Unemployment Benefit Program

On the 20th of April, 2009 amendments to the National Insurance Act and its Regulations were enacted bring into force the Unemployment Benefit Program. This program is in two phases, an interim phase financed from existing National Insurance Board (NIB) funds and a permanent phase to be financed by employer/employee contributions. This program was recommended by the 2005 Social Security Reform Commission with a long term objective of temporarily replacing part of an employee’s lost wages in order to provide time for the unemployed person to find a suitable job. The short term objective is to help sustain consumer demand during our current economic downturn.

To be eligible to receive benefits under this program the requirements include that the unemployed person be registered at NIB as an employee, has made a minimum number of NIB contributions prior to becoming unemployed, is not receiving any NIB benefits other than Survivors or Disability benefits, and is willing and able to work. The program does not cover self employed persons or those who are 65 years old or over.

We are currently in the interim phase of the program. This phase is being financed by a transfer of $20 million from NIB’s Medical Benefits Branch to the Short Term Benefits Branch from which the unemployment benefits will be paid. Eligibility requirements are less rigid during this phase in regard to the minimum number of NIB contributions and cover those who became unemployed after the 1st of July, 2004. This date was chosen in order to cover those who became unemployed in the aftermath of hurricane destruction in Grand Bahama.

The permanent phase of the program will begin when the allocated $20 million has been exhausted. In order to finance the program a 1% increase in NIB contributions will kick in that will be shared equally by the employer and employee. The current contribution rate of 8.8% being 3.4% from the employee and 5.4% from the employer will be raised to 9.8% when the employee share will be increased to 3.9% and the employer portion with be increased to 5.9%. This new rate will not apply to those who are 65 years or older since they are not eligible to receive this new benefit. Once into the permanent phase the NIB contribution requirements for eligibility will become more stringent and those who do not claim within six months of eligibility will no longer be entitled to the benefit.

Employees aged 65 and less than 70 years are not entitled to their pension and are still required to pay their share of NIB contributions if they earn more than 50% of the insurable wage (currently $200 per week). If their earnings are $200 per week or less, they are entitled to their pension and no longer have to pay their share of the NIB contribution. When an employee reaches the age of 70 years they can claim their pension and no longer have to pay their share of the NIB contribution, regardless of the amount of their earnings.

Funding of the social security benefits provided through NIB is shared equally between the employer and employee. The 2% additional contribution paid by the employer replaced the private sector provided workman’s compensation insurance that was available prior to the enactment of the National Insurance Act. This coverage provides for the payment of medical bills related to industrial accidents or diseases. The liability of paying medical costs in the event of an industrial accident can be enormous and in order to have coverage from NIB the employer contribution portion must be paid even for those employees who are receiving their NIB pension.

Entitlement to the unemployment benefit becomes available two weeks after unemployment began. The benefit is 50% of the applicant’s weekly insurable wage up to the National Insurance ceiling of $400.00 per week (i.e. the maximum unemployment benefit is $200 per week) for a period of 13 weeks (3 months). Unemployment checks are issued every two weeks in arrears. For example, after a person is unemployed for two weeks an application for the unemployment benefit can be made and the first benefit check will be issued two weeks later. A prerequisite of applying for the unemployment benefit is that the unemployed person has registered with the Labour Exchange at the Labour Department. In order to continue receiving the unemployment benefit the applicant must still be unemployed, looking for and be available for work and reregister with the Labour Exchange every four weeks.

There are a number of circumstances that provide for disqualification of the unemployment benefit, however disqualification for any one circumstance is only up to six weeks, meaning that the disqualified unemployed person would still be eligible to receive some of the benefit. If there are multiple disqualifications they can be dealt with consecutively which can result in the complete loss of the benefit for that individual. Some reasons for disqualification are where the unemployed person: refuses suitable employment; makes no reasonable effort to obtain employment; fails to carry out directions given by the Director of Labour; fails to attend an interview as directed; fails to attend a course of instruction or training; was terminated due to theft, fraudulent offences or dishonesty; or voluntarily left his or her employment.

The employer is responsible for filling out the Termination of Service/Lay-Off Certificate upon an employee being release from employment (available on the NIB website www.nib-bahamas.com). If notice or redundancy pay was given to the employee at the time of termination please record the number of weeks on this form as the effective date of unemployment will not begin until the expiry of those weeks. This form must be submitted to the NIB Director within one week of being issued on penalty of a $200 fine. Although the current form does not state this, the oversight of leaving this information off of the form will be corrected in its next printing.

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