Criminal action looms for employers who default on payment of employee NIS contributions
COPS, UAS&DS directors could be early "test" cases
Stabroek News
December 29, 2006
The Kingston Head office of the United Associates Security and Domestic Services Inc.
"Long-standing and belligerent" employers who appear bent on evading their "legal and moral obligation" to remit employee National Insurance Scheme (NIS) contributions can now expect to face criminal proceedings according to a senior NIS official.
NIS Head Office Manager Deryck Rodney told Stabroek Business in an interview earlier this week that the scheme was now legally in a position to institute criminal proceedings against the directors of companies that were "in serious and protracted default" in the payment of NIS contributions.
Rodney named two security firms, COPS and the United Associates Security and Domestic Services Inc. (UAS&DS) as being among the likely candidates for such action by the NIS. COPS owes the scheme more than $90m in employee contributions while the UAS&DS is adrift in its payments by $45m.
According to Rodney while COPS had made some "token" payments on outstanding employee contributions the scheme was not satisfied with its payment pattern. In the case of the UAS&DS he said that despite several commitments given by company officials to settle its indebtedness to the NIS based on mutual agreements and after civil proceedings had been filed there was no evidence that the organisation was inclined to honour its commitment to the scheme.
According to Rodney the pattern of "payments" by the UAS&DS suggested that the company had settled for an approach of making payments on behalf on individual employees who may have made strident representation to the Ministry of Labour or some other authority. "There is no evidence whatsoever of any attempt on the part of this company to liquidate its indebtedness in respect of its workforce as a whole."
Describing the practice of non-payment of employee contributions as "both a moral and a legal travesty" Rodney said that defaulters like the two security companies can now expect to face repeated criminal charges every time they are in default. "Our strategy will be to file criminal charges at the end of every payment period once payment is not received," Rodney said.
Several months ago the NIS filed civil suits against several companies including the UAS&DS and Rodney told Stabroek Business that the Magistrate in the UAS&DS hearing had ruled that criminal charges could in fact be brought against the directors of that company.
Rodney said that the NIS had been approached on numerous occasions by employees of both security firms whose contributions were adrift by a considerable margin and that while the scheme had put measures in place to make benefits available to them the practice of having to "make good" on unpaid employee contributions was essentially unfair to those employees.
According to Rodney the NIS was now determined to take a tougher line with defaulters and apart from resort to the courts the scheme had also moved to deny certificates of compliance to those defaulters. "We will also be doing everything in our power to ensure that those defaults prevent those defaulters from benefitting from contracts that would put them in a position to default even further in terms of their payments to the scheme.
Meanwhile the NIS official told Stabroek Business that under the scheme's current reform project tougher measures will be designed to address the problem of defaulters. Among the measures likely to be called for under the reform initiative are the support of government and quasi-governmental organizations to ensure that National Insurance Compliance Certificates are a statutory and mandatory requirement for the renewal of companies' licences and contracts. The NIS is also likely to seek the right of access to employers' income tax returns in order to secure accurate information regarding their wage bills and the numbers of their employees. Rodney explained that this latter measure was being sought in order to address the problems of employers' failure to register some of their employees and under-reporting earnings.