Unemployment payments may be extended

The time employees are expected to wait before they can seek severance payments could be further extended.

This assessment has come from Special Envoy to the Prime Minister Professor Avinash Persaud who disclosed that consideration was also being given to lengthening the unemployment payment period.

He explained that the proposed Barbados Economic and Sustainable Transformation (BEST) programme, which is being designed to get employees in the tourism sector back to work, was still being developed and if it is not ready before most of the severance payments are triggered, the change may be necessary.

He was addressing the Barbados Hotel and Tourism Association’s third quarterly general meeting, held virtually on Wednesday.

“We are not looking to extend the layoff eligibility for severance, which has already been extended from 13 weeks to 22 weeks. We may amend the legislation to extend it by a week or so if there are logistical issues around getting this programme in place at the right time,” Persaud said.

“We are going to extend unemployment benefits, which is currently at 26 weeks, and we are probably going to extend that, but we are still working out how long that is. But that is just to make sure that through the period of getting people engaged, no one is falling through the cracks . . . . So, we are seriously thinking of extending unemployment benefits. We are not really thinking of extending severance by the eligibility period by any significant period of time, but we may end up having to do that by a week or two,” he added in response to questions from BHTA members.

It was in mid-June that lawmakers amended the Severance Payments Act, giving employers a 22-week cushion before employees could apply for severance payments. The employees then have four weeks to make a claim, which could take the total time up to 26 weeks.

This means if an employee was laid off in the last week of March, days after Barbados recorded its first COVID-19 case, then that employee would become eligible to resign and seek severance starting the first week of September, giving them until the end of the month to make the claim.

Last week, Persaud announced that Government would be providing financing for the tourism sector from the international reserves, to help keep thousands of workers employed instead of them seeking severance.

However, with employees becoming eligible for severance this month, officials are hoping that the massive programme, which will have to be approved by Cabinet, would be ready by the end of this week.

“Things are updating, I can’t tell you exactly when it will be definitive, but I expect it to be so at the end of the week,” Persaud said. “It is a fairly settled programme. We are now talking about some details that are not yet finalised but the whole programme is fairly settled. We want you to re engage your employees and we want you to invest.”

He explained that the BEST programme would have two components – financial support from Government in the form of a “loan” for upgrades and refurbishment, and a grant to pay possibly 80 per cent of the salary of workers.

Persaud made it clear that companies that benefit from the preference share type investment measure would need to repay the loan component only after they have started to turn a profit.

He said the BEST programme was designed bearing in mind that the tourism industry did not have any revenues.

“This is an investment not by you but by the Government. So, the Government is going to invest as an equity investment. It is going to put up all the money for the wages and for the other investments that you may be involved in, whether that is refurbishment, renewable energy, changing your value chain, integrating with other tourism [players]. That money will come as Government investment in your firm,” he explained.

“Hopefully, you will repay us at some point when you have profits, and to make sure that you are encouraged to do that you have to repay us before you pay yourself. So, you can’t take out dividends, you can’t sell off assets before you repay the investment.”

Describing it as the “easiest terms for financing” that the sector would come across, Persaud said “people will be incentivised to use Government’s funding even when they have some of their own cash”.

“So, in addition to us putting up the investment, we will provide a grant where you don’t need to repay . . . but we will only provide the grant if you match it with your own money. So, every $100 you put up of your own money we will put up $120 if you brought in foreign currency, or we will put up $100 as grants. If you don’t have the money to put up, you don’t get the matching grant, but you will get the investment where we expect you to repay the investment when you have profits,” the advisor further explained.

Companies must prove that at least 75 per cent of their revenues come from direct tourism or tourism related activities to benefit from the programme.

Labour union representatives and BHTA officials have already given the proposed plan the thumbs up.

(marlonmadden@barbadostoday.bb)