Insights on the 2025 Employment Amendment Act: Key Ministerial Perspectives

Bermuda Clarifies gratuity Laws: A Closer Look at the Employment Amendment Act 2025

By Archyde News

March 23, 2025

The Core Issue: Defining “Wages” and its Impact on Paid Leave

The island nation of Bermuda is grappling with the complexities of how gratuities and service charges, collectively referred to as “other gratuities,” should be treated when calculating paid leave for employees. On March 21, 2025, Minister of Economy and Labor Jason Hayward introduced the Employment Amendment Act 2025 in the House of Assembly. The bill seeks to clarify the calculation of paid leave for employees who receive these “other gratuities” as part of their minimum hourly wage.

The crux of the issue lies in the definition of “wages.” Prior to March 1, 2024, when the employment [protection of Employee Tips and Other Gratuities] Amendment Act 2023 came into effect, there was no clear distinction between tips and gratuities/service charges. They were often lumped together as “tips” and not considered wages.

According to Minister Hayward, “I am pleased to introduce in the Honourable House today, a Bill entitled the Employment Amendment Act 2025 which proposes to clarify the calculation of paid leave for employees who receive gratuities and service charges [hereafter referred to as other gratuities] as part of the minimum hourly wage rate.”

This ambiguity created inconsistencies in how employees were compensated for statutory leave. From June 2023 until February 29, 2024, employees receiving “other gratuities” were paid a flat minimum hourly wage of $16.40 for all paid statutory leave. Tho, the 2023 amendment, which defined “other gratuities” as wages, fundamentally altered this calculation, especially for employees whose earnings fluctuated weekly.

the Problem: Unpredictability and Financial Burden

While the Employment [Minimum Hourly Wage] Order 2023 allows employers to use “other gratuities” to supplement the minimum hourly wage, the intention was *not* to include them in the calculation of “a week’s wages” for statutory leave purposes. The original intent was that all statutory leave would be paid at the minimum hourly wage rate.

Including “other gratuities” in the wage calculation has led to:

• unpredictability: Fluctuating gratuity amounts make it difficult to calculate a consistent “week’s wages.”
• Financial Burden: Businesses face challenges in accurately budgeting for employee costs due to the variable nature of gratuities.
• Uncertainty: Employers are unsure how to properly compensate employees for leave, leading to potential disputes.

Stakeholder Response and the Path Forward

Recognizing these challenges,the Ministry of Economy and Labour sought legal advice from the Attorney General’s Chambers. They also consulted with the Bermuda Hotel Association, a key industry partner employing a significant number of affected employees. The Hotel Association provided independent legal counsel that echoed the Ministry’s concerns.

A special meeting of the Labour advisory Council (LAC) was convened to discuss the issue and find a consensus. The goal was to align with the Ministry’s original legislative intent: ensuring everyone receives at least the minimum hourly wage for all paid statutory leave.

Minister Hayward stated that he “convened a special meeting of the labour Advisory Council [“LAC”] to discuss the concerns raised with the intention of reaching a consensus that aligned with the Ministry’s initial legislative intentions; to ensure that all persons are remunerated at at least the minimum hourly wage rate for all paid statutory leave entitlements.”

The LAC members agreed that the paid statutory leave entitlement for employees receiving “other gratuities” should be amended, especially when those gratuities supplement the minimum wage.

Retroactive Request and Financial Relief

the Employment Amendment Act 2025 will be applied retroactively to March 1, 2024, coinciding with the enforcement date of the Employment [Protection of Employee Tips and Other Gratuities] Amendment Act 2023.However, the bill includes a provision that protects businesses from having to seek reimbursement for “overpayments” made between March 1, 2024, and the present date.

This retroactive application aims to provide immediate clarity and stability for both employers and employees. It prevents a situation where businesses are penalized for adhering to the previous interpretation of the law.

Broader Implications and Analysis for the U.S. Context

While this legislation is specific to Bermuda, the underlying issues resonate strongly within the U.S.hospitality and service industries. The debate over tipping,service charges,and minimum wage laws is ongoing,with various states and cities experimenting with different models.

Some U.S. cities, like Seattle, have implemented higher minimum wages for all workers, including tipped employees. Others, like California, have laws protecting employee tips, stating that “gratuities are the sole property of the employee or employees to whom they are given.” This is outlined by the Division of Labour Standards Enforcement within the California Department of Industrial relations.

The Bermuda case highlights the importance of clearly defining key terms like “wages” and “gratuities” in labor laws. Ambiguity can lead to confusion, legal disputes, and unintended financial consequences for both businesses and workers.

Key Considerations for the U.S.:

• clarity: Clear communication with customers about how service charges are distributed.
• Fairness: Ensuring that tipped employees receive a fair wage, nonetheless of fluctuations in gratuities.
• Predictability: Providing businesses with a stable and predictable framework for managing labor costs.

The National Restaurant Association, a major lobbying group in the U.S., often advocates for policies that balance the needs of restaurant owners and employees. Their perspective is that overly complex or restrictive labor laws can stifle business growth and limit job creation.

Potential Counterarguments and Considerations

One potential counterargument to the Employment Amendment act 2025 is that it could be perceived as benefiting employers at the expense of employees. Critics might argue that excluding “other gratuities” from the “week’s wages” calculation reduces the overall compensation employees receive for paid leave.

However, the Ministry of Economy and Labour maintains that the bill’s primary goal is to ensure that all employees receive at least the minimum hourly wage for statutory leave. By clarifying the law and preventing unpredictable fluctuations, the government aims to create a more stable and equitable system for everyone.

Another consideration is the potential impact on customer behavior. If service charges are perceived as mandatory tips that do not directly benefit employees, customers may be less inclined to tip generously. This could indirectly reduce the overall earnings of tipped workers.

Practical Applications and Future Outlook

The Employment Amendment Act 2025 provides a practical framework for addressing the complexities of gratuity-based compensation. By clearly defining terms and establishing consistent rules, the law aims to promote fairness, transparency, and stability in the workplace.

The key takeaways for U.S. businesses and policymakers are:

1. Define Terms Clearly: Ambiguity in labor laws creates confusion and disputes.
2. Consult Stakeholders: Engage with both employers and employees to find solutions that work for everyone.
3. Promote Transparency: Communicate clearly with customers about how service charges are used.
4. Strive for Fairness: Ensure that all employees receive a fair and predictable wage.

Gratuity Calculation: Before and After the Amendment

Metric	Before March 1, 2024	After March 1, 2024 (Original)	After March 23, 2025 (Amendment)
Inclusion of “Other Gratuities” in Wage Calculation for Paid Leave	No	Yes	No
Wage Rate for Statutory leave	Minimum Hourly Wage ($16.40)	Variable, based on “Week’s Wages” including “Other Gratuities”	minimum Hourly Wage ($16.40)
Predictability for Employers	High	Low	High
Administrative Burden	Low	High	Low

© 2025 Archyde News. All rights reserved.

How does Bermuda’s Employment Amendment Act 2025 clarify gratuity laws and what are the implications for businesses and employees?

Bermuda Clarifies Gratuity Laws: An Interview with Labor Law Expert,Dr. evelyn Reed

March 23, 2025

Introduction

Archyde News: Welcome, Dr. reed. We’re thrilled to have you with us today to discuss the employment Amendment Act 2025 in Bermuda and its implications for both businesses and employees, and how minimum wage and gratuity rules affect statutory leave calculations. Can you give our readers a rapid overview of the core issue?

dr. Evelyn Reed: Thank you for having me. Absolutely. The central problem is how Bermuda defines “wages” when calculating statutory leave. Specifically, the question is whether “other gratuities”—tips, service charges—should be included in determining a “week’s wages” for leave purposes. Including them caused significant practical problems.

The Problem with Including “Other Gratuities”

Archyde News: Can you elaborate on these practical problems? What were the specific issues that arose from including gratuities?

Dr. Reed: Certainly. including gratuities led to several issues. First, it created unpredictability. Gratuity amounts fluctuate, making it difficult to calculate a consistent ‘week’s wages.’ Second, it created a bigger financial burden. Businesses struggled to budget accurately for employee costs due to the variable nature of gratuities. Third, it resulted in uncertainty. Employers were unsure how to properly compensate employees for leave, leading to potential disputes which the Employment Amendment act 2025 aims to rectify.

The Role of Stakeholders

Archyde News: The Ministry of Economy and Labor sought legal advice and consulted with the Bermuda Hotel Association. How significant was this stakeholder engagement in shaping the Amendment Act?

Dr. Reed: It was crucial. Engaging with the Hotel Association, a major employer in the hospitality sector which relies heavily on tips, helped the Ministry understand the real-world impact of the existing legislation. Their independent legal counsel echoing the Ministry’s concerns added significant weight to the need for clarification. The Labour Advisory Council (LAC) was also integral in finding a consensus.

key Changes of Retroactive Submission

Archyde News: The Employment Amendment Act 2025 is being applied retroactively. Why was this decided, and what are the implications?

Dr. Reed: Retroactivity, back to March 1, 2024, provides immediate clarity and stability. This means that the new rules will apply as if they were always in place. It prevents businesses from facing penalties for having followed the previous interpretation. This removes uncertainty and prevents potential disputes which could burden the courts and local business. However the protection of businesses from overpayment reimbursement for employees has to be considered.

Relevance for the U.S. Context

Archyde News: This legislation is specific to bermuda, but what are the broader implications for the U.S., especially in the hospitality and service industries where tipping is prevalent?

Dr. Reed: The Bermuda case offers valuable lessons. The key takeaways for the US are the importance of clearly defining ‘wages’, engaging stakeholders, and aiming for fairness and predictability. Different states and cities have experimented with different models. As an example, Seattle’s higher minimum wages and California’s laws protecting tips each present different approaches to similar problems caused by the same root cause; ambiguity in laws. The case highlights the importance of clear definitions which can lead to clarity in the workplace and prevent legal disputes.

Potential Criticisms and Counterarguments

Archyde News: Are ther any potential counterarguments or criticisms of this new amendment? Could it have negative consequences?

Dr. Reed: A potential criticism could be the perception that this benefits employers at the expense of employees, possibly reducing leave compensation in certain specific cases. There is the added potential of changed customer behavior if service charges are not clearly allocated towards gratuities. However, the primary goal is to ensure everyone receives at least the minimum wage, and the Ministry believes this clarification creates a more stable and equitable approach overall.

Looking Ahead

Archyde news: What are your key takeaways, and what advice would you give to U.S. businesses and policymakers considering similar legislation?

Dr. Reed: The key is clarity, clarity, and working together. Define terms clearly, consult with stakeholders, communicate transparently with customers about service charges, and strive for fairness. By learning from Bermuda’s experience, U.S. jurisdictions can create more equitable and sustainable labor practices regarding gratuities and minimum wage.

A Thought-Provoking Question

Archyde News: dr. Reed, considering the dynamics of tipping culture, labor costs, and employee expectation, how can policymakers best balance the needs of businesses, workers, and customers in the U.S. to achieve a genuinely fair and sustainable system?

Dr. Reed: That’s the million-dollar question, isn’t it? The solution likely lies in a multi-faceted approach, with robust consumer education about service charges is critical alongside ensuring minimum wage with clarity and consistency. this might involve a national standard for tip allocation, promoting clear discussions with employers and employees about compensation structures, and perhaps piloting innovative models that incentivize high-quality service. It requires creativity and continued dialog.

Archyde News: Dr.Reed, thank you so much for sharing your expertise with us today. This has been incredibly insightful.

Dr. Reed: My pleasure. Thanks for having me.