Bermuda Industrial Union president Mr. Ottiwell Simmons MP.

Mr. Edward Craven, the hotel's financial director, testified during hotel contract hearings that management increased tipped and non-tipped workers earnings last February by increasing the service charge guests must pay and dividing the extra money among both groups.

He said the hotel did this in place of implementing last year's Hobgood award, which gave workers a five percent pay raise.

But Mr. Simmons said: "They (Elbow Beach Hotel) are really trying to get out of paying employment tax.'' He said the hotel increased workers' earnings without actually increasing their basic wages. Employment tax is not paid on gratuities hotel workers receive, he said.

"They (the hotel) are evading their tax responsibility,'' he said. "What they are doing would be a criminal offence in any other country -- and in Bermuda.'' Mr. Simmons was speaking before the Essential Industries Disputes Settlement Board which is holding hearings on a new BIU-HEB collective agreement.

Under cross examination, Mr. Craven, an HEB witness, said he was not working at Elbow Beach when management implemented the earnings increase.

He said the hotel's former managing director Mr. John Jefferis was the architect of the new system.

Mr. Simmons said the maker of the policy should be presenting the evidence, but HEB lawyer Mr. Stephen Shawe said Mr. Craven had interviewed Elbow Beach management and had all the relevant documents with him.

Mr. Craven told the board the new system was implemented before the Hobgood award was announced last May. And he said employees benefited more by it.

The Hobgood award gave workers a five percent pay raise and all hotels except for the Elbow Beach gave them the wage hike.

The HEB had said it was going to implement the Hobgood award in full but the plan fell apart when the BIU rejected the award -- after previously agreeing to be bound to arbitrator Mr. William Hobgood's findings.

Mr. Craven further testified the amount Elbow Beach Hotel employees get each month varies according to occupancy levels for that month.

And he said they do not get any share of the service charge pool when working overtime or on paid sick leave.

Mr. Simmons asked if the hotel had taken into account those facts when concluding its workers earned more under the new system than they would have under the Hobgood award. Mr. Craven said it had not.

The hearings resume on Tuesday when the HEB will present its last two witnesses.

The hearings will be adjourned next Friday until November 2 because Mr. Shawe and board members have other commitments.