Lawyer: New Labour Law adds costs

Mr Moses

If the proposed Cayman Islands Labour Relations Bill remains unchanged, every private sector company will likely have to rewrite its current employment contracts with workers – if those agreements exist at all – according to a review of the legislation by a local law firm. 

“There will be additional HR costs and zero time in which to [make the changes],” HSM Chambers managing partner Huw Moses said during an interview with the Cayman Compass last week. 

Mr. Moses, who also gave a presentation last week to business owners at the Cayman Islands Chamber of Commerce on the new legislation, said he believed government should seek to make some “tweaks” to the law as it is currently rewritten, particularly to give employers a grace period to comply with new dictates from the administration. 

The new Labour Relations Bill, which will repeal and replace the current Labour Law (2011 Revision), is undergoing a public comment period prior to its presentation to the Legislative Assembly. The public comment period ends on Aug. 31. 

The Ministry of Employment said in a statement released Monday that a “number of observations” raised by Mr. Moses and his firm would be considered during the next phase of drafting the legislation. However, the ministry also alleged that the presentation to the Chamber last week sought to “sensationalize certain issues.” 

“For example, much concern was raised in relation to the new proposed provision that gives the ability for a Labour Tribunal to order an employer to reinstate or reengage an employee who has been found to have been unfairly dismissed, as an alternative remedy for compensation,” the government statement read. “However, it was not explained during the presentation that, if a tribunal chose to exercise this remedy, the practicality of making such an order would need to be considered by the tribunal – in addition to both parties’ wishes.” 

Mr. Moses told the Cayman Compass Friday that he believed the broader powers given to the Labour Appeals Tribunal would actually assist in the process, in particular by allowing both parties in a labor dispute to resolve the matter without taking the more expensive route of going to court. 

However, the veteran local attorney also told local businesses that they could expect generally larger awards in dismissal cases, more claims of unfair dismissal and more labor-related appeals and more legal costs for companies that will be mostly unrecoverable. 

Policies relating to unfair dismissal, when an employee is found to have been fired without cause, are proposed to include much stricter penalties for employers. Under the old law, workers who were unfairly dismissed were entitled to a maximum of one week’s pay for each year worked at the company. The new bill sets the minimum pay for an unfairly dismissed employee at a minimum of four weeks per each year employed at the company with no upward limit set on the award. 

Mr. Moses said the old award for unfair dismissal needed to be increased, but the lack of an upward limit on the award could potentially cause local employers significant hardship and a lack of certainty. 

Another area of the law that needed to be clarified, he said, was the termination of fixed-term contracts. For instance, some have misinterpreted the proposed legislation to mean that non-Caymanian work permit holders can have their contracts or permits canceled at any time if the company decides to replace them with a permanent resident or a Caymanian. Mr. Moses said that’s not true. However, if a non-Caymanian is replaced at the end of their current contract with a Caymanian or permanent resident, they would not be entitled to severance pay or payment for fair dismissal. 

“But the drafting of the legislation appeared to say [the employer] would be liable for severance payments [in that case],” Mr. Moses said. 


The redrafted labor legislation also places a number of responsibilities on the employer, for which fines and/or jail sentences can be levied in cases of noncompliance. 

Under the Labour Relations Bill, employers are required to make a copy of the new law available to all workers and must keep the law and regulations given to employees up to date. A fine of $500 will be levied if the company does not make this information available. 

Mr. Moses said it appeared that a “conflict” in the proposed legislation required both a contract of employment and a statement of working conditions for the employee where that would not be necessary. In any case, the statement of working conditions would have to be signed by both the employer and the employee. 

Mr. Moses questioned what would occur if current employees who have no working contract refuse to sign one unless they’re given a substantial raise and whether the employer would face fines for not having a contract in that situation. The proposed legislation levies a $10,000 fine for failing to provide a written statement of working conditions, a $2,500 fine or six months’ imprisonment for providing an employee with a “defective” written statement of working conditions and a similar fine for failure to provide such a statement to a worker upon request. 

In a case of employees losing their job – being made redundant – in a company with five or more employees where they have been employed full-time for six months or more, a report on that job loss must be filed with the government’s director of the Department of Labour and Pensions. A $500 per day fine can be assessed if that report is not filed. However, Mr. Moses points out there is no set time frame in the law within which the company must file such a notice. 

Bill review 

In its statement released Monday, the ministry indicated that the draft Labour Relations Bill was not a “done deal” and that the public, including Chamber of Commerce members, would have ample opportunity to give their views. 

“[During] the process, there has been a deliberate attempt to balance the interests of the employee and the employer,” the ministry statement read. “Attempts have been made to clarify and strengthen a number of provisions in the law in order to benefit both the employee and the employer and the economy as a whole. 

“As long as an employer abides by the law, there would be no fear about the application of increased penalties and fees as a result of breach of the law.” 

Mr. Moses
Mr. Moses