I believe the Government of the Turks and Caicos had good intention of ensuring that the employees in the hospitality industry get 100% of the 10% service charge by December 1, 2018. Unfortunately, the day before the implementation, a press release was released to announce that that the service charge bill was delayed for public education and clarifications. It is unfortunate because the timing is bad as it is believed that many employees were looking forward to receiving extra service charge (if any) in January. Some perhaps were even planning to incur charges on their credit card this month hoping to pay it off with the service charge distribution in January.
While there is ambiguity with the ordinance that I will address below, I think that the Government had ample time to educate the public and to iron out the ambiguity of the service charge bill.
The Ambiguity Elements of the Bill
Distribution of Service Charge
Section 9 of the Ordinance states (1) The proprietor of a hotel or restaurant to which this Ordinance applies, shall within twenty-one days of the end of each month, distribute among its employees in equal shares all service charge collected or received during that month pursuant to this Ordinance.
The challenge with this clause is that the proprietor of a condo/villa normally does not have employees. Most villas are managed by a managing company or a property manager company.
While the ordinance does have a definition of proprietor, it is not clear and the current interpretation could mean that the owner can keep all of the service charge to himself especially when most owners do not have employees as they subcontract someone to act on their behalf. However, this was not the intent of the Government and so this needs clarification. Perhaps the definition of employee needs to include the words property management company.
As I mentioned in my previous article on service charge, I don’t think the distribution should be equal primarily because some employees are not working equal number of hours. Some hotels have a point system for distribution of the service charge and the hotels should be allowed to use this system for distribution as long as it is fair.
Another issue with the distribution, is that some resorts have a strata company that is owned and run independently from the property management company. The strata company has employees that deal with guests but the management company is the one that charges and collects the service charge. Is the property management company obligated to distribute service charge to the strata employees? This needs clarification.
Definition of Hotel
According to the ordinance, “hotel” means any building or series of buildings containing more than three bedrooms for the accommodation of guests for reward; and includes the curtilage thereof and all structures within the curtilage;
In the Turks and Caicos Islands, the villas are individually owned by persons or companies. For example, a resort may have 25 condo units and each villa may have only 2 bedroom each. The villas may be independently managed by various property managers. Based on the interpretation, the owner can say that his unit is only 2 bedroom and therefore the guests that stay in his unit should not be charged service charge.
However, I believe the intent of the Government was not to look at the individual condos but rather the entire property and hence the word a series of buildings but the challenge is three bedrooms.
The hotel definition needs more clarification as the current definition is misleading and some owners have already argued that they do not have to charge service charge. I think the Government needs to be specific and remove the three bedrooms from the ordinance.
Understand the Industry
Our Government needs to understand the industry that it regulates. We all make mistakes but based on some of the wording of the Ordinance, it is clear that there is a misunderstanding of the management of the Condo and villas industry in TCI.
Listen to Others
I hope this last-minute delay in the implementation is a ‘wake up” call for our politicians on both sides of the camp to be open and listen to the feedback of others. I am not suggesting in any way that the Government put themselves in a compromising position. I am suggesting that they review the feedback like what they are doing now to see if the suggestions made by others are logical and if they are, then incorporate the changes. After all, no man is an island.
I believe before and after the passage of any bill, there should be a clear communication of the bill with the relevant stakeholders and the community at large. I know there is a House of Assembly where the bills are debated. However, it does not hurt by explaining to the public prior to and after the bills are passed. In fact, the communication should come from both the Government and Opposition.
Legality and Timing of the Notice
I don’t know about you but I was questioning the legality of the first press release as I am not aware of anyone seeing the gazette on November 30th revoking the December 1st implementation date. Fortunately, on December 5, 2018, I was able to get a sight of the Gazette dated November 30th.
Most of us acted on the press release. The lesson we need to learn from this is TCIG needs to ensure that the press release and gazettes are done simultaneously to avoid any confusion on the legality of the press release. Of course, I know that the Minister would not do a press release if it was not legal. However, I would imagine the gazette was published before working hours ended on November 30 and so the press release should have come out then earlier than the time it came out. I stand to be corrected. On second thoughts, the gazette was probably published on the evening of November 30th the same time as the press release.
There are still a lot of speculation on what areas of the Ordinance needs clarification. I think the press release should be specific on the areas that need clarification. Too many people are guessing. In this article, I have addressed the areas I think need clarification but I don’t know if they are the same areas that the Government is talking about.
I know employees are disappointed but to give you some comfort, the Minister is correct in saying if the service charge was implemented on December 1st, the employees would not get a significant increase in pay slips because most guests would have already book for this season prior to December 1st. On the other hand, however, there are some guests that do book last minute reservations and so the employees would have received something in January. Furthermore, there are some villas that were not never charging service charge and with the new law, they were required to start on December 1st so those employees in the industry would have receive an increase in compensation from the last-minute bookings.
It should also be noted that many people are living from paycheck to paycheck and so any amount of money make a difference even if it is $5. The point is what some of us consider insignificant may be very well be significant to others.
Finally, I can understand the Government’s decision to delay because there are a few areas that require more clarification. However, given that the first payment based on the revised law would not have taken place until January 21st, 2019, I want to end with a question for us to consider. Do you think that the Government should have proceeded with the implementation on December 1st and make the amendments and public education during the month of December?