By:
Nick Joseph (HSM Partner) and Hilary Brooks (HSM Associate –
Employment)

HSM’s
Employment
and Immigration
lawyers are advising a number of persons and businesses as to the
requirements and expectations of the Law when businesses are required
to make staff redundant.

Redundancy
is defined in Cayman Islands Law as “a situation in which, by
virtue of a lack of customers or of orders, retrenchment, the
installation of labour-saving machinery an employer’s going out of
business, force majeure or any other reason, tasks which a person was
last employed to perform no longer exist.”

Cayman
Islands Labour Law

A
redundancy is a form of “fair dismissal” provided it is carried
out in accordance with the Labour Law. The Law provides for
preference in employment. If a group of persons carrying out a
specific role within an organization are to be made redundant, the
Law requires that preference be given according to immigration
status. It follows that work permit holders are expected to be made
redundant before permanent residents, permanent residents are
expected to be made redundant before the spouse of a Caymanian
holding a Residency and Employment Rights Certificate, and
Caymanians are expected, by Law, to be the last to face redundancy.
This is entirely academic if a business is closing down. All persons
(without regard to immigration status) will likely be made redundant
together. That is perfectly lawful.

Given
that a redundancy constitutes a form of termination, it triggers a
series of entitlements.

These
include severance pay, notice pay, and accrued (but untaken) vacation
pay.

Severance
Pay is calculated as being one week’s pay, at the latest “basic
wage”, for each completed year of service. “Basic wage”
means the ordinary wage due to an employee under his or her contract
of employment. It does not include such matters as future anticipated
gratuities and commissions. Accordingly, for many, the basic wage
will be CI$6.00 (or such other higher number set out in their
contract of employment. Where no formal contract exists, the amount
can be determined by reference to the conduct of the employer and
employee – i.e. what is the basic wage that has in fact been paid.

Notice
pay is determined by reference to the contract of employment. Where
no notice period is prescribed it is deemed to be the interval
between pay days.

Accordingly
(by way of example) an employee who is made redundant on 31 March and
who:

1.  has been employed by that employer for 3 years and 2 months
2.  earns CI$6.00 per hour at basic wage for a 40 hour week (CI$12,480 per annum); and
3.  has a 10 day annual vacation entitlement and has taken none this year;
   

would
generally expect to be entitled to payment on redundancy of:

1. 3
   weeks severance of CI$720
   
2. One
   month’s notice pay of CI$1,040 (assuming the employee is not asked
   to work during their notice period); and
   
3. 2.5
   days accrued but untaken vacation pay of CI$120.
   
   
   
   

A
person in this situation would accordingly expect payment on
redundancy of CI$1,880. Such payment is payable immediately on
termination.

National
Pensions Law

There
is generally no entitlement to access pension monies prior to
retirement. However, severance payments made on redundancy are not
pensionable, but accrued untaken vacation pay, and any payment due in
lieu of notice, are considered to be pensionable under the National
Pensions Law. Also it should be noted that any additional voluntary
contributions made by the employee can be withdrawn due to
unemployment.

Health
Insurance Law

All
residents in the Cayman Islands are required to have “adequate”
health insurance. As a general rule the obligation to ensure that
health insurance is in place rests with employers. Upon termination
of employment employers are generally required to ensure that health
insurance is maintained for 3 months following the termination of
employment. Employers are however entitled to charge those premiums
to the employee. The employer’s obligation to maintain health
insurance ends upon the person becoming employed elsewhere, being
covered by an alternative qualifying policy of insurance, upon the
expiry of 3 months, or upon the person leaving the Cayman Islands
(whichever happens first). It follows that it may be of direct
economic benefit for persons who held work permits, but who have been
made redundant (or otherwise terminated), to leave the Islands as
soon as practicable.

Immigration
Law

Regulation
9 of the Immigration Regulations provides that where a person on a
work permit is no longer employed, any work permit ceases to be
valid, and the employer must forthwith notify the Department of
Workforce Opportunities & Residency Cayman. Redundant employees
who were on a work permit to be in Cayman have no right to remain
once their employment ends. In normal circumstances that means that
persons are expected to register as tourists and remain in accordance
with permissions extended by WORC/Customs and Border Control. Customs
and Border Control have announced that where a permission to work in
Cayman ends before 22 March persons can simply proceed to leave
before the anticipated 22 March, 2020 closure, without first having
to “regularize” their permission to be in the Islands.

As
matters stand, no expatriate can work in the Cayman Islands without
express permission or exemption from requirements. It will not be
impossible for an expatriate made redundant to seek and obtain
alternative employment without first having to leave, and if normal
rules continue to apply, Caymanians, Spouses of Caymanians and
Permanent Residents will be given preference for any opportunity.

Rent

The
obligation to pay rent will be based on the terms of any applicable
lease. In normal circumstances appropriate notice will need to be
given, and deposits may be forfeited if notice is not given or there
is damage to the rented unit. Some leases may provide for the lease
to end upon the termination of a work permit.

Repatriation

Unless
provided for by contract, there is no obligation on an employer to
ensure that an expatriate employee is able to return to their home
country. It is worthy to note that employers have paid substantial
“repatriation fees” to the Cayman Islands Government in the
expectation that those funds could be applied towards the costs
associated with workers getting to their homeland. For some,
returning home is not a reasonable possibility. It requires closed
third party borders to be crossed, even if flights are available.
They may be stuck in Cayman, perhaps for an extended period. The
Government has recognized this and it, employers, and the community
will have to come together (maintaining social distancing) to ensure
that everyone’s basic needs can be met.

We
are ultimately, all in this together.  

This
article is intended only to provide a summary of the subject matter.
It does not purport to be comprehensive or to provide legal advice.
No person should act in reliance on any statement contained in this
article without first obtaining specific professional advice.
Alternative solutions also exist which may better suit the
requirements of a particular individual or entity.