The head of the Bermuda Industrial Union has defended the minimum wage and how it is applied to the hospitality industry — after a former MP who pushed for the pay threshold said the island’s political and trade union leaders had “forgotten the plot” on backing workers.

Chris Furbert also supported the staff layoffs threshold negotiated for the Hamilton Princess & Beach Club and Fairmont Southampton hotel, and said the BIU membership had approved them.

The union president spoke after Rolfe Commissiong, a former government MP who pushed for the formation of a parliamentary Joint Select Committee exploring both the minimum and a living wage, faulted the use of gratuities in hospitality to guarantee the $16.40 an hour minimum that came into effect this month.

Mr Commissiong told The Royal Gazette that the gains in workers’ rights secured in the days of the late BIU head Ottiwell Simmons were now “under threat”.

He said the gratuities system had previously been “sacrosanct”, but that the new wage deal for restaurant and hotel workers should not have been agreed by the union.

“It’s not equitable at all – the gratuity system is supposed to be there for workers, not used in some manipulative exercise so that employers within hospitality can maintain a business model predicated on hiring low-cost, low-skill to medium-skill foreign labour.”

He said it would drive wages down to “poverty levels at the expense of Bermudians”.

Mr Furbert responded: “The union’s position has always been that earned income is earned income. You’re talking about a mandatory gratuity.

“When you have to look at coming up with a minimum wage for a hotel worker, you have to include gratuity because it’s a mandatory payment by the guest.”

He said it had been agreed decades ago when the BIU sought wage guarantees.

“Remember, there’s no tax paid on gratuity,” Mr Furbert added.

“If I’m making $8 an hour and my employer agrees to make a 100 per cent wage increase, and then I keep my gratuity also — what employer in Bermuda is going to be able to give that, particularly a hotel? It’s not realistic.”

Mr Commissiong, who was chairman of the Joint Select Committee, said he had hoped Bermuda’s Wage Commission would have “taken a cue” from the UK Low Pay Commission, which he said was against using gratuities, commissions and tips in the calculation of basic pay.

But Mr Furbert, who served on the Wage Commission, responded that not including gratuities was “not feasible”.

That view was echoed by Philip Barnett, the president of the Island Restaurant Group and a wage commissioner, who said: “Just for clarity, we should stop referring to it as gratuity and call it what it is, which is a service charge.”

Mr Barnett said it was similar to a value added tax that “ultimately goes to the same source — to pay staff”.

“The reality is no servers are getting $16.40 per hour, at least not anyone working in full service restaurants. They all earn far in excess of that.”

Mr Barnett said full-time servers stood to make $25 to $45 per hour, and that not including gratuity would drive up costs.

“Mr Commissiong may want to pay $60 for a hamburger, but other people do not want to pay that amount.”

Mr Commissiong has also decried the BIU’s agreement this year to a 85 per cent deal with the Hamilton Princess & Beach Club and the yet-to-open Fairmont Southampton, meaning their staff can be laid off if occupancy falls below that figure.

Previously that threshold stood at 75 per cent.

He added: “I also have concern that with the delay of the project at the Fairmont Southampton, as with previous delays, it may entail both government and the BIU giving them even more concessions.”

Mr Furbert responded that the owners of both hotels had hoped to set the layoff bar at 100 per cent occupancy.

“Remember, this doesn’t exist anywhere else in the world. It’s 100 per cent everywhere else.”

Mr Furbert added that the 85 per cent threshold had been agreed by the unionised workers.

“It was ratified by the membership,” Mr Furbert said. “If the membership had said no, it would have stayed at 75 per cent.”

Mr Commissiong further criticised Jason Hayward, the Minister of Economy and Labour, for the failure to draw up a living wage for Bermudians.

Mr Furbert, who has also criticised the lack of a living wage, recalled informing the minister that he was withdrawing from the wage commission because the union did not agree with the $16.40 minimum wage.

“I believe we should have done the living wage first, and the minimum wage would have come out of that.”

He cited a 1990s report on the island’s wages by the US socioeconomist Dorothy Newman.

“She looked at the 1991 figures and found that a lone parent’s earnings for a 40-hour working week was $600. That’s $15 an hour.

“Put in the rate of inflation and that person today should be making $31 or $32 an hour.”

He added: “If Bermuda’s cost of living came down by 20 to 25 per cent in the next few years, maybe $16.40 might be the right number.

“But as long as we remain the highest country in the world for cost of living, that $16.40 won’t be nearly enough.”

The ministry said this week that the Government “stands behind employees receiving $16.40 as a wage floor”.

A spokesman cited the Wage Commission’s April 2021 report: “Where gratuities are added by the business for later distribution to gratuity-earning staff with their hourly wage, their total hourly pay, including gratuity, must be equal to or exceed, for the pay period, the recommended minimum wage.”

He added: “What this means is that workers in gratuity systems would at the least be guaranteed the minimum wage plus whatever direct gratuity they may be able to earn.

“Where gratuities are insufficient to meet the statutory minimum hourly wage, employers would be required to make up the difference.

“Further, hospitality industry workers not part of the gratuity-distribution system must be paid the statutory minimum hourly wage. The intent of the minimum wage was always to represent gross income, not net income.”

Asked for an update on progress towards a living wage, the ministry called it “a natural progression in helping ensure all Bermudians can sufficiently provide for themselves and their families”.

“To that end, the Wage Commission is tasked with providing a recommendation to the Government ensuring a livable wage considers Bermuda’s cost of living and poverty threshold, which will serve as a road map for how we will achieve a living wage in Bermuda.”