Cayman Islands companies are forbidden from “victimizing” or threatening to victimize workers who complain that their pensions are not being paid, according to proposed legislation.
“Victimization” includes dismissal from work, suspension, denials of promotions, demotions, intimidation or discrimination against the employee by his or her employer.
In instances where employees believe their employer has not made payments into their retirement plans as required under law, they may disclose that in writing to the government director of labor and pensions or to another “authorized officer.” Employees are also allowed to take their complaints to the government’s Labour Appeals Tribunal.
Proposed legal penalties for victimization under the National Pensions Law would increase fines from the current $5,000 to $10,000, or to imprisonment for a term of one year, or both.
The National Pensions Law, which regulates private sector retirement plans, requires companies to make payments of 10 percent of a worker’s annual salary into a retirement fund of the company’s choice. Five percent of the payment comes from the worker’s salary and a 5 percent matching contribution is made by the employer.
Failure to make those payments is punishable by fines, denial of a local trade and business license, and in egregious cases, closure of the business. However, in practice, the nonpayment of pensions in Cayman has been a widespread problem since the legislation was implemented nearly two decades ago.
A report in late 2013 by former Complaints Commissioner Nicola Williams detailed the depth of the problem, calling it a “national crisis,” and warning that many workers nearing retirement would be left dependent on social services because their employers had not paid into their retirement accounts.
Ms. Williams first reported on the issue in 2010; a follow-up evaluation by her office two years ago revealed the problem had gotten worse, with more than 1,100 companies in some state of arrears on pension plan contributions.
Part of the problem has been a lengthy process through the court system in prosecuting pension violators.
In 2014, a year after Ms. Williams issued her follow-up report, there appeared to be few instances of pension violations being resolved through the court system. According to records released by former Acting Pensions Superintendent Mario Ebanks, some 15 cases of alleged pension violations were before the courts, and only four had been brought to a conclusion.
The most well-known of the “concluded” cases from last year involved Cayman Net Ltd., the operator of the former Cayman Net News newspaper, where no employees received restitution for money owed. “At [a court] hearing on April 22, 2014, all charges [were] dismissed as it was accepted that no proceedings could occur as [owner Desmond] Seales was dead and was the sole director,” a statement on the National Pensions Office website read. “Documentation was produced to show business closed. Ex-employees would have to take civil action to recover their funds.”
To try to rectify this problem, the proposed pensions legislation, which has been put out for public comment, allows government to create a system of “administrative” fines for companies that don’t pay into retirement schemes. The proposal allows the director of labor and pensions to increase administrative fines for businesses that don’t meet their pension requirements.
A day after he appeared to announce the pensions reform bill, Director of Labour and Pensions and Acting Pensions Superintendent Mr. Ebanks officially left his position at the pensions office. He said he would stay on a “part-time” basis through July and then act as a consultant to finish up certain projects.
As of Wednesday, Mr. Ebanks moved into his new job as chief human resources officer at the Cayman Islands Airports Authority.
“After spending the past few years … in an important regulatory role, I am delighted to return to my passion of human resources and organizational development,” he said.