Legal Insights

THE EMPLOYMENT CONTRACT

There is no statutory requirement under the laws of Trinidad and Tobago for the employment contract to be in writing. The usual practice is for the employer to engage an employee under a letter of offer which sets out the main terms and conditions of the employment. Policies and procedures of the employer may be incorporated into the terms of employment by reference, or by practice. Where there is a unionised environment with a registered collective agreement between the employer and a recognised majority trade union, the terms and conditions of employment are set out in the collective agreement. Terms and conditions of employment, for both unionised and non-unionised employees, are generally negotiated freely.

CASH COMPENSATION

There is a statutory regime for fixing minimum wages to ensure that contractual wages and terms and conditions of service are at least as favourable to the employee as the prescribed statutory minimum. There is a statutory regime for the payment of overtime which applies only to employees receiving an hourly rate of one and one half times the national minimum wage or less. While industry practice varies, actual overtime rates are not dissimilar to the statutory rates.

PERQUISITES AND ALLOWANCES

There are no statutory provisions which oblige employers to pay bonuses or commissions or to grant perquisites or allowances to employees. Such are however often provided for in the contract of employment or collective agreement.

DEDUCTIONS

Pay As You Earn (“PAYE”): – An employer is obliged to withhold tax from the emoluments of each employee and remit to the Board of Inland Revenue the employee’s personal income tax. An employer who fails to deduct tax from his employees’ emoluments, or having deducted fails to remit the tax deducted by the due date, is liable to fine and imprisonment on summary conviction and incurs a penalty and interest on the sum not deducted or remitted plus the penalty.

National Insurance: – There is a statutory system of compulsory insurance for employed persons. The main benefits are: sickness benefit, maternity benefit, invalidity benefit, funeral grant, retirement pension, retirement grant, survivor’s benefit, employment injury benefit and industrial disease benefit. Contributions are paid by both the employer and the employee. The employer is responsible for deducting the employee’s contributions from the employee’s earnings and remitting both the employer’s and employee’s contributions to the National Insurance Board.

Health Surcharge: – A statutory health surcharge is payable by every employed person. The employer is required to deduct the surcharge from the emoluments of the employed person and to remit the sum to the Board of Inland Revenue.

WORKING HOURS

There is a statutory regime which prescribes the maximum number of working hours for workers receiving an hourly rate of one and one half of the national minimum wage or less. Actual working hours vary from industry to industry for workers earning above one and one half times the national minimum wage.

PUBLIC HOLIDAYS

At present there are fourteen (14) days which have been designated public holidays. In addition Carnival Monday and Tuesday are customary non-working days.

VACATION LEAVE AND ILLNESS LEAVE

There are no statutory requirements which fix an employee’s entitlement to vacation leave and to paid illness leave. These benefits are usually provided for in the contract of employment or collective agreement.

HEALTH CARE

There is no statutory requirement for an employer to provide health care for employees. Most well established employers do have health plans typically through life insurance companies.

MATERNITY LEAVE

Female employees have the right to a leave of absence for maternity, pay while on maternity leave and to resume work after such leave on terms no less favourable than those enjoyed immediately prior to maternity leave. Pay during maternity leave is provided between the employer and the national insurance system.

PENSIONS

There is no statutory obligation on an employer to establish a pension plan. However, pension plans are common in well-established businesses. Such plans are regulated. The plans must be established by irrevocable trust with various rules as to contributions and safeguards for the benefits payable to the members of the plan and there are restrictions on the classes of assets in which the funds of the plan may be invested. There are tax advantages to the employer, the employee and the trust income if the plan is approved by the Board of Inland Revenue. As an alternative to a formal pension plan, employers enter into Board of Inland Revenue approved annuity contracts with life insurance companies.

EMPLOYEE PROFIT SHARING PLAN

An employer company may establish an employee’s profit sharing plan, with the approval of the Board of Inland Revenue, to which contributions may be made by the employer. There are rules governing the annual distribution of profits and the purchase of shares in the employer company. A plan must be constituted by irrevocable trust.An employer company may establish an employee’s profit sharing plan, with the approval of the Board of Inland Revenue, to which contributions may be made by the employer. There are rules governing the annual distribution of profits and the purchase of shares in the employer company. A plan must be constituted by irrevocable trust.

EMPLOYEE SAVINGS PLAN

An employer may establish an employee savings plan to which contributions may be made by both the employer and the employee. There are tax benefits to the employer and employee in the event such a plan is established.

WORKMEN’S COMPENSATION

There is statutory scheme of compensation for injury or death to a workman caused by accident arising out of and in the course of employment. The compensation is based on certain formulae applied to the workmen’s earnings and is payable in certain specified circumstances. The employer is under an obligation to procure an insurance policy to fund its obligation to compensate workmen.

TERMINATION ISSUES

Redundancy of Workers:- There is a statutory procedure to be followed where an employer proposes to terminate the services of workers for the reason of redundancy (that is, the existence of surplus labour). This termination is referred to as a retrenchment and the onus is on the employer to demonstrate the reasonableness of the decision to retrench. The employer must give a formal notice of termination to the workers and to any recognised trade union. There is a formula for minimum severance payments on retrenchment based on earnings and years of service.

Redundancy of Managers:– Employees who are not workers for the purposes of industrial relations and retrenchment are not protected by statute, but must be given reasonable notice of termination depending on a number of variables, including; the responsibilities and duties of the employee, re-employment prospects, the age of the employee and the length of the employee’s service.

Termination for cause:- The law related to termination for cause depends on whether the employee is a worker for industrial relations purposes. In the case of workers, certain principles and practices of good industrial relations are applied and these significantly alter the common law. The employer must be able to prove a good case for dismissal for poor performance, misconduct or other good cause and must, very importantly, give the worker the opportunity in a disciplinary hearing to answer to the employer’s case before the employer takes the decision to terminate (or to impose some lesser disciplinary sanction). The common law principles continue to apply to employees who are not workers for industrial relations purposes. In such cases the requirement for a disciplinary hearing is less stringent but the employer must have good cause to terminate (or to impose some lesser disciplinary sanction).

OCCUPATION SAFETY AND HEALTH

There is a comprehensive statutory code for the safety, health and welfare of employees in an industrial establishment, that is, “a factory, shop, office, place of work or other premises but does not include premises occupied for residential purposes only”. It is the duty of every employer to ensure the safety, health and welfare at work of all employees, so far as is reasonably practicable. An employee has the right to refuse to work or to do particular work if there is sufficient reason to believe that there is danger to health or life. A more instructive overview can be found at the Legal Insight entitled “Trinidad and Tobago Occupational Safety and Health Act Chap. 88:08.”

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