Legislation should be enacted to provide some medium-term protection to government employees who find their jobs have been transferred to private sector entities as part of a Cayman Islands government outsourcing effort, a consultant has recommended.
Suggestions made in the recently released Ernst & Young report include options that would shift hundreds of jobs from the public payroll if the plans are accepted by Cabinet members. Healthcare, information technology, public works, security services and planning-building inspection functions have all been identified as potential outsourcing opportunities in the report, which was commissioned by government earlier this year.
If government does pursue various proposals involving worker transfers, it is likely that not all jobs will remain in private sector functions. However, for those positions that are kept, some legal protection should be mandated, EY reviewers state.
“Legislation is required to facilitate the transfer and protect employee rights,” the consultant’s report states.
Similar laws were introduced in the past decade by Commonwealth governments that were attempting to outsource certain government functions. In the U.K., the “TUPE” regulations [Transfer of Undertakings, Protection of Employment] were passed in 2006. Australia proposed its Fair Work Amendment Bill in 2012 for worker protection purposes.
“Within these laws, for a successful transmission of business and transfer of employees, the impacted employees must be provided with a suitable alternative role on ‘no less favorable terms’ by the buyer,” the EY report states.
This type of public sector worker protection legislation typically includes:
Employment protection for a specified period of time during which the worker is unable to be forced out of the job.
Agreement to certain employment terms and conditions, also for a set period of time.
Agreement on a possible “transfer payment” to “facilitate” the workers’ moving into the private sector.
Requirements that the employees keep the same vacation/sick leave options they previously enjoyed and any “future redundancy payments” they were owed. Alternatively, the employees could cash out any leave balances they maintained while employed with government.
The last area, in particular, could give rise to the specter of private sector employees, recently transferred from government jobs, being governed under separate labor laws than those applied to other private sector workers.
Retirement age
The EY report recommends government consider increasing both public and private sector worker retirement age to 65. Currently, government mandates retirement for civil servants at age 60, unless the worker receives a fixed-term contract extension.
Increasing the retirement age would lessen the “unfunded liability” in government’s defined benefit portion of its civil service retirement plan, which is estimated at $178 million over a rolling 20-year period.
However, increasing the retirement age could come with deleterious effects as well, EY reviewers warn.
“By raising the retirement age, you could be keeping on employees for longer than necessary and also could be restricting youth employment in government,” the report states. “There would also be significant pushback from employees who may have to work for longer than they planned.”
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