The creation of the Wage Commission is a result of a Parliamentary Joint Select Committee on the establishment of a living and minimum wage regime.  The Commission will consist of eight members, including representatives from the Ministries responsible for Finance and Labour.  It will conduct research and analysis and consult extensively with relevant stakeholders, including representatives of employers and employees, and will make findings as to the requirements for a basic standard of living in Bermuda.  Based on its findings, the Commission will issue a report every three years to the Minister responsible for Labour, including a proposed minimum hourly wage.  It will also make recommendations for a living wage, which the legislation defines as the income necessary for an employee and their household to enjoy “a socially acceptable standard of living”.  The living wage rate will take into account essential costs such as food, housing, clothing, medical, childcare and transportation.  It is possible that, in contrast to the minimum wage rate, the living wage rate could vary between different categories of employee and in different circumstances.

A statutory wage scheme could result in increased payroll costs for some employers but, as the sponsors of the legislation have noted, the implementation of a minimum wage is familiar to most developed economies.  Of the countries designated as International Labour Organization members, over 90% already have a statutory wage scheme of sorts.  Such schemes can have a direct impact on wage levels, but can also have indirect effects on the labour market.  In recent years, the UK has seen a rise in novel working arrangements in the so-called ‘gig economy’, which are often structured in part to avoid the scope of statutory minimum wage regulations and other basic employment rights.  It remains to be seen what the impact will be in Bermuda, but it is notable that part of the Commission’s role will be to set out the expected repercussions of a statutory wage scheme on the economy and competitiveness of Bermuda as a whole.

It may be three years until the Commission makes its first report so for the time being there is no immediate need for employers to take any action.  The Commission’s first recommendations will be eagerly awaited and as more details of the scheme emerge employers will need to begin planning for the new regime and its impact on their recruitment and retention of staff.

This note is intended as a high level overview of this topic. Legal advice should always be sought on a case by case basis.

Type

Insight

Locations

Bermuda

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