Long-Service Gratuity Fund Nears Implementation

Basseterre, St. Kitts, April 8, 2014 (SKNIS): Following legislation passed in 2013, a Government-funded long-service gratuity fund for private sector workers may take effect by as early as the second quarter of this year.

The fund, which is an amendment to the Protection of Employment Act, will benefit persons who have reached the required age of retirement (65 years) and have been working for the same employer continuously for at least 10 years. This money is also payable to the estate of one who passes away after 10 years of continuous work with the same employer. Eligible employees will receive this one-time payment within 90 days of retirement, which is calculated on the same rate as the employee severance payment package.

Labour Commissioner Spencer Amory said that this initiative is an additional pillar of social protection that the Government is using to assist citizens and is a distinguishing factor for St. Kitts.

“The Government is very mindful of its social responsibilities and the need to protect those who are impacted by the world of work,” Mr. Amory noted. “In many countries, the private sector has developed comprehensive pension plans, but in our jurisdiction there is not a significant amount of employers who can put such a programme in place. So our government, exhibiting some major confidence in the continued growth and expansion of the economy will now provide additional social protection packages for citizens.”

Currently, all employers are required to pay 1 percent of their monthly wage bills to a severance payment fund. The long-service gratuity will also be payable from this fund. Amory said that this contribution will not be increased, making this initiative free of cost to employers.

“We are saying to all employers out there that this is progressive, new and part of the social protection platform that the government is constructing and that government has not moved to increase their 1% percent severance payment contribution, making it cost-neutral to them,” Mr. Amory emphasized.

Under last year’s amendment to the Act, the Government made other changes intended to positively impact private sector workers such as the disbursement percentage of service charge, collected at businesses in the hospitality sector. As it stands, service charge is split 90-10 between employee and employer respectively.