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COVID-19 FAQs: Labour & Pensions

Cayman Islands Government
Published: April 28 2020
Last Updated: June 21, 2020

Labour & Pensions F.A.Qs

This section covers questions relating to the labour and pensions in regards to COVID-19 in the Cayman Islands. Click the links below to skip to the relevant questions or scroll down to read more:

Working During Curfew
  1. What happens if I lose my job?

Paying Employees & Ending Employment

  1. Is an employer required to pay the National Minimum Basic Wage?
  2. How soon should I pay employees if they are being terminated?
  3. By Law, should I pay severance to employees being laid off?
  4. Do I owe vacation pay if my employee has not completed 12 months’ employment?
  5. How much notice pay do I owe my employee?

Pensions

  1. Can I draw from my pension?

 

What happens if I lose my job?

The Department of Labour and Pensions will make every effort to work with employers and employees during this time to ensure the proper observance of the Labour Law and its Regulations.

If an employee is terminated as a result of COVID-19, the employer must pay severance pay of one week’s wages, at the employee’s latest basic wage, for each completed twelve-month period of employment. 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, and/or gratuities earned.

If an employee is temporarily laid off, severance pay is not required unless:

  • the date of recall is 30 days* (or, for employees in agriculture and construction, six months) or more in the future; or
  • no date of recall is given at the time of termination and the employee has not been recalled after 30 days* (or, for employees in agriculture and construction, six months).
*Under the Labour (Extension of Severance Pay Period) Regulations, 2020, the current 30 day layoff period has been extended to 60 days. In this instance, once 60 days has passed the termination is no longer considered to be temporary, and severance becomes payable.

In this second scenario where no date of recall is given, interest at 10 per cent per annum on the amount of severance pay due is also payable for the interval between the original termination date and the date of actual payment.

Where payment of severance pay has been made, including with any interest due, and the employee is subsequently recalled to his or her former or substantially equivalent employment or is again hired by the same employer, he or she shall be considered to be newly hired.

The Department of Labour and Pensions 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.

 

Is an employer required to pay the National Minimum Basic Wage?

Yes. An employer cannot pay any less than the appropriate National Minimum Basic Wage, but that does not prevent an employer from paying more than the National Minimum Basic Wage. Term and conditions, including salary/wages, of employment are typically negotiated and agreed between the employer and employee and should be contained in a statement of working conditions.

The National Minimum Basic Wage is CI$6.00 (gross) per hourly rate for most employees, and the gross hourly minimum wage rate for service employees of an employer that has a registered gratuities scheme is CI$4.50. There are also special calculations for live-in household domestics and employees who work on a commission basis. Read more

 

By Law, should I pay severance to employees being laid off?

The entitlement to severance arises after an employee has completed 12 months of employment. Severance is to be paid to employees being laid off, unless the employees are to be brought back to work within 30 days (in most industries or fields), or 60 days if laid off as a result of COVID-19 due to the enactment of the Labour (Extension of Severance Pay Period) Regulations, 2020. In this instance, once 60 days has passed the termination is no longer considered to be temporary, and severance becomes payable.

An extension to the 30 day temporary layoff period would mean that the employee continues to be employed for a further period of 30 days, totalling 60 days from the initial temporary layoff as a result of COVID-19 and accruing benefits pursuant to the Labour Law.

As it relates to the construction and agriculture industries, severance is to be paid to employees being laid off, unless the employees are to be brought back to work within six months. Once six months has passed, the termination is no longer considered to be temporary and severance becomes payable.

Severance is calculated at one week’s wage for each completed year of employment.

 

How soon should I pay employees if they are being terminated?

The Department of Labour and Pensions encourages employers to arrange for final payments owed to employees to be made upon termination.

Employers should be mindful that they must remit employees’ wages within one month of the wages being earned to avoid incurring an offence.

 

Do I owe vacation pay if my employee has not completed 12 months’ employment?

Employees begin accruing vacation benefits at the commencement of employment. Once an employee has completed his probationary period, payment of earned vacation leave is required when his employment is terminated. This may be prorated where employees have not completed a year of employment.

 

How much notice pay do I owe my employee?

The Labour Law requires that employees be given notice of their termination, if being dismissed for reasons other than misconduct or poor performance following a warning letter. Notice at least equal to the pay period interval must be given, i.e. if your employees are paid bi-weekly, two weeks’ notice would be required.

Where an employee is being terminated with immediate effect and not required to work out the notice period, the employee must be paid what they would have earned had they worked through the period of notice.

 

Can I Withdraw pension?

Amendments to the National Pensions Law provide for a pension holiday as well as emergency withdrawals from pension funds. Read more.

 

Learn More About Labour & Pensions

 

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Cayman Islands Government, Government Admin Building, Grand Cayman, Cayman Islands, Tel: 345 949 7900

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