Executive Director of the Barbados Employers’ Confederation (BEC) Sheena Mayers-Granville believes the extension of the period before workers can claim severance gives businesses some breathing space.
At the same time, Mayers-Granville told Barbados TODAY that despite the extension some businesses would still find it difficult to come up with severance payments given how badly their operations had been affected over the last three months.
“There are some employers who would have extended an olive branch and paid employees in full for March and April, even while on shutdown and with no income. Unfortunately, some are now experiencing cash flow issues and given how the legislation is written, many of these will not have access to the extended time before severance can be claimed,” said Mayers-Granville.
“We recognize that the tourism industry will be especially hard hit by the pandemic and the return of consumer confidence may be slower than in other industries. However, the extension is open to the business community, for all employers who enacted lay-offs or short time during March and April. Direct tourism businesses, as defined by employers impacted by travel bans, who laid-off persons in May will also be eligible for the extension,” she said.
Recently, Government made changes to the Severance Payment Act, providing a cushion for employers who laid off workers between March 1 and April 30 due to the COVID-19 pandemic.
With the amendment, an employee has to be laid off or kept on short-time for 22 consecutive weeks or for a series of 18 or more weeks within a period of 24 weeks before they can claim severance.
The employee then has four weeks after the relevant date to make a claim, which could take the total time up to 26 weeks.
Previously an employee, who completed 104 weeks of continuous employment, had to be laid off or kept on short time for only 13 consecutive weeks before claiming severance.
With businesses now struggling to keep their heads above water due to the COVID-19 pandemic, Mayers-Granville said the nine additional weeks before a severance claim can be filed should give businesses a little more time to recover.
She acknowledged that the pandemic, which resulted in a virtual standstill of the island’s bread and butter tourism industry, had resulted in some businesses losing out significantly on revenues.
“The business community is currently under severe strain to maintain operations at this time. It is envisioned that this extension will allow businesses some time to recover before incurring a severance liability,” Mayers-Granville.
“The extension of the period before severance basically gives the parties time to recover in an economy that is currently experiencing severe contraction. Some businesses are trading at less than 50 per cent of 2019 and therefore the recovery will not be immediate.
She added: “With the extension of the unemployment benefit to 26 weeks, employees will receive some support during this difficult time. Employers, who also have cash flow issues and who need time to recover after the initial shock of the total shutdown and then sluggish business activity will have some time to reorganize their businesses”.