Apart from its political stability, strategic location and significant natural resources (particularly natural gas), Trinidad & Tobago is attractive to foreign investors because it has a skilled and productive labour force. The population is well-educated with high literacy levels. As the most industrialised Caribbean nation, Trinidad & Tobago has a human resource base with experience in a wide variety of activities including all aspects of the oil, gas and petrochemical industries.
Jonathan Walker and Gregory Pantin, Partners in Hamel-Smith’s Dispute & Risk Management Practice Group, provide an overview of the basic rules regarding hiring employees, and establishing terms, conditions and benefits of employment.
Recruiting Employees Locally
Personnel may be hired through private employment agencies which charge for their services, or by placing advertisements in the newspaper. As well, there are several labour contractor companies which handle employment of an entire work force for a flat fee.
Employees may also be recruited through the Ministry of Labour which operates several employment exchanges throughout Trinidad & one in Tobago. Potential employees register with the Exchange which maintains a data bank of persons skilled in all types of trade and who have technical and technician qualifications.
Entry is on the basis of a “certificate” stamped in the passport allowing entry for a specified period. A person who wishes to remain for a longer period as a tourist or visitor is required to submit to an examination and an Immigration Officer may extend, limit, or vary the time or conditions of the entry stated on the certificate. If a person wishes to stay in Trinidad for a period exceeding 30 days to engage in a legitimate profession, then he must obtain a work permit which may be sought by the prospective employer and which is issued for a fixed period. Generally, work permits will not be granted to non-residents unless there are no locals who are capable of filling the specified post. Work permits are issued for a specific time frame during which a local resident will be expected to be trained to assume the post held by a foreign employee.
Employment relationships are governed by contracts of employment. Ideally these contracts should be in writing, however they are often partly oral and partly in writing. Frequently the contract is embodied in an employment letter which sets out the basic conditions of employment. It usually contains a job description or indication of the required tasks along with a general provision that the employee is to do such other tasks as may be required.
Careful consideration should be given to the terms of the contract of employment as it provides the opportunity to clarify many important matters such as the period of notice which will be required on termination, as well as the conditions which the employer considers necessary for the protection of its intellectual property rights and trade secrets. Where employees are represented by a trade union, the contract of employment would often incorporate the terms of any collective agreement entered into between the employer and the union.
Where appropriate, the contract may include restrictive covenants prohibiting an ex-employee from setting up a business in competition, or working for a competitor within a defined area for a specified period of time. Though such clauses are prima facie void as contrary to public policy, they may be enforceable if they are reasonable as between the parties as well as reasonable with reference to the public interest.
A restraint purporting to operate after termination of the employment will not be reasonable unless it protects certain proprietary interests of the employer which are recognised by the law. Even where these recognised interests are concerned, the restriction imposed upon the employee must not be greater than is reasonably necessary for the protection of that interest otherwise they will be void.
The basic principle of contract law that a contract cannot be varied without the consent of the other party applies to contracts of employment. Care should therefore be exercised in drawing up all contracts of employment. Also proper procedures should be followed whenever it becomes necessary to re-negotiate any aspect of the employment relationship.
Wages and salaries vary considerably between industries. However, the Minimum Wages Act empowers the Minister responsible for Labour Affairs to make Minimum Wage Orders in relation to specific trades. The current minimum hourly wage (exclusive of gratuities, service charges and commissions) is $9.00 or approximately US$1.43. Whilst the Government recently indicated an intention to further increase the minimum wage to $10.00 or approximately US$1.61, this has not as yet materialized.
The normal daily and/or weekly hours of work are 8 and 40 hours respectively, and workers are entitled to a meal break and rest period during the day. Workers who are required to work beyond the normal hours are entitled to overtime which is calculated in accordance with a statutory formula contained in the Minimum Wages Order 2005. Salaried employees who are hired as administrative personnel, executives and professionals are exempt from the minimum wage and overtime pay requirements. Remuneration may include housing, food or other allowances.
The law provides for certification and formal recognition of majority Unions for certified “bargaining units” at the work place, and the settlement of trade disputes by compulsory arbitration before the Industrial Court. About 22% of the work force is represented by trade unions that have negotiated collective bargaining agreements which set the terms and conditions of their employment.
If not unionised, disputes are usually settled amicably or by legal action, in cases usually connected with termination. If an employee is unionised or joins a union subsequent to his termination by the Company, settlement is ultimately by compulsory arbitration before the Industrial Court.
Most employers are required to pay permanent employees for time off on the country’s fourteen (14) public holidays. Employees who are required to work on a public holiday are entitled to be paid at overtime rates. Vacation will depend on length of service and seniority, and may vary from two to five weeks per year.
Employers must provide compensation for employees injured in the course of their employment. The employer is not liable if the injury is attributable to serious and willful misconduct on the part of the employee, unless the injury results in death or serious and permanent disability of the employee. The compensation payable in the case of death, permanent total disablement or permanent partial disablement is determined by law. The sums payable are relatively modest. The payment of workmen’s compensation to an employee does not prevent the employee from pursuing any other cause of action that he might have against the employer (e.g. for negligence). However, the Court, in assessing the damages to be paid to the employee, will take into account the amount paid to him as compensation.
The Occupational Safety and Health Act, which came into effect in 2006, seeks to regulate the health and safety of workers and the work environment. The purview of the Act extends beyond traditional industrial establishments, and includes shops, offices and other places of work.
The Act imposes a duty on employers to ensure the safety and health of their employees as well as persons not in their employment but who nevertheless may be affected by their business undertaking. Aside from imposing this general duty, the Act lays down a series of regulations in 5 main areas, namely:
(a) Safety - which includes regulations relating to the provision of protective clothing and devices, removal of dust and fumes and safeguarding of machinery;
(b) Fire - which includes regulations relating to the provision of a means of escape in case of fire;
(c) Health - which includes provisions relating to cleanliness, lighting, overcrowding, noise and vibration and the medical examination of employees;
(d) Welfare - which includes provisions relating to drinking water, washing facilities, canteens, restrooms and first aid appliances;
(e) Employment of Young Persons.
Compliance with these regulations is critical as, aside from carrying certain criminal penalties, the Act bestows upon workers the right to refuse to work where there is a safety or health danger.
Along with prescribing a general code for heath and safety the Act also imposes an obligation on every employer to make a suitable and sufficient annual assessment of:
In addition, the Act imposes certain reporting obligations on employers to give notice of accidents and occupational diseases.
In the case of persons employed under a direct contract of employment with a company, income tax is deducted on a Pay As You Earn (PAYE) basis, and remitted directly to the Board of Inland Revenue by the employer. Tax is calculated on the basis of chargeable income, determined after various tax credits and deductible factors are considered. Independent contractors are responsible for the determination and submission of their own tax which must be submitted on a quarterly basis to avoid accumulation of interest.
Tax Returns must be submitted annually by April 30 following the tax year, and all employers are required to remit the PAYE payments on a monthly basis.
A National Insurance Scheme is operated by the National Insurance Board (NIB) to which contributions are made by employer (2/3) and employee (1/3). Benefits include sickness, employment injury, maternity leave, retirement, pensions and funeral grants. No unemployment benefits are payable under this scheme. In addition, the NIB collects a Health Insurance Surcharge which is applied towards deferring the expenses of the health services provided by the State. Health Surcharge is payable wholly by the employee and the rate depends on wage levels, subject to a maximum of TT$429.00 per year. Salary deductions are made by employers for employees’ National Insurance and Health Surcharge contributions, in addition to Income Tax payments.
Effective January 2005 several amendments were made to the National Insurance Scheme one of the more far-reaching being significant increases to the contribution and benefit payments. Other major amendments include the widening of the category of employees who are now required to be registered by the stipulation that anyone who earns $80.00 or more per week must be registered; new and stricter time frames for registration of employees and penalties for the non- or late submission of contributions or incorrect information relating to employees.
Furthermore, employers may now harmonize existing pension plans with the National Insurance Scheme without the need for the consent of its employees as was necessary prior to the amendments.
There are two parallel regimes relating to the dismissal of employees. The Industrial Court operates the regime which applies only to “workers” as defined in the Industrial Relations Act. Persons other than “workers”, as defined, have the rights specified in their contracts of employment or implied into same in the absence of express provision and may seek redress in the High Court.
For “non-workers”, notice must be given according to contract or, if there is no express term as to the length of notice in the contract, such notice as is reasonable. As noted above, it is advisable to expressly provide for the period of notice in contracts of employment.
In relation to “workers”, the Industrial Court has ruled that the only acceptable reasons for termination of the employment relationship are those relating to misconduct, incapacity or operational requirements (retrenchment). Unless there are exceptional circumstances, the Court usually requires that where a dismissal is based on misconduct, the employee be given at least two written warnings, and an opportunity to take corrective action before proceeding to termination.
In the event that the Court finds that an employee has been unfairly dismissed, it can grant the employee reinstatement and compensation, or compensation alone. There is no right of appeal from a decision of the Industrial Court except on a point of law in which case an appeal lies to the Court of Appeal.
This is governed by legislation. Where five or more persons are to be laid off, the Act requires a formal notice of at least 45 days prior to lay off. Termination benefits are payable for employees with over one year’s continuous service, and are calculated on the basis of the basic wage paid at the time of termination as follows:
• More than 1 but less than 5 years’ continuous service - 2 weeks for each such year of service.
• 5 years or more - 3 weeks for each year of service.
Retrenchment benefits are treated as priority payments in a winding up. There is a tax exemption on severance payments of up to $100,000.00, with the remainder being separately chargeable to tax at the employee’s average rate for the year preceding receipt of payment
The form which this takes depends to a great extent upon whether the employment contract is in respect of a “worker” as defined in the Industrial Relations Act. Where a trade dispute arises, “workers” may fall into one of 3 categories:
• Workers represented by a Union which is registered under the Act as the “recognised majority union”;
• Workers who are not represented by a recognised majority union but who are paid up members of one or more registered trade unions;
• Unrepresented workers.
Where workers are represented by a recognised majority union, the dispute resolution process contained in the collective agreement must first be applied.
Where the dispute remains unresolved, either the employer or the recognised majority union can report it to the Minister of Labour not more than 6 months after the issue giving rise to the dispute arose (subject to any extension of time granted by the Minister on application). In the event that the Minister is unable to resolve the dispute, an unresolved certificate is issued. The Industrial Relations Act has established procedures for settlement of both “rights” and “interest” disputes.
A Non-Recognised Majority Union can only pursue “rights disputes”, and is not entitled to take strike action. Unrepresented workers cannot report a dispute to the Minister and consequently cannot take strike action in accordance with the Act.■