Editorial | Gov’t must legislate independent contractors

It is unfortunate that Justice David Batts was forced to do from the bench what policymakers should have done a long time ago. Their dithering did harm to a whole category of workers: industrial security guards. In the Marksman case, Justice Batts ruled that on the basis of the control the company held over their guards, they were in fact its employees, rather than independent contractors as is purported in their contracts.

Given that across the security industry the contracts are similar, if not identical to Marksman’s, last month’s ruling will impact nearly 30,000 employees, many of whom were in limbo with respect to their ability to access some state services, such as benefits from the National Housing Trust (NHT) because their payments seemed to be in arrears.

Two things must happen with urgency. First, the Government must define with clarity who is an employee and the responsibilities an employer has to them, including the obligation to pay over applicable salary deductions, including the employer’s matching portion, to agencies like the NHT.

Second, the Government must make it unambiguously clear to the security industry that its request for the lengthening of the workweek by 50 per cent, to 60 hours, is impractical and won’t be entertained. While such a move would perhaps be beneficial to the security companies, which didn’t pay overtime rates after 40 hours, it would be disruptive to the rest of the economy, whose workers would resist it unless they received compensatory salary adjustments. The administration would also probably be on dubious legal and constitutional grounds if it changed the law to affect one category of worker – if that is what the security industry has in mind.

COME TO TERMS

We don’t make light of the implications of Justice Batts’ ruling for the security companies and their workers. Hopefully, however, having come to terms with its unimpeachable logic of the judge’s arguments, they are already contemplating and preparing to act on what some of the industry’s leaders acknowledge as its practical next step: rationalisation and a greater use of the technology in security services. Further, rather than attempting to frighten policymakers and build political pressure by dangling the possibility of job losses, the innovative firms might consider how they might integrate some of their manpower and services with the needs of the national constabulary, which is in expansion mode.

This matter was brought to a head by the attempt of the NHT, the Government’s shelter financing agency, to retrieve nearly J$478 million in ‘contributions’ owed by Marksman for 3,000 employees for the period 2000-2016.

The NHT builds homes and provides cheap mortgages. Primarily, it is funded by a five per cent payroll contribution – three per cent from employers and two per cent from employees. Self-employed contributors pay three per cent. The employees’ portion of the contribution is refundable after seven years at a low rate of interest.

However, for more than three decades, security companies, with the tacit backing of the finance ministry, designated their guards/ independent contractors. Since 1999 Marksman deducted NHT contributors on that basis, relieving itself of the obligation to make the two per cent payment expected of employers. While the NHT periodically – via letters and other discussions with Marksman and the industry group – maintained its rights to the additional sums, it collected the lesser amount without demur – until 2017 when it sued.

Although he found that the Marksman security guards were indeed employees and that Marksman was obligated in law to make the employer’s contribution, Justice Batts declined to make a declaration retroactively awarding the outstanding amount to NHT. That wouldn’t be an equitable solution, he held.

“I agree with Marksman that the NHT acquiesced in their treatment of the security guards as independent contractors, not by the conduct of the then minister of finance, but by the conduct of the NHT itself,” Justice Batts wrote. “In the period 2000-2016, the NHT accepted, without demur, payments of three per cent of gross emoluments from Marksman concerning its security guards ... . Moreover, I agree with Marksman that the NHT slept on its rights from the mid-1980s and failed, until the claim was filed in 2017, to take action to recover employer’s contributions.”

LEGAL DOCTRINE

Even as he arrived at this conclusion, the judge creatively didn’t apply a legal doctrine that would have removed the NHT’s ability to assert a claim to the debt because of the very failure, over the long period, to do something about. He thus provided the court an opening to rule and bring clarity to the matter.

Said Justice Batts: “Having regard to the egregious circumstances of this case, the delay, the act of collecting at the rate applicable to independent contractors and, the possible direct and indirect effects declaratory relief may have on other interested parties not before the court, I am not minded to grant the declarations in the form sought. The overarching purpose of equity is to do justice. In the instant matter justice will not be done if the declarations are granted, with retroactive effect, as prayed by the claimant (NHT). Justice is better served for all the parties if the declaration has a prospective effect only.

“The bar of laches I do not apply, to prevent the grant of a declaration, first, because the industry needs the legal issue resolved and it is in the public interest to have the court pronounce on it. Secondly, there is no prejudice to the defendants as the declaration will not require them to pay past amounts due.”

With Justice Batts having brought clarity to the situation, it is now for the policymakers and legislators to confirm it in law.