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Companies warn Gov’t that guards will be pulled if arrears, 50% rate hike not paid

Published:Saturday | October 1, 2022 | 12:10 AMTanesha Mundle/Staff Reporter

The Jamaica Society for Industrial Security (JSIS) is calling on the Government to immediately pay over billions of dollars that it owes security companies so that they can meet the 50 per cent increase in security service costs that they now face.

The companies are also threatening to withdraw their services from Government if it does not agree to start making payments.

In the wake of the September 22 Supreme Court ruling that security guards are employees and not contract workers and that the companies should now start paying over their portion of the guards’ National Housing Trust (NHT) contributions, JSIS is contending that the companies have now been saddled with 49.56 per cent increase in the cost of security services.

JSIS, which lobbies on behalf of the security industry, is also maintaining that companies have no choice but to pass on the increase to its customers, including the Government, which is its biggest client, accounting for 65 per cent of business.

But at the same time, JSIS also wants the Government to pay up all outstanding arrears and to agree to a 49.6 per cent rate adjustment on all government contracts as of September 23.

“The call we have on Government is for an immediate clearing of the backlog of debt to the industry and for a timely and quick approval of the increase rate so that the cash flow can be sustained because the burden on our cash flows has increased significantly,” JSIS President Lt Com George Overton said during a press conference on Friday.

“What I am concerned about is the Government’s inability to pay, the Government’s inability to clear the backlog, because that’s no secret that the Government payable position is a very poor one,” he added.

In March, the JSIS had also blamed the Government’s failure to pay monies owed for their delinquency in meeting their tax obligations. Nearly 60 per cent of Jamaica’s private security firms were in arrears,Tax Administration Jamaica has reported.

“You may very well see a shrinkage in the market, not just the companies, but in the number of officers operating, because affordability is an issue” Overton said.

He noted that smaller companies, which are already experiencing difficulties meeting their payroll as a result of the disruption in payment regimes due to COVID-19, will face increased cash-flow challenges.

JSIS Director Major Richard Reese shared some recommendations, which the organisation said would avert the near 50 per cent increase to the clients if implemented. Among them is a framework agreement in which the Government would agree to adjust its payments by 49.6 per cent.

“If they don’t acknowledge the increase, we are going to have to pull our service as we will not be able to sustain the cost,” Overton warned. “We have to comply with the court. We can’t defy the court, and our costs have gone up since the 23rd. We can’t avoid those costs ... .

“Come our next payroll, if our guards don’t see overtime in there, all the lawyers will be knocking on our door ‘cause all the lawyers will be out there waiting on this,” he said.

Other recommendations include a moratorium on payment of statutory contributions for their workers until an equitable framework has been finalised as well as the immediate enactment of legislation to change the workweek from 40 to 60 hours by way of an amendment to the Minimum Wage Act.

The companies are also pressing for the consideration of a proposal to establish a category of dependent contractor, which provides for a hybrid arrangement that includes benefits, and for the enactment of legislation to provide for a single regulatory body for the private security industry to be expedited.

“These recommendations would reduce the impacts on clients as it relates to increased rates and provide benefits for the security officers and ensure business continuity of the private security providers.

“Failure by the Government to intervene, albeit after the fact, will result in an increase in unregulated operators and reduction in security services due to the inability of some clients to contract this critical service,” Reese stressed.

He, however, pointed out that JSIS had already met with the Government on September 26, served notice of the increase and shared the recommendations.

The court ruling, which will now affect the operation of all the security companies, came after the NHT took Marksman Limited to court, seeking a declaration that the guards were employees and to recover approximately $478 million in outstanding contributions for the period 2000-2016.

The company had only been paying over the three per cent that it collected from the workers.

Overton, however, noted that the changes will significantly benefit the guards.

“Their earnings will increase significantly because for every hour after 40 hours they will be earning time and a half. Their earnings are going to go up and, of course, the benefits of the vacation and the sick leave are there also. So they are benefiting and we are grateful because some of them we have always wanted to implement this,” he said.