It's always important to know your rights. We urge every employee to become familiar with their employee handbook in addition to familiarising themselves with Cayman's Labour Law and the proposed changes to that law.
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Learn about employee entitlements and labour regulations in the Cayman Islands.
Labour Law – Know Your Rights
Immigration and Employment Questions and Answers
Below, find advice for
businesses as well as guidance for individuals on labour law, dismissal,
insurance, pensions, rent and repatriation.
Cayman Islands Labour Law
A redundancy is a form of “fair dismissal” provided it is carried out
in accordance with the Labour Law. Redundancy is defined in Cayman Islands Law as “a situation in which, by virtue of a lack of customers or of orders, retrenchment, the installation of labour-saving machinery an employer’s going out of business, force majeure or any other reason, tasks which a person was last employed to perform no longer exist.” The Law provides for preference in
employment. If a group of persons carrying out a specific role within an
organization are to be made redundant, the Law requires that preference
be given according to immigration status. It follows that work permit
holders are expected to be made redundant before permanent residents,
permanent residents are expected to be made redundant before the spouse
of a Caymanian holding a Residency and Employment Rights
Certificate, and Caymanians are expected, by Law, to be the last to face
redundancy. This is entirely academic if a business is closing down.
All persons (without regard to immigration status) will likely be made
redundant together. That is perfectly lawful.
Given that a redundancy constitutes a form of termination, it triggers a series of entitlements.
These include severance pay, notice pay, and accrued (but untaken) vacation pay.
Severance Pay is calculated as being one week’s pay, at the latest “basic wage”, for each completed year of service. “Basic wage” means the ordinary wage due to an employee under his or her contract of employment. It does not include such matters as future anticipated gratuities and commissions. Accordingly, for many, the basic wage will be CI$6.00 (or such other higher number set out in their contract of employment). Where no formal contract exists, the amount can be determined by reference to the conduct of the employer and employee – i.e. what is the basic wage that has in fact been paid.
Notice pay is determined by reference to the contract of employment. Where no notice period is prescribed it is deemed to be the interval between pay days.
Accordingly (by way of example) an employee who is made redundant on 31 March and who:
- has been employed by that employer for 3 years and 2 months
- earns CI$6.00 per hour at basic wage for a 40 hour week (CI$12,480 per annum); and
- has a 10 day annual vacation entitlement and has taken none this year;
would generally expect to be entitled to payment on redundancy of:
- 3 weeks severance of CI$720
- One month’s notice pay of CI$1,040 (assuming the employee is not asked to work during their notice period); and
- 2.5 days accrued but untaken vacation pay of CI$120.
A person in this situation would accordingly expect payment on redundancy of CI$1,880. Such payment is payable immediately on termination.
National Pensions Law
There is generally no entitlement to access pension monies prior to
retirement. However, severance payments made on redundancy are not
pensionable, but accrued untaken vacation pay, and any payment due in
lieu of notice, are considered to be pensionable under the National
Pensions Law. Also it should be noted that any additional voluntary
contributions made by the employee can be withdrawn due to unemployment.
Health Insurance Law
All residents in the Cayman Islands are required to have “adequate”
health insurance. As a general rule the obligation to ensure that health
insurance is in place rests with employers. Upon termination of
employment employers are generally required to ensure that health
insurance is maintained for 3 months following the termination of
employment. Employers are however entitled to charge those premiums to
the employee. The employer’s obligation to maintain health insurance
ends upon the person becoming employed elsewhere, being covered by an
alternative qualifying policy of insurance, upon the expiry of 3 months,
or upon the person leaving the Cayman Islands (whichever happens
first). It follows that it may be of direct economic benefit for persons
who held work permits, but who have been made redundant (or otherwise
terminated), to leave the Islands as soon as practicable.
Immigration Act
Regulation 9 of the Immigration Regulations Act provides that where a
person on a work permit is no longer employed, any work permit ceases to
be valid, and the employer must forthwith notify the Department of
Workforce Opportunities & Residency Cayman. Redundant employees who
were on a work permit to be in Cayman have no right to remain once their
employment ends. In normal circumstances that means that persons are
expected to register as tourists and remain in accordance with
permissions extended by WORC/Customs and Border Control.
As matters stand, no expatriate can work in the Cayman Islands without express permission or exemption from requirements. It will not be possible for an expatriate, who has been made redundant, to seek and obtain alternative employment without first having to leave, and if normal rules continue to apply, Caymanians, Spouses of Caymanians and Permanent Residents will be given preference for any opportunity.
Rent
The obligation to pay rent will be based on the terms of any
applicable lease. In normal circumstances appropriate notice will need
to be given, and deposits may be forfeited if notice is not given or
there is damage to the rented unit. Some leases may provide for the
lease to end upon the termination of a work permit.
Repatriation
Unless provided for by contract, there is no obligation on an
employer to ensure that an expatriate employee is able to return to
their home country. It is worthy to note that employers have paid
substantial “repatriation fees” to the Cayman Islands Government in the
expectation that those funds could be applied towards the costs
associated with workers getting to their homeland.
Below are some of the highlights of the laws governing employment in the Cayman Islands.
- Sexual Harassment: The Gender Equality Law (2011 Revision), states that sexual harassment is illegal in the Cayman Islands.
- Maternity Leave: The Labour Law (2011 Revision) stipulates that 12 calendar weeks must be granted for maternity leave. The amount of paid maternity leave is four weeks (20 days) full pay; four weeks half pay and four weeks no pay, for all female employees who have completed 12 months of employment otherwise it will be on a prorated basis.
- Holiday Pay: According to the 2011 Labour Law, each employee is entitled to a minimum of two weeks’ vacation (10 working days) for the first four years of employment, three weeks (or 15 working days) for years four to 10, and four weeks (20 days) if employed for over 10 years for the same company. However, as of March 2024, new mothers who work for the Civil Service will now be given an additional four weeks of maternity leave. The paid portion of their maternity leave has been increased to 60 days (up from 30), and they can take a total of 110 days off (up from 90). New fathers will also now get 20 days of paternity leave, up from two working weeks, with an increase in the paid portion from one week to ten working days on normal pay.
- Severance Pay: Under the Labour Law (2011 Revision) all employees who have continually worked for their employer for more than a year are entitled to receive severance pay if their employment is terminated for any reason other than for misconduct and poor performance, at a rate of one weeks’ salary for every completed year of service. For part-time employees, severance pay is calculated based on the ratio of their hours of employment to the standard work week.
- Unfair Dismissal: If an employee feels that they have been unfairly dismissed they have 90 days from the date the employment was terminated to file a claim for unfair dismissal with the Department of Labour and Pensions. If the employee is successful with their claim they may be entitled to further compensation if the Labour Tribunal deems fit.
- Minimum Wage: The current National Minimum wage is CI$6 but this is up for review. The recommendation (as of March 2024) is that the minimum wage be raised to CI$8.75 and be index linked going forward. Those in service positions who receive a portion of their income via gratuity can be paid CI$4.50 per hour. Domestic helpers who receive benefits such as a car and accommodation in their salary package cannot be paid less than CI$4.50 per hour. However, both of these last two scenarios are set to change once the minimum wage rises to CI$8.75. See here to read the full report on the Minimum Wage Regime in the Cayman Islands.
Overtime & Weekend Hours
As is the case in most leading jurisdictions around the world, many companies expect their employees to work beyond the normal eight-hour work day.
Conversely, standard human resource (HR) practices may vary from country to country.
Before taking a job, familiarise yourself with the work culture. Ask your prospective employer’s HR professional whether overtime pay is provided or time in lieu. Check also whether you will be given an increase in vacation time if you consistently work much longer hours, as there is no requirement in the law for an employer to grant this.
Knowledge of the Labour Law will assist you in determining what is legal in the Cayman Islands from an employment law standpoint.
Check the Department of Labour and Pensions’ website for more information. The Cayman Islands Society for HR Professionals is also a great resource.
Health Insurance & Other Benefits
Health insurance in the Cayman Islands is mandatory. Employers are required to provide employees, their spouses and dependents with health insurance. Employees are also entitled to a pension plan.
Similar to other parts of the world, employers may offer enhanced benefits to prospective employees and it is not uncommon to see employers offering enhanced vacation leave, relocation expenses, additional pension contributions, bonus options, upgrades to premium health insurance and private school fees, amongst others. It can be very expensive to move household items to Cayman and different employers will have more or less generous relocation packages, so review the offer of employment carefully.
Many employers offer attractive health insurance packages for their employees, some even including wellness and preventative options.