UNDER THE Employment (Termination and Redundancy Payments) Act introduced by Michael Manley in the Seventies, workers whose employment is terminated after two years are entitled to redundancy payments in addition to pay in lieu of notice. Reflecting the ideology of the time, of such payments were exceedingly generous, in the case of long established companies, sometimes amounting to over $1 million per employee.
Many companies, facing financial difficulties, sometimes brought on by misguided government policies, should have downsized and reorganised but found it impossible to do so because they no longer had the cash with which to make the redundancy and notice payments. A company with 150 employees, for example, which needed to cut its workforce in half because of declining sales and dwindling profits would face payout of $75 million, which it could not pay. This led to unprofitable companies limping along, their only function to keep paying salaries to a workforce whose productivity was below competitive standards. Even government entities like the sugar industry were caught in the dilemma and postponed for too long a reorganisation that might have ensured their survival.
With the advent of globalisation and Jamaica's current economic crisis, the country is being forced to reconsider whether redundancy legislation should be amended to reduce the amounts paid to workers. There is no tradition of redundancy payments in America, notorious for its "pink slips" advising workers, including highly paid executives, on a Friday that their services are no longer needed. The philosophic basis for this is that employment is a contract and that since the worker has been paid for his services during his employment, often generously, why should an employer have to pay for work not done. This is seen as unproductive for the economy as a whole.
In America, any social fallout from redundancies is seen to be an obligation of the State and terminated workers are covered by unemployment insurance, principally funded by the government, under which they receive minimum payments for up to 18 months. Perhaps the time has come for such a scheme to be introduced in Jamaica. The current public debate, raised by Gleaner Honour Award recipient, businessman Sameer Younis, is timely and the issue should not be swept under the carpet.
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