New Labour Law changes will allow employers to temporarily lay off staff for up to two months without being required to pay out severance packages.

The changes, passed in the Legislative Assembly Thursday, ensure that employers must continue to pay health insurance for such workers during that time.

Premier Alden McLaughlin presented the amendments to the law in the Legislative Assembly on Thursday night, saying it will provide a “lifeline” to Caymanian businesses, allowing them the opportunity to pause operations without permanently losing staff.

The principal change to the Labour Law gives Cabinet the flexibility to grant an extension of the period for compliance or an exemption from any provision of the Labour Law or regulations in case of a “disastrous event”.

“The additional powers provided to the Cabinet will strengthen the government’s capacity to mitigate the economic impacts of major disasters,” he said.

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In this case, Cabinet is using the new powers to give employers an extra 30 days, on top of the 30 already allowed in the law, before they are required to pay severance to employees they have laid off on a temporary basis.

The premier said government believes the extension of time before “forced terminations” will allow many businesses, in particular small-to-medium-sized Caymanian businesses, to be able to “wait out the negative impacts of this unprecedented pandemic and be in a position to recall workers as soon as they are able to resume operations”.

He said without that flexibility, many Caymanian businesses “will simply not be able to pay significant severance packages and will be forced into bankruptcy”.

The associated draft regulations, he added, seeks to reduce the number of employees who face “hard terminations” by giving employers the ability to extend the temporary terminations or layoffs by an additional 30 days to allow them to restore operations and to recall staff before being forced to terminate them.

“This extension will apply to employers who temporarily terminate the employment of any employee entitled to severance pay,” McLaughlin said.

He said government may have to look at the provisions down the road as the COVID-19 crisis continues to evolve.

“We remain very hopeful that the results of the ramped-up testing programme, the mass testing under way … will be good, and will enable us to start planning … to start to slowly reopen the economy and hopefully give many of the businesses which have not been designated as essential an opportunity to resume operations and to keep on staff, particularly Caymanian staff,” he told fellow MLAs.

The law change also allows for documents and reports to be sent electronically to the Department of Labour and Pensions negating the need to physically deliver them.

Opposition Leader Arden McLean welcomed the changes but cautioned employers that the provisions do not exclude them from their liabilities, especially those who are before the Labour Tribunal.

“They need not think they are going to be excused because of COVID-19; that would be a travesty,” he said.

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