The hotel workers made redundant at Fairmont Southampton Princess agreed, in writing by signing loan agreements by the Bermuda Government, so they could file a class action suit against the hotel’s owners.

This from Finance Minister Curtis Dickinson, in the wake of criticism that no plan was put in place to ensure that Gencom pays out millions of dollars in redundancy payments instead of placing it on the shoulders of the unemployed employees or taxpayers.

Speaking at a joint news conference on Monday, the Minister said if Gencom fails to make redundancy payments, lawyers for the employees will sue.

Lawyers hired on their behalf will be writing to Gencom shortly seeking payment. If there is no response they will file a lawsuit in Bermuda’s Supreme Court.

According to the Minister, the employees agreed to file a class action lawsuit when they signed their loan agreements from the Government.

He also stated that the Government was prepared to work with other investors to get the renovation project carried out, if Gencom fails to raise sufficient capital.

He also reaffirmed the Government’s commitment to “continue the work required to provide a safety net to those persons and businesses who are experiencing financial difficulties as a result of the pandemic.

To date, $9.7 million had been paid to 552 employees with another owed to a total of 700 employees.

Highlights of the Minister’s statement: 

In particular, I would like to address a number of questions that have arisen over the course of the last couple of days in the media and generally surrounding payments in the absence of an agreement with Gencom or their subsidiary Westend Properties Limited.

First, some background information. As previously advised, the Government of Bermuda put into action a plan to pay the workers directly. These are people who had been made redundant, were due redundancy pay, and after not receiving these payments as promised, urgently required funds to provide for themselves and their families.

As of the end of last week, we advanced about $9.7 million or 89 percent of the total amount due of approximately $11 million. This included payments made to 552 or 82 percent of the 671 former employees that were due redundancy payments and offered advances by the Government.

The timing of any further advances is completely subject to any remaining employees submitting properly signed documentation.

I would like to deal with the legal position surrounding our actions/decision. Section 33 [3] of the Employment Act 2000 [As amended] reads as follows:

Subject to section 232 of the Companies Act 1981 (expenses of liquidation), but notwithstanding section 236 of that Act )priority of creditors) or any other enactment, on the winding up of an employer’s business or the appointment of a receiver, the claim of an employee to wages and other payments due under his contract or under this Act shall have priority over all other creditors, including the Crown.

Prior to making payments to the employees, we took advice from leading UK and Bermuda Counsel on the impact of the Employment Act. The Agreements entered into by each Employee prior to their payment are likewise designed with the statute in mind.

Following expiry of the November 20th deadline that Gencom had provided for making the payments, and after a week of hearing no proposals from them with respect to effecting these payments, lawyers representing the Employees will issue a Statutory Demand requiring payments of the amounts outstanding from Westend Properties Limited. If no arrangements are made with respect to the payments, the Employees’ lawyers are free to apply to the Supreme Court of Bermuda on the basis that the company is unable to make its payments when they are due. As we have demonstrated previously, the Bermuda Government is willing to use the full extent of the law to protect the interests of the People of Bermuda.

Considering the potential position we are in, we have begun work on how the project could proceed in the absence of a transaction with Gencom and have looked at the potential to partner with other equity and debt investors, including Bermudian investors and lenders, so as to get the project back on track. An additional option under consideration might be scaled-down renovation plans to reduce capital requirements and potentially the closure time. While we remain at a preliminary stage and nothing has been finalized, we are examining the options and will proceed in the best interests of Bermuda if needs be. What is clear from the steps we have already taken, however, is that the burden of that uncertainty will not be placed on the shoulders of Employees subject to redundancy, who are worst placed to bare it.

Some commentators have questioned whether the loan arrangements with the former Fairmont Southampton employees ushers in a new precedent where the Bermuda Government stands to make payments on the behalf of troubled companies. To be clear, it does not. The Fairmont Southampton is an iconic property and an essential component of the available beds and conference facilities that support Bermuda Tourism and the airlift that we as a country currently enjoy. We are committed to seeing this project through and are prepared to do so without Gencom if necessary, if they cannot stand behind the obligations they have.

On the issue of redundancy payments and Fairmont Southampton, let me conclude by saying that underlying all of the analysis that was conducted was an awareness of the painful impact the failure to pay the Employees would have on them and their families. In addition to being placed in the unenviable position of losing their jobs and not being paid the amounts due to them under the law, they would have had to pursue their rights through a legal system few could afford to navigate. Accordingly, the Bermuda Government decided to step in, pay the Employees, and then allow the legal process to follow its due course. Any funds paid to the Employees’ lawyers would be directly remitted to the Bermuda Government in satisfaction of the loans each Employee receiving a payment has entered into prior to payment.