New labor bill: Bad for business, bad for employees

The proposed “Labour Relations Bill, 2015” is an anti-business screed that will benefit neither employees nor employers and will result in increased unemployment in the Cayman Islands – especially among young people just starting out on their career paths.

We urge that the sitting government rethink, rewrite, or flat-out reject the current draft of the labor legislation that is currently being circulated for public input and comment.

In yesterday’s Compass, we included a 12-page special report on “Labor reform in Cayman” that provides an objective and comprehensive view of the labor issue, including analysis of the Labour Relations Bill, explanation of current law, historical background, and arguments both for and against the new legislation. We encourage everyone to read the report, in print or online at the Compass Data Desk.

Attorney James Bergstrom, making the arguments against the bill, made this overall observation:

“The Bill, as drafted, provides a much more punitive approach toward employers. It introduces a number of severe sanctions which are criminal in nature that are directed at individuals in the business.”

Some egregious examples included in the current draft legislation:

Every employer must enter into an employment contract within 10 days of hiring a new employee (including household domestics). Failure to do so makes the employer (the individual, not the business) liable for a $10,000 fine upon summary conviction.

The bill endows the director, deputy director, and labor inspectors with the same powers conferred upon a constable under the Police Law. These labor officials would be empowered to enter any workplace without notice at any time during working hours to ensure compliance with the law.

Extremely importantly, the new bill erodes the current provisions of the Labour Law as they relate to the standard probationary period for new employees. Currently, an employer can “take a chance” on a marginal employee, who well may be Caymanian, because if the relationship doesn’t work out, it can be ended without penalty. This is extremely beneficial to young people entering the workforce because it gives well-meaning employers an incentive to give them an opportunity.

The new legislation, in certain circumstances, would subject the employer during the probationary period to charges of “unfair dismissal” if he were to terminate a new employee. Again, in Mr. Bergstrom’s words: “Employers would need to become far more cautious in hiring any new staff and would not be willing to hire anyone except those with the requisite experience and qualifications. This would most likely impact young Caymanians the most.”

Some additional details and tidbits from the bill:

Severance pay for “fair dismissal” of an employee doubles from one week per each completed year of employment to two weeks. For “unfair dismissal,” the payment quadruples from one week per each completed year of employment to four weeks (up to a maximum of 48 weeks).

The proposed bill governs only the private sector. The public sector (meaning the civil service) is excluded from its onerous provisions.

We could go on and on, but since we are approaching our “bottom line” for this editorial, let us offer this:

Governments everywhere – not just in Cayman – seem to operate under the illusion that they can mandate and effectuate full private sector employment by passing laws.

They cannot.

Education, not punitive labor legislation, is the only sure path to meaningful long-term employment in these islands – and anywhere else.

P.S. For those who do not agree with us, we refer you to the arguments made in favor of the bill by local businessman George Ebanks in our special report. Mr. Ebanks put forth the best possible defense of what we still consider to be a critically flawed piece of legislation.


  1. Europe has some of the strictest employment protection laws in the world. Especially France.
    In consequence they have no growth.

    By contrast Florida has "employment at will" laws, anyone can be let go for any reason, except for discrimination and similar outrages.
    Florida has growth.

    In the UK we once fired an Indian lady packer from our warehouse. This was after numerous warnings about her poor work ethic and constantly arriving late.

    She sued us for unfair dismissal and that her dismissal was for racial reasons.

    We wasted thousands defending this case, which was dismissed as without merit. In fact she was told that her case was an insult to those people who have genuinely been discriminated against.

    So please let’s not go down this road to socialism.

  2. I think that this new labor bill is a big disgrace, and all the politicians that put it together. This bill is bad for the Islands and jobs, and it would push developers/business out of the Islands. I wonder why the business/developers are not speaking up like the Cayman Compass is doing?

  3. Nothing is surprising by this. This is what you get when you get a bunch of never-ran-a-buniness-in-their-life-knownothings private sector illiterates, draft bills for the public at large that supersede their understanding of the private sector. These guys can’t even manage the finances with guaranteed tax income, now they want to "fix" the private sector. Jokers….

  4. @RON, because they are sick of trying. That feeling is catching as more and more investors start to wonder if Cayman is worth it. Primarily smaller investors that don’t have pockets deep enough to cut through the red tape.

  5. The new Labour Relations Bill, 2015 will be good for both employer and the employee. It will be good for the employee in that it will now prevent the current practice of employers hiring; as a token, a Caymanian; teaching them nothing, no instruction ("using them") and then shortly thereafter firing them on 24 hours notice only to be replaced with a work permit- perhaps the intention all along.