minimum Basic Wage of that employee. That is, the employees must be paid a minimum of CI$4.50 per hour gross directly from the employer. However, including commissions in the computation of the wages of an employee must not prevent that employee from receiving all commissions earned.
• No employee, including service employees, live in household domestics, and commission based employees, must receive less than their respective National Minimum Basic Wage when the employer calculates their sick, vacation, maternity or any other applicable leave. For the avoidance of doubt, the employer of a live in domestic employee may continue to calculate any allocated in kind benefits for accommodations and utilities during leave periods.

“This formal adoption by Cabinet culminates the work of the Ministry and Government which began in February 2014. First of all, I must express my sincerest gratitude on behalf of the Ministry and the Government to the members of the Minimum Wage Advisory Committee (MWAC) for bringing our country to this historic occasion. Their contribution was necessary and indeed invaluable to this process,” said the Honourable Tara Rivers, Minister of Education, Employment and Gender Affairs. “As a country and Government, we have a responsibility to the members of our local workforce to help to ensure that their minimum needs can be met in light of national, economic and social conditions. Based on the research compiled and the economic analysis conducted by the MWAC, the guidance provided by the experienced labour economist acting as a technical advisor, and considering the input from all persons who participated during the process, the Government has agreed that $6 per hour is an appropriate rate to use at this time to achieve this.”

The Order was drafted to incorporate the spirit of the recommendations contained in the MWAC report which was presented and subsequently accepted by the Government in 2015. However, because the current definition of wages in the Labour Law (2011 Revision) does not include gratuities, the Minimum Wage Advisory Committee’s recommendation to allow no more than CI$1.50 of gratuities to be used toward making the CI$6.00 minimum wage will be appropriately addressed in the revised legislation. Based on the numerous comments received on the draft Labour Relations Bill, 2015 which was put out for public consultation last year, the Labour Relations Bill is currently being amended, and it is anticipated that a revised Labour Relations Bill will be available sometime in March.

Minister Rivers said a balance had to be struck when deciding on a national minimum wage. In fact the composition of the MWAC itself had representation from independent persons, employers and employees, and its membership was gender balanced and represented a wide range of ages, including a youth perspective.

“Determining the appropriate minimum wage was definitely a balancing act. The Government had to consider the impact on both employers and employees. Through the work of the MWAC, the Cayman Islands – Economic Vulnerability Threshold (CI-EVT) was established. This threshold represents the minimum amount that a worker needs to earn in order not to slip below the poverty line, and this was determined to be CI$5.22 per hour per Income Earner,” explained Rivers. “Keeping in mind that the goal of having a national minimum wage is to address exploitation and provide real relief to the lowest paid workers, we obviously did not want to set the wage below the CI-EVT figure; in fact, we did not want to introduce a minimum wage whereby people may end up living on or fall below the poverty line, in the event of any unforeseen changing economic conditions. However, at the same time, we did not want to put employers in some industries in a position where they could not afford to hire workers because the minimum wage is too high. Therefore, it was determined that $6 per hour is a reasonable minimum wage given those considerations. The truth is that for many of the low wage employees in the Cayman Islands, the new minimum wage will actually mean an increase in salary, and this means they will be better equipped financially to provide for themselves and their families.” Rivers went on to stress that, “As a country, we cannot continue to facilitate the importation or perpetuation of poverty in our society, and this is one way in which the Government has chosen to address this issue.”

Minister Rivers stated that the National Minimum Basic Wage represents the lowest acceptable wage that an employee should earn in exchange for his or her labour in the Cayman Islands, but not necessarily the ideal or appropriate wage for some jobs or industries. “The minimum wage is the absolute wage floor in which employers and employees can agree to; however, the parties are free to and should negotiate for wages and compensation that are reasonable given the economic conditions, the nature of the job, the industry standards, etc.”

In order to ensure that having a minimum wage is meeting the needs of the country and the stated policy objectives, it is expected that the National Minimum Basic Wage will be studied and reviewed on a regular and intermittent basis going forward. It is anticipated that the monitoring and evaluation procedure for the minimum wage will also be addressed in the revised Labour Relations Bill.

The Ministry and Department of Labour and Pensions have produced a list of Frequently Asked Questions (FAQ) relating to the minimum wage (see attached) which will be available on the Ministry’s website (www.education.gov.ky) and the Department of Labour and Pensions website (www.npo.gov.ky) along with The Labour (National Minimum Basic Wage) Order, 2016. Members of the public can also call the Department of Labour and Pensions for more information at 945-8960, and the Department has a Confidential Tip Line (945-3073) to report employers who are not paying employees the National Minimum Basic Wage or committing other breaches of the Labour Law.

Related:

FAQ’s for The National Minimum Basic Wage
February 2016

1. How much is the National Minimum Basic Wage?
The National Minimum Basic Wage is CI$6.00 (gross) per hourly rate for most employees, and the gross hourly minimum wage rate for service employees of an employer that has a registered gratuities scheme is CI$4.50. There are also special calculations for live-in household domestics and employees who work on a commission basis.

2. When does the National Minimum Basic Wage come into effect?
March 1st 2016

3. Is an employer required to pay the National Minimum Basic Wage?
Yes. An employer cannot pay any less than the appropriate National Minimum Basic Wage, but that does not prevent an employer from paying more than the National Minimum Basic Wage. Term and conditions, including salary/wages, of employment are typically negotiated and agreed between the employer and employee and should be contained in a statement of working conditions.

4. Does the National Minimum Basic Wage apply to people who work in the hospitality industry?
Yes. The National Minimum Basic Wage is CI$4.50 per hour for service employees who work for an employer that has in place a scheme for the distribution of gratuities that is approved in writing by the Director of the Department of Labour and Pensions. This CI$4.50 per hour gross is to be paid directly by the employer, in addition to all gratuities earned by such employees during the relevant pay period.

Once the Labour Relations Bill is finalised, approved in the Legislative Assembly and enacted, it is expected that the Law will allow for no more than 25% or CI$1.50 per hour to be allocated from the gratuities earned by the employee to be put towards making the National Minimum Basic Wage, and the stated National Minimum Basic Wage for these employees will be amended to be CI$6.00 per hour gross, to bring it in line with all other employees.
5. Does the National Minimum Basic Wage apply to domestic employees?
Yes, the CI$6.00 per hour minimum wage rate applies to household domestics. However, household employers with ‘live in’ household domestic employees may count a maximum of 25% or no more than CI$1.50 towards achieving the CI$6.00 Minimum Wage as a credit for accommodations and utilities. In this situation, the least that can be paid in monetary compensation to the employee is CI$4.50 per hour. This provision is ONLY provided for household employers with ‘live in’ employees.

6. Is there an allowance for employers who pay for their employees’ accommodations?
There is only an allowance in the case of household employers with ‘live in’ domestic employees; not in any other employment scenario.

7. What about household employers who provide food and other items in addition to accommodations for their live-in domestic employees?
The 25% or CI$1.50 in kind credit applies to the provision of accommodations and utilities only. The household employer and live-in domestic employee are free to make agreements between themselves as it relates to the provision of food, etc.

8. Does the National Minimum Basic Wage apply to persons who work on commissions?
Yes. However, for the computation of an employee’s wages that works on a commission basis, the employer may use no more than 25% or CI$1.50 per hour to be allocated from the commission earned by the employee to be put towards making the National Minimum Basic Wage of that employee. The inclusion of commissions in the computation of meeting the National Minimum Basic Wage must not however prevent that employee from receiving all commissions earned.

9. Is there any employee or any employer that the Order does not apply to?

The National Minimum Wage Order does not apply to self-employed persons. The National Minimum Basic Wage Order also does not apply to a juvenile, which is a person under the age of seventeen years, who is required by law to attend school.

Because the current Labour Law does not apply to charitable organisations and churches, these employers are currently exempt from the National Minimum Basic Wage Order. However, once the Labour Relations Bill is finalised, approved in the Legislative Assembly and enacted, it is expected that churches and charitable organisations would be covered by the law and then would be required to pay their employees at least the National Minimum Basic Wage.

NOTE: This question and answer has been updated By GIS on Tue Feb 16 at 12.21PM

10. How will the government know if employers are abiding by the minimum wage order?
The enforcement will be managed by the Department of Labour and Pensions and their team of inspectors.

11. What is the penalty for employers that do not pay the minimum wage?
Under Section 81 of the Labour Law (2011 version), the Court is able to give a summary conviction for a first offence of up to $2,500 and to imprisonment for 6 months and in the case of a second or subsequent offence a fine of $5,000 and imprisonment for 12 months.

12. How do employees complain if they are not paid the minimum wage?
The enforcement will be managed by the Department of Labour and Pensions and their team of inspectors and employees can contact the Department at 945-8960. Employees will also be able to utilise a confidential labour tip line 945-3073 to report any breaches made by their employer.

13. Is the National Minimum Basic Wage the salary the employee takes home or is it before health and pension deductions?
The effective National Minimum Basic Wage is the gross rate; therefore, this is the rate before applicable pension and health insurance deductions.

14. How does this affect any overtime worked (over the defined 45 hour work week or the defined 9 hour standard work day)?
As defined within the Labour Law (2011 Revision), employees should be paid one and a half times their normal hourly wage for any time worked beyond the defined standard work week of 45 hours or the standard work day of 9 hours. However, there may be an exception to this if an employer and employee have an overtime waiver that has been granted by a Labour Tribunal.

15. How is sick leave, vacation leave, maternity leave or other types of leave calculated in relation to the National Minimum Basic Wage?
No employee, including service employees, live in household domestics, and commission based employees, shall receive less than their respective National Minimum Basic Wage when the employer calculates their leave.

For the avoidance of doubt, the employer of a live in domestic helper may continue to calculate any allocated in kind benefits for accommodations and utilities during periods of sick, vacation, maternity or any other applicable leave. That means that if the live-in domestic employee is making the National Minimum Basic Wage of CI$6.00 per hour gross, and the household employer is counting CI$1.50 per hour earned towards the provision of accommodation and utilities to the employee, then sick leave, vacation leave, maternity leave or other types of leave must be calculated and paid at a minimum of CI$4.50 per hour.

16. Does the National Minimum Basic Wage apply to students working part time?
The National Minimum Basic Wage does not apply to the payment of wages for any person under the age of 17 who is required by law to attend school.

17. Does the National Minimum Basic Wage apply to employees over 60 years?
Yes.

18. Does the National Minimum Basic Wage apply to part time employees?
Yes. The National Minimum Basic Wage Minimum Wage would be applicable for all regular hours that an employee works.

19. Why is a minimum wage necessary in the Cayman Islands?
Governments are commonly understood to have a social and moral responsibility to take action where necessary to look out for the collective well-being of all people and to prevent injustice and exploitation. The National Minimum Basic Wage is one such tool that can make a genuine difference to improve the lives of the lowest paid workers, and having a minimum wage rate will assist low wage workers in staying above the economic vulnerability threshold in the Cayman Islands.

20. How was the $6.00 amount determined?
In setting the Minimum Wage the balance between the needs of the individual and his/her family (the employee) and the needs of the economy and the affordability to pay (the employer) were all taken into consideration. Setting the minimum wage required a balancing act to ensure that there is economic stability, but at the same time allowing people to meet their minimum basic needs.

The Minimum Wage Advisory Committee (MWAC) wanted to ensure that all people in the Cayman Islands have a decent standard of living, and in order to establish a minimum wage, a consensus on a poverty threshold wage needed to be established. Based on the available statistical data, the MWAC established the Cayman Islands Economic Vulnerability Threshold (CI-EVT), which in essence is the lowest income boundary that an earner would require in order to prevent their household from potentially falling into poverty. The CI-EVT rate was determined by the MWAC in 2015 to be CI$5.22 per hour, therefore in order to achieve a clear policy objective of addressing exploitation and providing real relief to the lowest paid workers, the minimum wage rate had to be above the CI-EVT rate of CI$5.22 per hour.

21. Will the National Minimum Basic Wage ever increase or decrease?
The establishment of a National Minimum Basic Wage is a starting point based on current economic conditions. In order to ensure that it is meeting the needs of the country and the policy objectives of the minimum wage, the National Minimum Basic Wage will need be studied and reviewed on a regular basis going forward, as recommended in the MWAC 2015 Report. The situations of both the employers and employees need to be considered in all subsequent reviews. It is anticipated that the finalized, approved and enacted Labour Relations Bill will provide guidance on the future review process of the National Minimum Basic Wage.

22. I am being paid monthly. How is $6 an hour calculated to a monthly salary?
Take the amount the employee is paid- before the legally required deductions of health insurance and pension are calculated- and divide that figure by the number of hours worked per month to get an hourly rate. In order to be compliant with the law, the hourly rate should be no less than CI$6.00 per hour or CI$4.50 per hour for qualifying service employees, live in domestic employees or employees working on a commission basis.
A Minimum Wage Calculator will be available on the Department of Labour and Pensions’ website in the very near future, but below is also a simple example of how to calculate if an employee is receiving at least the minimum wage.

Example:

$1,000.00 Gross Salary per month
– $150.00 Health Insurance
– $ 50.00 Pensions contribution

$800.00 Net Salary per month

Week 1- Worked 40 hours
Week 2- Worked 43 hours
Week 3- Worked 40 hours
Week 4- Worked 42 hours
Total hours worked in 1 month = 165

$1,000 Monthly Salary / 165 hours worked per month= $6.06 per hour

23. What is the difference between a Minimum Wage and a Living Wage?
The International Labour Organization (ILO) defines a minimum wage to mean “the minimum sum payable to a worker for work performed or services rendered, within a given period, whether calculated on the basis of time or output, which may not be reduced either by individual or collective agreement, which is guaranteed by law and which may be fixed in such a way as to cover the minimum needs of the worker and his or her family, in the light of national economic and social conditions.” The important aspects which define a minimum wage are 1) it is guaranteed by law and 2) it cannot be changed by individual or collective agreement.

A Living Wage is based on the basic cost of living in a country or area in a country, but it is not enforceable by law nor is there any universally accepted definition of a Living Wage or agreement on how to calculate it.

24. Where can I find more information about the Minimum Wage Order?
The Ministry of Education, Employment and Gender Affairs website www.education.com.ky has links to the Minimum Wage Advisory Committee’s 2015 report and Labour Law documents (including the Labour (National Minimum Basic Wage) Order, 2016), which can be downloaded and printed or viewed online.

ENS

IMAGE: obdc.com

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