Controversial minimum wage rules come into effect on June 1, requiring employers to pay employee wages of no less than $16.40 an hour.

Some of the poorest-paid workers, however, may find a shock.

For example, it may be surprising for some to realise that gratuities are included in what can be counted against a minimum wage.

In Britain that is something expressly prohibited.

In Section 4 of the National Minimum Wage Entitlement, it outlines what is not counted towards the minimum wage.

It states: “Some parts of your pay do not count towards minimum wage. These parts include tips and gratuities and premium payments (for example, extra pay for working bank holidays or overtime).”

But Bermuda is a different world.

If some restaurateurs are nonchalant over the imminent minimum wage, it is because they expect it to have minimal impact, if any, on them.

The new rules do seem to target industries where low-wage earners supplement their income with tips, particularly restaurants and bars.

But employers in Bermuda will be allowed to include gratuities to get to the “magic number” of $16.40.

Philip Barnett, the president of the Island Restaurant Group and a wage commissioner, said: “The Act specifies that the minimum wage can include service charges collected on the guest checks, as long as their average hourly rate is [at least] $16.40 per hour in a reference period, such as a paycheque. As long as that can be clearly shown, then there should not be a huge impact [on business operations].”

In January 2020, the Wage Commission was presented to the Bermuda public. Members of the commission included Mr Barnett, Martha Dismont, Hasan Durham (ex officio member); BIU president Chris Furbert, Cordell Riley (chairman), economist and Bermuda College lecturer Craig Simmons, and economist Robert Stubbs.

By the time the report, Recommendations for a Minimum Wage in Bermuda, was delivered, two signatures, those of Mr Furbert and Mr Stubbs, were tellingly missing.

A minority report from the two would have been useful to the public.

Earlier this month, in an op-ed for The Royal Gazette, former Progressive Labour Party MP Rolfe Commissiong called the inclusion of gratuities in the minimum wage calculation “one of the greatest sell-outs in the history of employment rights of workers in Bermuda”.

He wrote: “This scheme lacks equity and allows for the continuation of a business model predicated on the payment of poverty-level wages in certain occupational categories within the hospitality industry.”

This week Mr Barnett told this newspaper that $16.40 an hour is what must be paid as a gross amount to the employee minus “allowable deductions”.

That, too, raises another issue.

Scott Pearman, OBA Shadow Minister for Home Affairs and Legal Affairs, has questioned the “allowable deductions”.

He said: “Minister Jason Hayward told the House of Assembly these would be set out in guidance, and guidance has not been published.”

In his estimation, once deductions such as pensions were made, the worker actually took home a lot less than $16.40, but closer to $7.

Mr Barnett’s response to this was: “Employers obviously have to then pay their legislated share of payroll tax, social insurance payments, health insurance payments and pension payments on that, so the employer actually pays more than $16.40 an hour for that particular employee,” he said.

“When burdened with benefits, an employee earning minimum wage actually gets over $21 per hour, total compensation, if they are on a good comprehensive health insurance plan.”

Marico Thomas, president of the Bermuda Chamber of Commerce, called the new minimum wage “appropriate” but predicted that the percentage of the overall working population impacted will be minimal.

“If all affected businesses were to raise prices, the overall inflationary impact should not be significant,” he said.

Mr Barnett said his industry is “OK” with the setting of the minimum wage as many employees are already getting $16.40 or higher.

Derek Myers, owner of WildGreens Bermuda restaurant on Front Street, said: “I am actually fine with it as I pay either at the upcoming wage or above.”

Mr Thomas, owner of Thomas United Company Limited and the Bermuda Hospitality Group, thought smaller businesses and restaurants, particularly those that do not receive gratuities or serve alcohol, will feel the weight of the changes the most.

He said: “Affected businesses will deploy strategies which include raising prices for goods and or services, removing items for sale that are marginal or insufficiently profitable, updating operational policies for efficiency, reducing labour hours and even asking family and friends to work for free.”

Mr Barnett thought low-skilled, manual workers will see the biggest benefit from the new minimum wage.

“Pot washers will probably see a bit a of a wage bump,” he said: “To be clear, it will cause some disruption to specific industries. I would assume it would impact gas station attendants, hairdressers, spa workers or anyone else where service charge or commission is their main source of income.”

Mr Pearman said the minimum wage launch was off to a shaky start, with restaurateurs in his constituency already reaching out to him with questions.

One questioned whether he would have to draw up a different contract every time the season changed, when gratuity amounts differed and one had to make up the shortfall.

Is the restaurant industry ready for the new minimum wage regime?

Mr Barnett said: “Besides what has been issued publicly, and what The Royal Gazette has reported on, there has been no special outreach from Government to the industry on implementation.”

• Are you being impacted by the new minimum wage, positively or negatively? Let us know by e-mailing jmhardy@royalgazette.com or calling 278-0150.