Tip system raises concern for basic wage earners
(CNS): Some of Cayman’s lowest-paid workers have complained that employers using gratuities to top up wages to conform with the national minimum wage of $6 per hour are misusing the system. Hospitality employers, such as hotels and restaurants, are allowed to pay workers $4.50 per hour if they also receive at least $1.50 per hour from managed gratuity systems approved by the labour department. But hospitality staff say it is time to close this loophole because they are being short-changed.
At a public meeting Wednesday evening, held by the National Minimum Wage Advisory Committee (MWAC), the issue of how hospitality workers and some domestic staff are paid was raised by a number of attendees who described a litany of issues that this carve-out has caused.
Because employers are dipping into gratuity pools to top up workers’ pay, some are still earning just $4.50 an hour on paper, which means that their pension contributions are based on that hourly rate. In addition, they said, it can be hard to persuade banks to take the part of their pay that comes from gratuities into consideration if they apply for loans and mortgages.
Even where employers, as per the law, only use gratuities to top up basic wages, with the rest being properly distributed among all non-management or supervisory staff, some workers feel that the situation is unfair.
But it appears that in some cases, employers are using tips to top up wages where there is no official scheme and the extra $1.50 is paid in cash. In some cases, gratuities are being used for entire wage packets, even those of more senior staff, reducing the money normally shared among the lowest paid and undermining pay levels at a time of crippling inflation.
MWAC Chairperson Lemuel Hurlston said that his team was aware of the various problems related to how gratuity schemes are being used to top up workers’ wages.
“The committee is very well aware that the issue of gratuities is very much a controversial one. We are also aware that several complaints have been made in regards to the distribution of gratuities,” Hurlston said after a number of people raised those issues and pointed to the impact it has on them as workers in the tourism sector.
He also noted the passage of a private member’s motion in parliament earlier this year to establish a task force to look at how hotels, resorts, condo complexes and restaurants that have gratuity management systems are distributing that money.
“That is an investigation to take its own natural course,” he said, noting that employers with legitimate tips schemes should be following the rules, which would mean their workers have nothing to worry about.
During the course of the meeting, numerous concerns about the current low level of the minimum wage were raised by the audience. People pointed to the long list of socio-economic problems that have arisen as a result of the low wages people are earning in Cayman, one of the most expensive places in the world to live. The $6 minimum wage was introduced in 2015 when inflation was running at -2.8%. Since then the cost of living has reached unprecedented levels.
Hurlston said that the committee’s review of the national minimum wage is not a panacea — though it appears the MWAC will be recommending a notable increase. He said it would not solve all of the economic challenges, but it is part of a complex set of labour laws and benefits that address some of the growing challenges.
As the national minimum wage has not been reviewed for eight years, officials believe the number of people only earning $6 an hour is relatively small. But at this point, no figures have been released to show how many people are actually surviving on the minimum wage.
The review period began in February, and the committee is scheduled to submit a report and recommendations to the government in September. This means that members of the public have just a few more weeks left to complete the online survey or submit comments.
According to officials, more than 5,000 people, both employers and employees, have participated in the survey, and hundreds have engaged in the various stakeholder meetings and focus groups.
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Category: Business, Local News
My daughter is coming out to work from the UK. She has left her job and flat to do this. She was advised she would get 40k per year but her contract states 7.15 per hour plus gratuities .. but there is no mention of minimum or maximum rate? Is this normal, there is no employee handbook and her contract only states this hourly rate. With her living expenses calculated at 1k per month.. it would only leave her 8k per year to live on ? Much less than she has in the UK?
CNN recently reported that It is thought that 90% of the planet’s fish stocks have already been used up.
But what would the seas look like if we did decide to permanently stop fishing?
Two trirds of the world’s population that rely of fishery as a mean part of our diet, would lose a mean source of our food supply
https://www.bbc.com/future/article/20230721-what-would-happen-if-we-stopped-fishing
Asking this simple question can provide a surprising insight into the profound impact we are currently having on the planet’s largest ecosystem and reveals to us questions of what we can do to help the ocean fishery to recover.
https://www.myvuenews.com/agriculture-minister-focused-on-doubling-seafood-exports/
During 2018 the Bahamas Agricultural Minister revealed a proposal to double seafood exports from the $90 million in revenue which gave way for lobsters to be farmed
https://www.smithsonianmag.com/innovation/rock-lobster-farm-could-soon-be-coming-menu-near-you-180965064/
With the Cayman Islands traditionally known for farming Turtles for domestic consumption and commercial tourism attractions
With all said above, why aren’t we also thinking of expanding our Turtle Center to start farming lobsters?
Just a note for you and your readers to think about
There will always be employers that prey on their own employees in the Cayman Islands. It is part of the culture and the reason that there is so little actual law enforcement here.
wage theft, oppression, misogyny, animal cruelty, reckless driving, littering, etc etc etc etc etc etc etc etc
stop the Hotels restaurants only paying 4.50 p h. Tips are very small on the Brac a take out restuararant tips are like 5 $ a week. yes 5 $ a week.They only paying 4.50 ph. it’s a crying shame. make every one Pay at least the minimum wage. why the money making Hotels/resturarants ate allowed to onlypay 4.50 ?
They are allowed, not by the law, but an ineffective and even inept enforcement mechanism.
Call it what it is, it’s a surcharge, not z gratuity.
The seperation of tips from gratuities can be only be seen as gouging by the establishments. I’ve heard that some restaurant/hotel owners divide the grats 50:50 keeping 50% of the total for themselves before sharing out between the staff. Paying staff only 4.50 and using grats to top up to minimum wage is slave labor. Time for the government to legislate to end this crime.
You all want this to stop? Then start shaming the businesses that are breaking the law bet you there will be differnce immediately when they are boycotted.
agreed! i would join them too as support
Name them so we can boycott them
I’ll try to add an additional cash tip instead of topping off the cc bill then.
i’m surprised that i have never heard those in the service industry complain about their wages.
it always others talking…
their ‘low pay’ is a myth just like ‘caymanian unemployment’
Which restaurant or business do you own/manage?
Automatic tips aren’t really tips, they are just another way to charge more. Pay people a decent wage, but let them keep all of their tips. No customer is leaving a tip for the owner to have a cut. Credit card tips should be paid out in cash at nd of shift. Stop all the chiseling greedy bs.
It is disgraceful that this happens in Cayman in this day and age. People are being exploited by those ruthless employers. You would expect this type of behaviour in a third world country not one of the major financial centres of the world. The government needs to step up to sort this. If it was happening to Caymanians there would be a huge outcry.
You expect it in a third world country but not a third world island? And your telling your third world government to step up? Take away the expat money, skill, labor, and basically expats and what do you have?
Haiti/Jamaica hybrid hell
The only reason it is not happening to Caymanians is that they were so sick and tired of their treatment, they left the industry.
What kills me is people saying they can’t afford to give their helper an increase. Maybe they could clean the house themselves and save all that money!
The upper middle class will never allow their superior status and image to be diminished. The lower middle class and poor must always know their place.
Any employer who is paying any staff member $6 an hour should be ashamed of themselves.
do you have a job? what do you do? How much do you earn?
Rest aasured, they sleep easy nightly.
The minimum wage here is a disgrace and designed for slave labor. Some folk could work for 3 hours and still not afford a meal at KFC etc. Disgraceful.
I think you can get a meal at KFC for less than $18.
18 @ 1:48pm – Not if you’re feeding a family!
you think that if you work
3hours you’ll take home 18.what about Pension and insurance.come on now.
As we are all aware, the second that minimum wage is increased, that cost will be levied to the consumer! Businesses are started to make money not lose or become a charity! so if everyone is complaining about cost of living now, just strap on your seatbelt and prepare for what is to come.
Citations needed.
common sense dummy
The tried and true business world created scare tactic.
Care to provide proof of this occurring with actual economic data?
Typical Republican comment.
The raise of minimum wage goes right back in the economy.
Minimum wage in the US is twice that of cayman and prices are half of what they are here.
that’s the effect of higher minimum wage.
More spending and more revenue, lowering overhead per unit sold.
Tell everyone you don’t understand economies of scale with telling everyone you don’t understand economies of scale.
Restaurants can price themselves out of the demand zone. Remember, we have a slow season, and they depend on locals’ support during the slow season.
If they are taking a portion of gratuties for themselves, why support this?
I would like to offer my sincere condolences to anyone applying for a loan or mortgage with the basic rate of KYD 6.00 per hour.
moron
It seems to have become normal I the last 3 months to automatically add the basic 15% tip and then hand over the card machine expecting a further tip. I know a few people who have been caught out paying a 20% tip on top of the 15%. This is basically a scam and servers and restaurants pulling this £#it are going to get a really bad name very quickly.
Actually some of us like to tip on top of the 15% because we’re thankful for our good fortune and wish to spread it around a little bit.
If you do it knowingly that is one thing, I tend to tip above because I frequent just a few places and form relationships there. The OP comment relates to those establishments and staff who try to pull a fast one and dupe you into excess tipping. I know of one particular place on the eastern side of the island that has started doing this and when I caught it, it was the last time I went there.
This has always gone one, but the new card machines make it more obvious, as they ask to add a tip when entering card pin.
They cleverly name it gratuity or service charge elsewhere, to trick you into thinking its different from a tip.
laws geared towards rich favor it seems….we soon be like maldives where only rich can survive…and imported cheap labor take care of rich and live in dormitories! locals…well…move on or suffer…lol
actually, I think many would be happy to live in dormitories here too. Remember, many are here only to send money home to their families so will live in squalor in order to do so.
If your business cannot make enough money to pay its workers then it is a failed business.
There something seriously wrong with the salary scheme when a bottle of beer costs more than a server earns in an hour.
“As the national minimum wage has not been reviewed for eight years, officials believe the number of people only earning $6 an hour is relatively small.”
WTF? WTF?
Thousands of people are paid this and even less by unscrupulous Caymanian employers. Just look at the housekeeping industry. People are forced to pay for their own permits, get paid a slave wage, and are treated like dirt. Sadly this is still better than where they came from but it doesn’t mean it’s right. If they make a complaint they are fired and sent home. Cayman still runs on slavery hundreds of years after it was supposedly banned.
And those oppressing the housekeepers will continue to do so because of who they know or are.
committee out of touch is no accident
Pay the standard pay needed. All the other consequences needs to be taken care based on that.
Never under pay and worried about the consequences.
And of course government not businesses should decide what that standard is.
tail wagging the dog like always
The answer of course is to abolish the gratuity system altogether and pay them all a flat wage. You’re welcome.
this is yet another nasty business practice from the US. Cayman looks more and more like an American colony every day.
We are an American colony. Have you not watched Seven Mile Beach turning into South Miami Beach. Time to open your eyes.
Staff are indentured servants and modern day slaves.
Say you live in mommy’s basement and are jobless without saying it.
precisely.
Using gratuity to pay $1.50 of minimum wages is criminal. This should have never formed a part of a minimum wage. Gratuities are NOT guaranteed as if a guest does not feel their stay or meal, whatever was any good, they can refuse to pay the grats. How can govt pass a task force to investigate gratuities when they (CIG) have given businesses the green light to exploit workers with this $1.50 bs agreement.
That is not true here. The gratuity to the bill is a condition of your service and will be printed on the menu. You cannot refuse that as you accepted the contractual offer to pay the gratuity when ordering. You can however refuse to tip anything extra on your bill.
That’s exactly right. If the menu states 15% added to the bill for grats that forms part of the contract when you choose to eat. The issue is, who’s getting the grats, the server of the owner. I know who!
Then it is not in a gratuity. Learn some Latin. Then you might understand for it to constitute a gratuity it must be given with no obligation.
Do away with gratuities schemes –
and the you’d have no restaurant staff
which is probably why some of these restaurants are CONTSTANTLY looking for staff and their turnover is much like a hooker’s bed on a Sat night.
And yet Switzerland, France, Italy, the UK… all manage very well (in fact, better than the USA) without gratuity schemes.
So Members of Parliament should be paid a lower base wage and get a share of the gratuity based upon how the financial performance of the country.A task force composed of minimum wage earners will be an integral part the public consultation.
I like that!
Start with the committee
I want stopgap laws which require all management hospitality personnel to live on $6.00/hour for six months. Then come back and tell us about all your bullshit measures to save money for rich owners on the backs of the people who actually do the work.
except it isnt management….owners tell you what you can pay people. Managers would pay anything to get good staff
How about we scrap completely the gratuity that is automatically added on? The one that rewards half-assed serving. Then, employers pay their bare minimum wage if that’s what they want to do.
Good servers will go to the best employers, good employers will dish out gratuities in a fair manner.
I’d love to know who pays bare minimum!
Here’s a tip for them, pay attention in school.
Here’s a tip back. Stay home, never go to a restaurant or use any service industry that is overpaid.
I’d like to know which establishments are stealing tips from their staff in this way, so I can boycott them.
Likewise!
Yeah this feedback is unfortunately conflating multiple issues. If the employer has an approved grat scheme they have to pay out based on that scheme and those grats ARE pensionable 100% that is the LAW.
So, for anyone saying that they’re getting $4.50 on paper that is either a lie/misunderstanding or your employer is breaking the law. Changing the minimum wage or adjusting this carveout won’t prevent that. You need to work to find a better employer…and name/shame the ones breaking the rules.
As far as loans go this is also a misconception and the banks absolutely consider grats as long as you can show a steady history of earning them. That said I would offer the following thoughts:
1) what would you have done if you took out a loan in 2019 based on grats that evaporated from 2020 to 2022 due to covid (you would have lost your home).
Also if $4.5-6 is the make or break point to getting a mortgage I would suggest that you are not currently in a great position to be taking on that kind of debt. If your grats keep you up in the 15-20/hr range that’s different.
banks only take in consideration 40%. I’ve tried it recently.
Say you’re a business owner who needs and abuses cheap labor to make money without saying so.
not a business owner needing to do that at all buddy. Hence why I said if that’s what’s being done the companies need to be reported.
Poster is just pointing out the reality. In Cayman we seem to think that having a law – or changing it – will make a difference, when we don’t enforce the laws we have. People who will deliberately cheat others will continue to do so irrespective of an y unenforced law.
I’d like to know why the police refuse to prosecute anyone, despite the theft and fraud usually involved.
Because there is this sticky thing about needing a law to be broken before they charge and prosecute. Most of us consider these practices to be a “crime”, however until the laws are changed, they are accepted policies in which we only discuss.
Theft and fraud are crimes. The Common Law is good law.
Theft involves breaking the law!
above the law
Minimum wage needs to be $10/hr. If it is a tipped employee then maybe $7.50 but tip needs to be over this amount not included.
$20 per hour. The cost of living here requires higher wages. There are no robot servers yet, much to the dismay of business owners, so pay these hard workers a living wage!
They should be able to pay that the amount they charge.
Wow. Why stop at $20 per hour?
Why not $2500 per day and a mandated one day work week plus 30 sick days and 30 vacation days?
You obviously have never been in management nor run a business before and you have certainly NEVER taken even a basic economics course.
gotta feed my staff crumbs to make max profits
While I hear you that a living wage should be paid, setting minimum wage at $20/hr would create unemployment and poorer service across the island. The jump is just too much and would be too difficult to implement. $10/hr is a big improvement of 60% on the current minimum, it is achievable and hard to argue against. It would bring real improvements to the lives of a lot of folks very quickly instead of being bogged down in debate for likely years until the next election cycle. If you jump to $20 you will see legit changes in service and employment, think of no more table service in restaurants, it will be QR code ordering and paying with someone dropping the plates. Think of waiting on lines for cashiers, bank tellers, service calls, much longer. Think of all the families that work here and drive the engine of the financial services industry but will no longer be able to do so far away from families that can help with their kids and public schools because school fees and domestic helper costs would skyrocket. Think of utility costs going through the roof and impossibility of finding anyone to fix anything in your house. An increase in minimum wage is long overdue but you want to achieve it gradually so you don’t disrupt the engine of the economy.
Oh no, my nannies, cleaners and landscapers will have to be paid more. The horror!
It’s not that they would have to be paid more, they simply would never be hired to begin with and those jobs would disappear. Instead of 5 servers on a shift, you will have 1. That server will not give you a menu, take your order, ask if you need anything else, give you a bill, or run your card. You will do all that on an app and the server will bring plates and drinks and clear it when you leave. This would eliminate the people skills of a good server and much of the experience and ambiance of a restaurant, but the restaurant would have no choice. With the elimination of these jobs you would then have fewer people spending their pay in the community and supporting the economy. It’s not just about paying one nanny more, it would have a ripple effect across the entire economy. Higher minimum wage – ABSOLUTELY, $20/hr minimum – untenable.
Business will go out of business
Any business that pays slave wages should not be in business.
perhaps you should go back to your country of origin with all the slavery references. utter foolishness.
What’s the consensus here? if restaurant adds 15% gratuities already to the bill, do you still supposed to tip the waiter additional tip?
If the service was great and you had a good time or you’re a regular at an establishment then a few extra dollars extra to your server is probably fair.
20% from my family, regardless of service quality. These servers need support, not judgement from customers.
Mug
Nope. That’s on the restaurant, not me.
You’re so cool
I’m well aware.
Where I work, we all know the regulars that tip extra and those that don’t. Who do you think gets served first, better and more friendly? If I’m busy and I have a good tipper and a cheapskate in my section, who do you think I’m going to look after.
I routinely tip 20% where ever I go but still get below basic service. Is the tip too low? I don’t have a lot of money and cannot go much beyond that.
The objection is the double-tipping because the establishment has put the tip in already. Your boss has determined that no matter how good – or bad – your work ethic (and the quality of the cooking, cleanliness of the utensils and bathroom, etc.,) your effort is only worth 15% over the base price of the service provided. If tipping was optional then there would be a justification for To-Insure-Prompt-Service TIPS or perhaps a nice gratuity as a thank you for your friendly service. But when tipping is not optional … equal service for equal tip is assumed as part of the product you are selling. Talk to your boss.
That’s why I deliberately shop around and don’t become a “regular” anywhere. You’ll never know.
This is just an awful comment. So the service establishment where you work, the only real driving force above all else is the money. There’s no underlying ethic of doing the best job you can to all your customers regardless of financial wealth, – revealing & fascinating.
I would suggest most people work for the money
there’s a difference between people working for their money and becoming a prostitute to the dollar
If I’m a regular or thought it was great I usually round it up to 20%+. Recently lots of places started getting cute with the machine though and ask for a tip on top without saying there’s already a tip included. If this keeps happening I’m going to start knocking it down to zero.