Measures, including putting work permits on hold, could be brought to bear against employers who manipulate worker contracts to dodge basic employee benefits.

Walton Brown, the Minister of Home Affairs, said yesterday that he aimed to safeguard workers’ rights in tandem with the Labour Advisory Council, with “harsh sanctions” after fielding scores of complaints from employees in “dire circumstances” who had been coerced into “take it or leave it” work scenarios.

Calling it “very prevalent” in the construction sector, Mr Brown said the problem spanned multiple industries, with contracts that skirted benefits such as health and social insurance.

Typically labelled contractor or consultant contracts, which would normally be reserved for employees providing expert professional advice, Mr Brown said the “problematic” arrangements would leave workers covering their own benefits, without recourse to settling a wage that would compensate for the deductions.

Mr Brown said amendments would be brought to employment, labour and union legislation, potentially in the next session of Parliament.

These would also allow for the investigation of “unfair treatment of persons who are employed on a temporary, part-time or casual basis” who were not classed as employees under the present legislation.

Mr Brown added: “The imposition of harsh sanctions and the suspension of work permits for employers who wilfully defy the legislation are a few of the penalties being thoroughly and keenly considered by the Government.”

Keith Jensen, president and chairman of the Bermuda Employers Council, said that a “hustle economy” caused by the economic downturn had tempted some employers into cutting corners.

Mr Jensen told The Royal Gazette last night: “The BEC does not condone abuse of the law, but careful consideration has to be given to changes because of the potential impact on second jobs, legitimate outsourcing, and service relationships that are casual or part-time.”

Penalties already existed for health insurance, social insurance and payroll tax infractions, he noted. Mr Jensen said that bosses sidestepping the law with employment contracts were putting themselves at “great risk”, such as liability for hospital expenses where staff were not covered as required.

Health insurance is enforced by the Bermuda Health Council, he said, while skipping payroll carried “heavy penalties”, including for workers who failed to register as self-employed.

Mr Jensen added: “It is a complex area. In construction, bona fide competitors welcome a level playing field where all pay their payroll taxes and treat their employees as they should regarding benefits. Good contractors compete on productivity, quality of their work and fair prices.

“The recent recession hitting the construction industry hard, however, in my opinion pushed some employers and employees into the ‘hustle economy’ where short cuts were taken to find ways to avoid taxes and other expenses, cut red tape and generally avoid their responsibilities as employers and employees.”

He said each employment category had to be evaluated: homeowners casually employing painters or roof cleaners should not be required to take on labourers as employees, while workers with second or part-time jobs might not be regarded as employees under various areas of Bermuda’s legislation.

“Taxi drivers often work by renting the car for a period of time,” Mr Jensen added. “Some industries are heavily commission driven.”

He said the council looked forward to the tripartite consultation process to “limit abuse without stifling innovation and creating another layer of bureaucracy”.

• To read the minister’s remarks in full, click on the PDF under “Related Media”.