Written by: Richie Kock Esq at Richie Kock Attorneys
Last Tuesday, the case of Casa Blanca was heard at the Court in First Instance of St. Maarten. Casa Blanca and its principles are charged with exploitation of sex workers and tax fraud.
According to the Public Prosecutor, Casa Blanca had concluded employment agreements with its sex workers and therefore should have reported the revenues for the sexual services by the women for tax purposes.
At first glance, this standpoint seems logic. However, there are serious caveats.
Firstly, it should be asked why a club would conclude employment agreements with sex workers, because there are no obvious benefits for the club in doing so. Neither the club nor the sex worker consider the contract as an actual employment relationship.
The only purpose of these agreements is to acquire work permits for the sex workers. The sex workers cannot request nor acquire these permits themselves according to the current permit system that is currently in place in St. Maarten.
The St. Maarten government is evaluating to change this system into a system wherein the sex worker may request the work permit as an independent entrepreneur. Apparently, this system is already in place in Statia.
An employment relation with a sex worker is also not morally accepted in St. Maarten, or the other Dutch Caribbean islands of Aruba, Curacao or BES.
Notwithstanding the above, there are even more pressing legal arguments as to why the employment contracts with sex workers should be considered null and void.
The existence of an employment agreement is condition to certain legal requirements being met, i.e. (i) the employee has to perform work, (ii) te employer has to pay salary to the employee, and (iii) the employer should have the power to give instructions to the employee. All three requirements should be met, or else there is no legal employment agreement.
Casa Blanca makes its money from renting rooms to the sex workers. The revenues for the sexual services are for the women. The client pays the sex worker for her services and the club withholds rent money on said revenues as well as a small service charge fee. Under this scenario, there are evidently two separate and independent entrepreneurs at play, i.e. the club and the sex worker. This is confirmed by case law.
More importantly however is the moral and ethical issues surrounding the treatment of sex workers in St. Maarten, which excludes the existence of legal employment agreements. To mention a simple example, an employment contract with a slave is illegal (at least according to our laws). In the same way, employment agreements with workers whom are being treated unethically are also considered null and void.
The alleged unethical treatment of sex workers in St. Maarten has gotten so out of control that the government decided to stop the issuance of work permits for sex workers as of 2015. Local clubs, including Casa Blanca, are accused of exploitation of the women who work there. This environment is evidently not suitable for and in conflict with a legally binding and enforceable employment agreement.
The Highest Court has decided that an employment agreement with a sex worker is perfectly acceptable, unless the agreement should be considered unethical based on the specific circumstances, e.g. in case of exploitation.
It comes down to the following. The Public Prosecutor cannot have it both ways. If It charges and prosecutes local clubs for allegedly exploiting sex workers, then it is not possible to also go after the same clubs for not having reported the revenues of the sex workers for tax purposes. By doing so, the Prosecutor assumes the existence of legally binding employment agreements, which is not the case. If there is no employment relationship for civil law purposes, then the same applies for tax purposes. Tax wise, the sex workers are independent entrepreneurs and should be separately taxed as such. This way, taxation in St. Maarten would be in alignment with reality. No double dips for the Prosecutor’s Office and certainly not for the tax department.