Employers reminded to obey Labour Law

Cayman Islands labour law

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Government is warning local businesses that they are under an obligation to pay employees who have been terminated what they are owed under the law.

It follows news of growing terminations in light of Cayman’s lockdown and curfew restrictions.

In a statement issued Tuesday afternoon, the Department of Labour and Pensions said, “Employers terminating or temporarily laying off workers as a result of the coronavirus pandemic must upon termination pay severance pay of one week’s wages, at the employee’s latest basic wage, for each completed twelve-month period of employment.”

It explained that the employment period is to reflect any time during which the employee worked for any previous owners of the same business.

“Employees are also entitled to any earned vacation leave, sales commission owed, as well as gratuities earned,” it added.

It is an issue Premier Alden McLaughlin, who is also Human Resources Minister, has addressed in several of the daily COVID-19 media briefings.

He has gone on record saying that none of the provisions that are in place have “suspended” the Labour Law and employers must pay employees as required by the legislation.

McLaughlin also said that government is exploring ways to possibly extend the pay-offs that are given to Caymanians impacted by the closures to expatriate workers who are unable to go home and cannot work.

This plan drew criticism on social media.

However, the premier said on Monday Cayman is facing a humanitarian crisis and reminded the public, “we pride ourselves as a Christian country living by Christian principles”.

He pointed to two Cuban nationals who came to him seeking help after they were laid off over the weekend and who were only paid for one day’s work.

“They are desperate; what should we do about that? Tell them go fish? We have to ensure that anyone who is living here has the basics to provide for a decent existence while they here,” he said.

The Department of Labour and Pensions, in its statement, also addressed the issue of lay-offs, saying it “will make every effort to work with employers and employees during this time to ensure the proper observance of the Labour Law (2011 Revision) and its Regulations”.

It also pointed out that in the cases of temporary termination, employers do not need to pay severance to their employees.

“Exceptions to this include; where the date of recall is thirty days or more in the future, if no date of recall is given at the time of termination. (Severance pay shall be payable thirty days from the termination if the employee has not been recalled. Interest at 10% per annum on the amount of severance pay due shall be payable for the interval between the original termination date and the date of actual payment),” it explained.

For employees in agriculture and construction, these exceptions apply after six months.

Anyone with labour or pension enquiries can call 945-8960 or email [email protected]. People can also visit the website www.dlp.gov.ky/ to view labour and pensions legislation, FAQs, or use the minimum wage calculator.

The department also accepts anonymous reports via a confidential hotline at 945-3073.


Section 42 of the Labour Law (2011), which addresses severance pay provides the following guidance:

42. (1) Subject to subsections (2), (3) and (4), simultaneously upon the termination of the employment of any employee entitled to severance pay, the employer shall pay to that employee severance pay calculated in accordance with this Part.

(2) If the termination is stated to be temporary, no severance pay need be paid to the employee at the time of such temporary termination except-

(a) where the date of recall, if one is given at the time of termination, is thirty days or more in the future, severance pay shall be payable on the date of termination; or

(b) if no date of recall is given at the time of termination, severance pay shall be payable thirty days from the termination if the employee shall not then have been recalled; in which case, interest at ten per cent per annum on the amount of severance pay due shall be payable for the interval between the original termination date and the date of actual payment.

(3) Subsection (2) shall apply to employees in agriculture and construction with the words “six months” substituted for the words “thirty days” in both places where they occur in that subsection.

(4) Where payment of severance pay has been made, with interest where due under paragraph (b) of subsection (2), and the employee is subsequently recalled to his former or substantially equivalent employment or is again hired by the same employer, he shall be considered to be newly hired and his term of employment, for subsequent severance pay purposes, shall be considered to have commenced on the date of his recall or rehire.

Full coverage: Coronavirus

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