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Law on calculation of leave entitlement to be amended

Leave entitlement: Jason Hayward Minister of Economy and Labour (Photograph by Blaire Simmons)

Employment laws will be amended to clarify that gratuities that are not part of the minimum hourly wage should be excluded from leave entitlement calculations.

The Minister of the Economy and Labour gave a statement in the House of Assembly clarifying that “paid leave entitlement for persons who receive gratuities and service charges as a part of the minimum hourly wage rate is to be set at $16.40”.

He added: “In addition, the ministry wishes to advise that the ministry intends to amend the Employment Act 2000 to clarify in law that other gratuities, which do not constitute part of the minimum hourly wage, will be excluded from the calculation of leave entitlement, which is the current intention of the law.”

In his statement on Friday, the minister said that before March 1 this year, “there was no definition for gratuity or service charge under the Act and both were considered as falling within the term ‘tip’ as defined in the Act and as such, did not constitute wages”.

He added: “For the purposes of calculating the paid leave for employees who received gratuities and service charges pursuant to the Employment (Minimum Hourly Wage) Order 2023 prior to March 1, the interpretation of a week’s wages pursuant to the Act did not apply and these employees should have been remunerated at a minimum rate of $16.40 for all statutory leave entitlements.

“Pursuant to the Employment (Protection of Employee Tips and Other Gratuities) Amendment Act 2023, which took effect on March 1, the term ‘other gratuities’ was introduced and effectively differentiated tips from other gratuities.

“As a result, the calculation of a week’s wages for employees who receive gratuities and services charges has fundamentally changed.

“For instance, the leave entitlement for employees who receive other gratuities and whose wages vary from week to week, should be calculated by taking the average wages earned over the previous 12 weeks worked.”

Mr Hayward said that “recognising the challenges that industries which accept other gratuities on behalf of their employees would and are currently facing”, he convened a special meeting of the Labour Advisory Council to discuss the concerns and “reach a consensus on the most reasonable and just way forward”.

“The LAC had a robust discussion on the paid leave entitlement for persons who receive other gratuities as a part of their minimum hourly wage entitlement.

“The consensus reached by the LAC is as follows, that the paid leave entitlement for persons who receive other gratuities as part of their wages should be set at the minimum hourly wage rate, which is currently $16.40.”

• To read the minister’s full statement, see Related Media.

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Published May 20, 2024 at 7:56 am (Updated May 18, 2024 at 8:37 pm)

Law on calculation of leave entitlement to be amended

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