Chamber of CommerCe employers’

poCket Guide

Training & Development Toolkit for all Levels

The Chamber of Commerce Professional Development and Training Centre offers a winning combination of one and two-day courses to affordably assist businesses with the development of their most valuable asset, their employees. For further details and a list of upcoming courses, visit www.caymanchamber.ky/training

Mentoring Cayman is a joint initiative between the Cay-man Islands Chamber of Commerce and the Ministry of Education, Training & Employment to assist high school students to become the next generation of business leaders. To learn more and become involved, visit www.caymanchamber.ky or call (345) 949-8090

Leadership Cayman is a dynamic six-month programme designed to allow participants a deeper understanding of social, economic, business and political issues whilst developing their own personal leadership styles and nourishing community spirit. For more information, please visit www.leadershipcayman.ky

Business Coaching Cayman, a partnership between the Chamber of Commerce and Shirlaws, is a six-month programme specifically designed to provide access to the tools, techniques and skills available through busi-ness coaching for business leaders. To see if this is the right investment for your business, contact the Cham-ber of Commerce at (345) 949-8090

Business Coaching Cayman

1

Contents

Message from Chamber President Chris Duggan 2

Message from Mario E. Ebanks, MBA, Director, Department of Labour & Pensions 2

Employers’ Guide on Determining Who is a Caymanian 3

Pay and the Standard Work Week 4

Gender Equality 6

Unfair Dismissal 9

Pensions 12

Health Insurance 16

Labour Tribunals 17

About the sponsors: Cayman Islands Chamber of Commerce, Baraud International & Appleby 20

Chamber of CommerCe employers’ poCket Guide

2

Message from Chamber President Chris Duggan

Dear employer,

The Chamber’s Employers Pocket Guide is a compilation

of the essential employment related legislation to help you

stay in compliance when it comes to how you treat your

employees. The booklet is intended to be a quick read,

but it’s full of information to help you be both fair and

legal, 100% of the time. For more complex matters, you

are encouraged to review the specific piece of legislation

or to seek legal advice.

The guide is designed to help you stay well within legal boundaries when

dealing with employee matters. Each section covers a specific law or related

employment related topic. You’ll receive advice on complying with key sections

of the Labour, Pensions, Health Insurance and Gender Equality laws.

On behalf of the Chamber Council, I’d like to thank Baraud and Appleby for

sponsoring the development and production of the guide and the Department of

Labour & Pensions for endorsing the development of this booklet.

Message from Mario Ebanks, Director, Department of Labour & Pensions and Acting Superintendent of Pensions

On behalf of the Department of Labour and Pensions

and the Ministry responsible for Employment, I commend

the sponsors of this Pocket Guide, and all of those

who worked to make it possible, for their great spirit

of corporate citizenship for this initiative. Even before

taking up this post I have been a long-term advocate for

quick and accurate access to information resources on

the fundamentals governing proper workplace relations;

key amongst those are Employment Contracts and Employee Handbooks. I am

therefore pleased that this Pocket Guide, which seeks to provide guidance to

business owners and managers, particularly the smaller ones who may not have

adequate in-house capabilities, is being made available. This Guide provides a

quick reference to key principles of the Labour, Immigration, National Pensions,

and Health Insurance laws, as well as providing some best practice commentary.

This Guide however is not intended to be an exhaustive reference, and

should not necessarily be used as a substitute for comprehensive legal advice

or consultative due diligence, particularly for unique circumstances. The

Department of Labour and Pensions has not vetted all of the contents in detail,

but we are pleased to endorse the concept as a very useful reference Guide.

Readers are encouraged to review the Laws, and particularly the Labour and

Pensions Law and Regulations, for edification and context, and are encouraged

to call upon the Department of Labour & Pensions for guidance on application

and interpretation, as appropriate.

Best wishes to you as you do your part, whether as a business owner,

employer, manager, or employee, to foster “workplaces of excellence” here in

these tranquil and diverse Cayman Islands, our homeland.

3

There are three broad categories of Caymanians:

• those who are Caymanian as of right;

• those who are Caymanian by grant (by a Board or Cabinet); and

• those who are Caymanian by entitlement.

It is possible for a person to cease to be a Caymanian. For instance, a letter

issued to a person who became Caymanian by entitlement as a child may be no

reflection of their current immigration standing.

Similarly, a person awarded status, now known as the Right to be Caymanian,

on the grounds of marriage to a Caymanian may have ceased to be Caymanian

on the breakdown of the relationship. It is therefore imperative that employers

equip themselves with sufficient proof to ensure they are fully aware of the

immigration status of each employee in their business.

Particularly where employees and prospective employees do not possess

a current valid stamp in their passport a helpful means of making appropriate

determinations can be a critical tool.

If a current or prospective employee is unable to make any of the statements

set out below, they should be asked to provide reasons as why they believe that

they are Caymanian along with supporting documentation.

I possess the Right to be Caymanian (and have not lost that status)

because:

• I was / am a British Subject and was born in the Cayman Islands before

27 March 1972, and attach a copy of my birth certificate or the photo

page of my passport evidencing this fact; or

• I was born on or after 27 March 1972. I attach a copy of my birth

certificate and also provide a copy of evidence that at least one parent

named on my birth certificate was Caymanian at my birth (this may

include the parent’s birth certificate showing they were born in the

Cayman Islands before 27 March1972); or

• I was born in the Islands between 27 March 1977 and 1 January 1983 to

non-Caymanian parents, possess British Overseas Territories Citizenship

by virtue of being born in the Islands and was subsequently granted the

employers’ Guide to determininG who is a Caymanian

A determination as to whether an individual is Caymanian can be critical

for employers in the Cayman Islands and can affect fundamental issues

such as the ability to offer, or continue to offer, someone employment.

The concept of who is a Caymanian is addressed in the Immigration Law.

The onus is on employers to satisfy themselves that current and prospective

employees are in fact Caymanian. The fact that someone is the holder of a

Cayman Islands Passport may be irrelevant to the question of whether or not

they are Caymanian. Such passports merely confirm that the holder is a British

Overseas Territories Citizen of the Cayman Islands, which is not the same as

being Caymanian.

4

pay and the standard work week

Right to be Caymanian by the Chief Immigration Officer in respect of

an application made before 21 December 2007. I attach documentation

evidencing these facts; or

• I became Caymanian by entitlement as a child and have obtained

continuation of the same subsequent to my 18th birthday, and attach

documentation confirming this; or

• I was granted Caymanian Status or the Right to be Caymanian by the

relevant Board and attach documentation which confirms this including

(where relevant) its continuation after my 18th birthday; or

• I was awarded Caymanian Status or the Right to be Caymanian by the

Governor in Cabinet and attach the certificate; or

• I am Caymanian on the basis of marriage to a Caymanian and I attach a

copy of the applicable certificate.

The onus, as stated previously, is on the employer to satisfy themselves

that they have the full particulars of the immigration status of each employee

in their business.

In the Cayman Islands, issues relating to pay are generally regulated by

agreement between the employer and employee under contracts of

employment. However, there are a number of key statutory requirements

provided for by the Labour Law (2011 Revision) (“the Law”) including a

standard work week, overtime and permitted deductions from pay.

STAnDARD woRk wEEk/DAy

The Law defines the following:

• 45 hours in any seven-day period as a standard work week; and

• 9 hours as a standard work day.

During the standard work day, employees are entitled to reasonable rest and

meal breaks. However, if an employee is employed in one of the specified

industries or businesses set out in the Law, (which include the construction,

manufacturing, heavy equipment operation, hospitality or gardening/landscaping

industries), then such employees are entitled to the following rest breaks:

• one 15 minute break if working more than three but less than five

consecutive hours; or

• two 15 minute breaks and a 30 minute meal break if working more than

five consecutive hours.

The 15 minute breaks must be paid whereas the meal break may go unpaid.

Employees not working in one of the specified industries are entitled to “reasonable”

rest and meal breaks. Whilst the Law provides no general minimum requirement as it

does, for example, in the construction industry, it is clear from the use of the word

5

“entitlement” that a failure on an employer’s part to provide “reasonable” meal breaks

is contrary to the Law. However, it is not in itself an offence under the Law.

oVERTIME

Overtime must be paid to an employee when his or her working hours exceed

either the standard working week (45 hours) or on any given day the standard work

day (nine hours). Overtime must be paid by an employer at time and a half based on

the employee’s basic hourly rate.

There are three instances in the law whereby there are exceptions. The three

exceptions to paying overtime (each of which is subject to limitations) are where:

• the employer and employee agree that time off will be taken in lieu of

overtime pay;

• non managerial/non professional employees agree with their employer that

no overtime or time off in lieu will be paid at all and a Labour Tribunal has

approved such agreement; or

• the employees are either at a professional or managerial level and agree that

no overtime will be paid.

In each instance the employee must voluntarily agree to the arrangement. Where

the employer agrees to provide time off in lieu, the agreement must be in writing

if it is a permanent arrangement. The written agreement may be incorporated as a

general clause in the contract of employment. If the period is less than one week it

is acceptable for the employer and employee to agree orally.

Where non-professional/non-managerial staff agrees to forgo overtime

payments and/or time off in lieu, that agreement must be in writing and both

registered and approved by a Labour Tribunal. Labour Tribunals tend to register

very few agreements presented to it for approval. This is largely due to employers

and employees being unable to satisfy the Labour Tribunal that the employee has

entered into the agreement voluntarily.

It is important for employers to ensure that their terms of employment are

compliant with the overtime requirements, particularly for non-managerial and non-

professional staff as the penalties for any failure can include a fine or imprisonment.

Both are determined by the gravity of the offence.

PAy

The finer details of an employee’s pay, including how much, when and

where pay is deposited are all matters which should be generally contained

in the contract of employment. As a safety net intended to protect the

most vulnerable of employees, the Law provides that:

• at least 50% of an employee’s total pay must be monetary;

• the remaining 50% may be made up of payment in kind (provided

that such payments do not include alcohol or drugs); and

• any payment must be paid in legal tender and any payment by

cheque, direct deposit or other non cash method must be approved

by the employee in writing.

The payment of wages to the employee must be followed within one

week by a statement of wages or a pay slip detailing precisely how the

wages are made up. Failure to do so is an offence under the law.

6

DEDUCTIonS FRoM PAy

Employers may deduct appropriate amounts from an employee’s pay provided

the total deduction does not exceed one-third of the gross amount earned during

the period. Deductions allowed under the Law include:

• any deduction imposed by law;

• money advanced by the employer excluding interest or similar charge;

• the cost of materials, tools and implements provided to a workman at his or

her request;

• payments for welfare, insurance or a similar fund;

• any sum that the employee has agreed to in writing to have deducted; and

• wages deducted as a result of suspending (where there is a contractual right)

the employee where the employee is guilty of further misconduct following

the issue of a written warning.

All other deductions require the employee’s specific written consent, which

should be obtained at an early stage rather than waiting until the day to make

the deduction.

The employer is specifically prohibited from deducting pay with respect to:

• the cost of anything required to be done by the employer under the Law ;

• obtaining or retaining employment with the employer(including work

permit fees);

• bad or negligent work (other than where that work results in cash float

shortages); or

• the cost of damage to material or property of the employer except where

the employee’s action are willful.

Gender equality

In 2011, the Gender Equality Law (the “Law”) was introduced which,

in addition to the sexual discrimination provisions outlined in the

Labour Law, prohibits gender discrimination and sexual harassment on a

number of different grounds. The Law relates to discrimination in all facets

of employment including recruitment, contractual terms, working conditions,

promotions, remuneration and training but provides an employer with a lawful

defence in specific circumstances. Understanding the Law and the obligations

imposed upon employers and employees alike can be challenging. For a better

understanding let’s look at what qualifies as gender discrimination.

MInIMUM wAGE

Whilst there is yet to be established any formal minimum wage in the

Cayman Islands there has been a unanimous commitment of all elected

representatives in the Cayman Islands Government to introduce one.

Although the legislation is yet to be drafted it is anticipated that a minimum

wage of CI$5.00 per hour will be introduced at some point in the future.

7

TyPES oF DISCRIMInATIon

Discrimination can include any act, practice or policy that directly or

indirectly results in discrimination against a person on any of the grounds

referred to above regardless of whether the person responsible for the act,

practice or policy intended to discriminate. Discrimination for an employer

extends to being liable for the acts of its employees which includes any agent,

representative or manager placed in authority over an employee. Accordingly,

to avoid falling foul of the Law, an employer must also ensure that its employees

do not discriminate.

DISCRIMInATIon on THE BASIS oF GEnDER

There are two main circumstances in which the Law prohibits discrimination

generally, namely:

• during the recruitment of employees; and

• during employment.

DISCRIMInATIon In RECRUITMEnT

The Law prohibits discrimination by an employer in relation to the

recruitment, selection or employment of any person on any of the specified

grounds in relation to:

• the advertisement of a job;

• an interview or other arrangements made for the purpose of

determining who should be offered employment;

• in determining who should be offered employment;

• in the terms or conditions on which employment is offered; or

• in the creation, classification or abolition of jobs.

This section of the law does not apply to recruitment in a private household.

wHAT IS GEnDER DISCRIMInATIon

Most acts of discrimination in the legislation refer to “prohibited

discrimination” which is defined in section 3(2) of the Law. The Law

provides that a person discriminates against another person when that

first person makes any distinction, exclusion or preference with the intent

or effect of nullifying or impairing equality of opportunity or treatment in

any employment or occupation on the following grounds:

• sex, marital status or pregnancy; or

• any characteristic based on gender which appertains generally or is

generally imputed to persons of a particular sex or marital status

or pregnant state.

It is anticipated that the words “distinction, exclusion or performance”

will be interpreted widely when referring to action taken by an employer

toward an employee. It does not necessarily matter what the party making

the distinction, exclusion or preference intended so long as the result

of that action is to impair the other party’s equality of opportunity or

treatment in employment.

8

CIRCUMSTAnCES wHEn An EMPLoyER CAn DISCRIMInATE

The Law provides a number of exceptions to discrimination in both recruitment

and employment where there is a “genuine occupational qualification”. So, where

a genuine occupational qualification exists, the employer will be deemed not have

discriminated against the employee or potential employee. Examples of a “genuine

occupational qualification” include circumstances where:

• the essential nature of the job calls for a man or woman for reasons

of physique (excluding physical strength/stamina), for example, arts and

entertainment or other industries where authenticity of performance

is required;

• the job needs to be held by a person of a particular sex to preserve decency

or privacy because it is likely to involve physical contact with persons of the

opposite sex; or

• due to the number of employees at the location of the employment,

employing a particular sex makes it impracticable to provide alternate

sleeping arrangements;

• where the job requires a married couple; or

• where the nature of the job makes it impracticable to offer work to a

particular sex.

The law’s prohibition against discrimination also extends to certain specific types

of organizations including professional partnerships, qualifying bodies, vocational

training bodies, employment agencies and goods & service facilities.

SEXUAL HARASSMEnT

The Law provides that any act of sexual harassment based on sex constitutes

discrimination but is limited to acts relating to employment. This means that sexual

harassment only offends the Law if it is specific to the workplace and does not

include customers, contractors or any other person that is not an employee.

Sexual harassment is defined as unwanted conduct of a sexual nature against an

employee by an employer or another employee and is discrimination based on sex:

• in the workplace; or

• in connection with the performance of, or recruitment for work, which is

threatened or imposed as a condition of employment on the employee or

which creates a hostile working environment for the employee, being conduct

DISCRIMInATIon In EMPLoyMEnT

Once an employee is employed the Law prohibits an employer from

discriminating against an employee on the following grounds:

• in the terms or conditions of employment afforded to the employee by

the employer;

• in conditions of work or occupational safety and health measures;

• in the provision of facilities related to or connected with employment;

• by denying access, or limiting access to opportunities for advancement,

promotion, transfer or training; or

• to any other benefits, facilities or services associated with employment;

• by retrenching or dismissing the employee; or

• by subjecting the employee to any other disadvantage.

9

which has the purpose or effect of violating the dignity of the employee; or

• intimidating, degrading, humiliating or offending the employee.

Whether a particular act or acts constitute sexual harassment, the following

must be considered:

• the perception of the victim;

• the other circumstances of the case; and

• whether it is reasonable for the conduct to have that effect.

All the circumstances must be taken into account when determining whether

certain conduct amounts to sexual harassment.

EQUAL REMUnERATIon

The Law prohibits unequal remuneration between men and women in

circumstances where they are performing work of equal value and provides that:

• An employer shall not pay unequal remuneration to men and women

performing work of equal value for an employer.

• Where a claim for equal remuneration is made by an employee; it is a matter

for the employer to refute such an allegation.

In the law “Work of equal value” is defined as work equal in value in terms of

the demands it makes in relation to such matters as skill levels, duties, physical and

mental effort, responsibility and conditions of work.

In addition, “Remuneration” is defined as any money or other thing, whether

called salary, wage, allowance or by any other name paid or contracted to be paid,

delivered or given as recompense, reward or compensation for any work or labour

done or to be done, whether within a certain time or to a certain amount, or for a

time or an uncertain amount.

The Labour law continues to provide a separate prohibition on discrimination

(including on the grounds of sex) but that prohibition does not enable employees to

bring a claim in their own right against the discriminator, rather, it provides for the

prosecution of offenders.

unfair dismissal

The statutory concept of unfair dismissal was introduced in the Cayman

Islands with the enactment of the Labour Law (1987). This concept

created a system which made it unfair for an employer to dismiss an

employee for reasons other than those provided for in the legislation.

SCoPE oF THE LABoUR LAw

Under the Labour Law (2011 Revision) (as amended) (“the Law”), employees

are entitled to statutory protection from unfair dismissal provided they are not

employed:

• In the public service;

• By a charitable organisation; or

• By a church.

10

The Law excludes public servants from express protection but only to the

extent that the regulations governing public servants are more favourable. Where

the treatment of public servants is less favourable than the minimum standards,

the Law will apply.

Entitlements arising under the Law will only extend to employees once they have

completed their probationary period; or if not on probation, the employee must

have completed three months continuous service with the employer. Employees on

fixed-term contracts have no entitlement to claim unfair dismissal under the Law

where the employee’s employment terminates naturally upon expiration.

EXCLUSIonS To THE RULE

Where an employee has an entitlement under the Labour Law to claim unfair

dismissal, his or her claim may be excluded and the dismissal held to be fair where

the reason assigned to it by the employer is:

• Serious (gross) misconduct (for cause);

• Misconduct following a written warning;

• Poor performance issues following the issue of a written warning;

• Redundancy;

• Operation of law; or

• Some other substantial reason.

In all of the circumstances, it is essential that an employer considering dismissal

acts reasonably both in the lead up to and in the act of dismissing an employee.

Failure to act reasonably (even if the reason assigned to the dismissal falls under

the six exclusions set out above) is likely to lead to a Labour Tribunal finding that

the dismissal is unfair.

Gross misconduct – is conduct that is so serious that the employment

relationship cannot reasonably be expected to continue. The Law provides examples

of the type of conduct, which, if committed during the course of employment,

may amount to gross misconduct. The list includes committing a criminal offence,

behaving immorally or being under the influence of alcohol. In these circumstances,

employees may be dismissed summarily and without notice or entitlement to

severance payments.

Misconduct – is conduct that is not so serious as to warrant summary dismissal.

The employer may issue a written warning. The warning must be in writing; it must

set out the nature of the misconduct; and it must describe the consequences of

any further acts of misconduct, for example, dismissal. Upon receipt of a written

warning, an employee’s contract of employment may be terminated for “misconduct

of any kind” within 12 months of the date of the initial warning. Consequently, an

employer dismissing an employee during the 12 month period may do so without

any obligation to pay severance or to provide notice. The Law specifically identifies

absenteeism as misconduct capable of attracting a written warning.

Performance related reasons - where an employee does not perform his

or her duties in a satisfactory manner, the employer may issue a written warning

setting out the areas in which performance must improve. Subsequently, the

employee should be placed on a performance improvement plan. If, after one

month, the employee continues to perform his or her duties in an unsatisfactory

manner the employer may dismiss that employee provided that dismissal was

contemplated in the warning letter. Employers should be mindful of the timing

11

when contemplating disciplinary action for poor performance. The Law requires

a period of one month to elapse prior to disciplinary action (including dismissal)

being taken. Where the employer decides to dismiss the employee following the

expiration of the one month period the employer should not delay the dismissal

for any significant length of time as to do so may increase the likelihood of a finding

that the dismissal is unfair.

Redundancy – means a situation in which, by virtue of a lack of customers

or of orders, the installation of labour saving machinery, going out of business

or any task which a person was last employed to perform no longer exists. A

redundancy is a dismissal but it is a fair reason for dismissal provided the employer

acts reasonably.

PRoTECTIon oF CAyMAnIAnS on REDUnDAnCy

The Law also provides a convoluted and somewhat inconsistent formula of

selecting expatriate workers to be made redundant ahead of Caymanians provided

there is no policy or procedure in place to determine appropriate selection criteria.

Where there is no policy or procedure in place, the employer must positively

discriminate in favour of Caymanians and other lawful residents in the order of

priority as set out in the Immigration Law. This means that if, for example, there

are two employees (one Caymanian and one work permit holder) one of which is

to be made redundant and both are employed to perform work of the same kind,

the employer must choose the work permit holder ahead of the Caymanian. This

obligation is separate and distinct from the obligation to prefer Caymanians in

employment as required by the Immigration Law.

Contravention of laws – An employer may not continue to employ an

employee in circumstances where to do so would be in contravention of any law of

the Cayman Islands. An example is where an employee’s work permit has expired.

To continue to employ that person would be contrary to the Immigration Law.

A willing failure to seek to renew a work permit will not, however, provide an

employer with protection against claims of unfair dismissal, or even liability to pay

severance.

Some other substantial reason – is a general provision that may potentially

render a dismissal fair even if it does not fall into one of the previous categories.

An example might be where an employee is dismissed after having committed a

criminal offence outside of work, or where an employee refused to agree to a new

shift pattern. A court or tribunal must consider any dismissal in accordance with

what is reasonable in all of the circumstances. The question of consistency is an

important part of what is reasonable. An example of inconsistent treatment might

be where all things being equal two employees are guilty of the same misconduct

and the employer dismisses one whilst the other receives a warning. Such treatment

will generally lead to a Tribunal finding that the dismissal is unfair.

CoMPEnSATIon

Where a Labour Tribunal finds that an employee has been dismissed unfairly,

its power to order the payment of compensation in favour of an employee is

constrained by the limits set out in the Law. The maximum compensation that may

be awarded to an employee for unfair dismissal is limited to one week’s wages for

each year of completed service with that employer. The amount of compensation

awarded is based on a number of factors and is discretionary.

12

Where the employer has failed to pay the employee his severance entitlement,

the Tribunal may make an award calculated by multiplying a maximum of one week’s

basic wage by the number of completed years’ service, with that employer.

The Tribunal has no jurisdiction to order the payment of any contractual

payments such as notice pay, holiday pay or any other statutory entitlement other

than compensation or severance. Where an employer fails to pay wages, holiday

etc., the employee must seek a remedy in the Courts.

pensions

In order to protect and preserve a reasonable quality of life for retirees,

whilst also seeking to minimise the Government’s potential liability to

provide for the elderly in later years, a system of mandatory pensions was

introduced in the Cayman Islands in 1998.

Since the introduction of the National Pensions Law (the “Law”), pension

contributions in the Cayman Islands have been required in respect of all

employees residing in the Islands for more than nine months. The obligation to

ensure that pensions are in place rests with the employer. This guide provides

a general overview of the main pension requirements for employers in the

Cayman Islands.

PEnSIonS

In the Cayman Islands there are two main pension plans: the Defined

Contribution Benefit and the Defined Benefit Plan. The Defined Contribution

Plan is more commonplace, particularly amongst private businesses, whereas the

Defined Benefit Plan is generally only offered to Government Employees.

The Law defines the two plans as follows:

• “Defined Contribution Benefit” means a benefit that is determined solely

with reference to, and is provided by, contributions made by or for the

credit of a member together with the investment yield of such accumulated

contribution and that is determined on an individual basis. The benefit under

this type of plan will be determined by the level of contributions made by

and on behalf of an employee together with the accumulated yield of the

fund as a whole.

• “Defined Benefit Plan” means a benefit determined in advance with

wRonGFUL DISMISSAL

Employers and employees should take note that whether or not

a dismissal is unfair for the purposes of the Labour Law may not in

itself be determinative of whether or not it is wrongful at Common

Law. Allegations of Wrongful Dismissal are outside of the statutory

framework of the Labour Law and can generally only be dealt with as

an alternative or in addition to a complaint for unfair dismissal through

the Grand Court.

13

reference to various factors including level of earnings and length of employment.

Such a plan will provide an Employee upon retirement with a specific benefit

paid on an intermittent basis for life following retirement. The benefit is

defined by the level of earnings at the time of retirement together with

length of service.

ELIGIBILITy

Every employer must provide each employee with either a Defined Benefit Plan

or a Defined Contribution Benefit provided that the employee has been employed

in the Islands for a period of at least nine months. The nine month minimum

residency period does not apply to either Caymanians or Permanent Residents.

The Law deems a person to be “employed” in the Islands in circumstances where

either the office of their employer to which he or she is required to report for

work is situated in the Islands; or, if normally resident in the Islands, the office from

which their wage is paid is situated in the Islands.

Domestic helpers employed in private residences are exempt and, consequently,

employers are not required to provide pension plans for them.

There is of course no prohibition on providing pension benefits to employees

even where the law does not make such benefits mandatory.

ConTRIBUTIonS

The equivalent of at least ten percent of an employee’s wage, up to the year’s

maximum pensionable earnings, must be contributed to a pension plan by the

employer on behalf of that employee. Generally, both employer and employee will

contribute five percent each to the pension plan although the employee is not

required to contribute more than five percent without his or her express consent.

If an employee contributes less than five percent, the employer is required to

make up the balance so that the overall contribution is no less than ten percent

of an employee’s wage up to the year’s maximum pensionable earnings. It is

permissible for the employer to pay the full ten percent. Many employers choose

to pay the full ten percent and deduct the five percent from the employee’s wages.

Self-employed workers are required to contribute ten percent of earnings up

to the year’s maximum pensionable earnings, which (at time of writing) is currently

CI$60,000.

Pension contributions are required only on an employee’s “earnings”, a term

which is defined as follows: “wages, salary, leave pay, fees, commission, bonus (where

the bonus is greater than 20 per cent of the employee’s basic salary) or gratuity”

Earnings however, do not include severance payments, retirement or long

service payments or health insurance premium payments.

Pension contributions need not be kept up during periods of leave where the

employee is not in receipt of earnings. For example, both employer and employee

must continue to make contributions during periods of maternity leave when the

employee is in receipt of maternity pay, but not for the balance of any additional

agreed period of unpaid leave when no payments of salary or wages are made.

PEnSIonS PAyMEnT

Ordinarily, the usual retirement age for pension plan purposes is 60 years of age.

Prior to reaching 60 years of age, both former and current employees are

entitled to receive an early pension provided:

14

• the person is within ten years of normal retirement age;

• employment has been terminated for any reason; and

• there is an existing entitlement to a deferred benefit on termination of

employment.

Where an employee changes jobs, he or she is entitled to transfer contributions

from a previous pension plan to a new employer’s plan subject to the administrator

of the new plan accepting the payment.

A provision, mainly aimed at expatriate workers, allows former employees to

obtain a refund from the pension fund where:

• employment has been terminated;

• the worker no longer resides in the Islands; and

• no contributions have been made to the pension plan for a period of at least

2 years.

• Additional requirements may need to be met and may vary between pension

providers.

TERMInATIon oF EMPLoyMEnT

Upon termination of employment by either the employer or employee,

contributions cease immediately. Where an employee resigns, the employer will be

required to continue to pay pension contributions in the normal way on any final

salary or accrued but untaken vacation.

Where the employer terminates the employee’s employment, then there are a

number of issues the employer must consider depending upon the circumstances

in which the employee was dismissed. On occasion, the employer will provide an

ex gratia payment in addition to statutory benefits such as severance and notice.

In such circumstances, the employer must make pension contributions both

to and on behalf of the employee on the accrued wages and vacation but not

severance or ex gratia payments.

PEnALTIES FoR non-CoMPLIAnCE

Penalties for non-compliance under the Law include the following:

• An employer that fails without reasonable excuse to either provide or make

contributions to a pension plan on behalf of an employee is liable to a fine of

up to ten thousand dollars upon indictment; and

• An employer, who has been directed to pay arrears of contributions but

Chamber Pension Plan Hotline 345-745-7630

68 Fort Street, P.O. Box 609Grand Cayman KY1-1107 • Cayman Islands

pensions@bfgl.com

/ChamberPensionPlan

NEW WEBSITE VISIT OUR

WHERE YOU CAN:

• View your statements

• Access employer & member forms

• Read the latest performance reports

• Fill out Employee Contribution Records

• Schedule a presentation

…and much more

www.chamberpension.ky

“Chamber Pension’s new website is easy to use with everything I need in one place.”

PEnSIon HoLIDAy

For a brief period between April 2010 and April 2011 (in respect of

Caymanian employees) and between April 2010 and April 2012 (in respect

of expatriate employees), a system was implemented which, subject to

strict conditions, allowed for no contributions to be made for the relevant

periods. Currently there is no pension holiday and all employers are

required to comply in respect of all relevant employees. However, the

government has recently increased work permits fees as of September

2012 and has advised that pension payments for expatriate workers can be

waived. This has not yet been formalised in practice.

15

Chamber Pension Plan Hotline 345-745-7630

68 Fort Street, P.O. Box 609Grand Cayman KY1-1107 • Cayman Islands

pensions@bfgl.com

/ChamberPensionPlan

NEW WEBSITE VISIT OUR

WHERE YOU CAN:

• View your statements

• Access employer & member forms

• Read the latest performance reports

• Fill out Employee Contribution Records

• Schedule a presentation

…and much more

www.chamberpension.ky

“Chamber Pension’s new website is easy to use with everything I need in one place.”

16

fails to pay within the stipulated time, shall be liable to a fine of five hundred

dollars each day the arrears remain outstanding; and

• In addition to any fine imposed, the court may order that the employer pay

the amount of arrears in contributions to the pension fund or approved

provider.

• Separate and varied adverse consequences may rise under other regulatory

laws. For example, nonpayment of pensions can be grounds for the

immigration authorities to deny (or refuse to renew) a work permit.

Further, non-payment of pensions may give rise to claims for breach on contract

and/or expose employers to claims pursuant to the Labour Law.

health insuranCe

In accordance with the Health Insurance Law of the Cayman Islands, all

employers are responsible for providing health insurance for all of their

employees, the employee’s unemployed spouse and any of the employee’s

dependent children who reside in the Cayman Islands. The Health Insurance Law

states that an employer shall be liable to pay the total cost of the premium of

the Standard Health Insurance Contract One (SHIC1) but shall be entitled to

recover directly from the salary, wage or other remuneration of each employee,

50% of the cost of the premium. The employer is not required to contribute to

the premiums for the employee’s dependent children or unemployed spouse and

can deduct those amounts as arranged with the employee.

The Health Insurance coverage must be obtained through an approved health

insurance company. In the case of a self-employed person, the individual must

provide their own cover with an approved health insurance company and their

unemployed spouse and dependent children should also be covered.

Health Insurance coverage should be taken out with immediate effect upon an

employee starting employment. The onus is on the employer, within fifteen days

after the commencement of an employee’s employment with that employer, shall

give a written statement to the employee consisting of-

a. the name and address of the approved insurer with whom the employee’s

standard health insurance contract has been effected;

b. the effective date of cover under the contract; and

c. the insurance number of the health insurance contract.

If an employee is refused health insurance coverage by two or more approved

insurers, that individual is deemed an uninsurable person under the current law.

That person may then make an application for coverage with the Cayman Islands

National Insurance Company (CINICO), an independent government-owned

health insurance company, established to provide health insurance for those

persons unable to obtain coverage either for health reasons or financial reasons.

Health insurance coverage terminates on the first day of the month

17

following the date of termination of employment. If the individual remains

resident in the Cayman Islands and they do not become insured under any

other employer, they can request to retain their Heath Insurance with their

previous employer for a period of three (3) months. In these circumstances,

the employee will be responsible for the full amount of the premium.

labour tribunals

The Labour Law (2011 Revision) (“the Law”) was initially introduced

in the Cayman Islands in 1987. The Law, for the first time, imposed an

entirely new framework of legal rights for employees whilst creating

corresponding duties for employers. Labour Tribunals were introduced in 1995

and have operated in much the same way since Labour Tribunals, predominately,

have a mandate to deal with claims for severance and unfair dismissal raised by

employees.

Many employers either have or will have to defend themselves against

claims for unfair dismissal in the Labour Tribunal at some stage. The prospect

of defending oneself in the Labour Tribunal against such claims can be daunting

particularly where the employer has had no previous experience with the Tribunal.

In the following sections there are some introductory notes on the process and

procedures that need to be followed when preparing for a Labour Tribunal.

PREPARATIon FoR HEARInGS

Documents

A thorough search for all related documentation should be made at the earliest

opportunity. Documents include all emails, memos, letters, notes or any other records of

correspondence between the parties. Any other documents that relate to the particular

issues in the claim, even if there is a question as to their relevancy, should be kept and

maintained in preparation for the Labour Tribunal. Relevant or potentially relevant

documents should never be discarded regardless of their content. It is particularly

important to retain access to the employee’s emails after dismissal or following their

resignation for a period of at least three months. Similarly, any documentation including

the contract of employment, employee handbook together with particular policies that

were relied upon by the employer to dismiss the employee should be retained.

Evidence

Generally, the Tribunal will request that all evidence upon which the parties intend to

rely including witness statements and documents, be forwarded to the Tribunal secretary

at least seven days in advance of the hearing.

TIME LIMITATIon

An employee has 90 days from the date of dismissal to lodge a complaint

of unfair dismissal. The Tribunal has no power to extend this time limit.

There is no time limit provided for making a complaint in respect of non-

payment of severance pay.

18

ConCILIATIon

Upon receipt of a complaint, the Department of Labour & Pensions may direct that

the parties undertake conciliation to explore the possibility of finding a resolution

to the dispute. Conciliation will generally take place prior to the hearing date being

set, the idea behind which is that it provides the parties with an opportunity to

resolve the claim without a hearing before the Tribunal. Conciliation is an informal

meeting between the parties, which is conducted by a senior Labour Inspector and

designed to facilitate settlement discussions. Accordingly, conciliation is generally

only productive where both parties attend with a genuine desire to resolve the claim.

THE HEARInG

Each Labour Tribunal is made up of three people; a Chairperson, and two other

members. One of the members will generally have a non-managerial background

whilst the others will have a background in management. The Chairperson may

be legally trained, but not necessarily so, and the other members are likely to

have no formal legal training. At the outset of the hearing, the Tribunal Chair will

usually provide the parties with an overview of the way in which the hearing will

be conducted. Whilst the Tribunal acts in a judicial manner it is not a court and

accordingly the strict rules of evidence do not apply. Rules of evidence are followed

as a guide, which affords the Tribunal more flexibility when dealing with the parties

and with the evidence.

Consequently, the atmosphere should be considerably more relaxed and informal

than a court, although evidence is given under oath. The employee will generally

present his or her case first. On that basis, the employee’s witnesses will give

evidence and any documentation will generally be shared with the Tribunal. Once

the employee has presented all of his or her evidence, the employer will then have

its opportunity to ask questions of the employee’s witnesses and then to present

its case. Similarly, the employee will have an opportunity to ask questions of the

employer’s witnesses when they have given their evidence.

Whilst a witness is giving evidence the Tribunal Chair or any member may

ask questions of the witness, party or any attorneys present to clarify or enquire

further into particular issues. Submissions provide each party with an opportunity

to summarise its case, comment on the weaknesses of the opposing party’s evidence

and argue the facts on the basis of the law.

Once both parties close their submissions, the Tribunal will retire to make a

decision. It may deliberate over the evidence presented by each party for a number

of days or potentially weeks and once a decision is reached it will prepare a written

decision containing the reasons for its decision, a copy of which is forwarded to

each party.

witness Statements

Witnesses can generally provide their evidence in the form of written

statements. The advantage of providing evidence in this way is that it

provides the Tribunal with an account of the evidence to be provided

by each witness prior to the hearing. The Tribunal will usually read all

the documents on their file including the witness statements prior to

the hearing commencing. It is important that each witness is available to

attend the hearing as failure to do so may damage your case.

19

DECISIon

Fundamentally, the Tribunal, in its deliberations, must decide whether the employee

was in fact dismissed given the particular set of circumstances and whether that

dismissal was fair or not. Where the Tribunal finds that the employee was dismissed

unfairly, it will make an award in favour of the employee. Such awards generally include

a discretionary award of compensation together with severance pay in accordance

with limits set out in the Law. The Tribunal will take into account any severance pay

that was paid to the employee by the employer at the time of dismissal. Severance

is calculated by multiplying the number of completed years of service by one week’s

basic wage.

Accordingly, fifteen completed years of service equates to fifteen weeks’ severance.

Compensation for unfair dismissal is generally calculated in the same way as severance.

The law sets out a number of considerations which the Tribunal may consider in

determining the amount of compensation subject to the limit imposed by the Law.

Such considerations include length of service and the degree of unfairness of the

dismissal. Labour Tribunals have no power to make awards for a failure by an employer,

for example, to pay holiday pay, wages, notice or any other aspect of the contract of

employment other than severance and/or compensation for unfair dismissal.

Occasionally, a Labour Tribunal, in its judgment, will make a recommendation that

the employer pay such outstanding contractual entitlement(s). Such recommendations

carry no weight of law and are in and of themselves, unenforceable by the employee.

The employee must bring such claims in the courts.

APPEALS

Any aggrieved party may appeal the decision of the Labour Tribunal to the Labour

Appeals Tribunal (“LAT”) within fourteen days of notification of the Decision. The

aggrieved party may appeal following:

• a decision of the Labour Tribunal where the Award exceeds $500;

• the service of a remedial (enforcement) notice;

• where a Tribunal finds that a dismissal was fair;

• refusal of a Tribunal to register an overtime agreement; or

• any decision of the Tribunal that no award should be made.

As with the Labour Tribunal, the LAT has the same limitations with respect to

awards. The LAT is limited to making awards of severance and compensation where

appropriate. A party may appeal a decision from the LAT to the Grand Court on

points of law only. Such appeals are very rare.

Of course employees may choose to commence court proceedings instead of

or in addition to commencing a Labour Tribunal claim. A claim in the Summary or

Grand Court will be for breach of contract or wrongful dismissal. Such claims are

generally based upon the employer being in breach of the contract of employment.

Legal costs will usually disincentivise claims in the Grand Court unless there

are significant sums in question, including (for example) claims arising out of share

participation plans and/or bonus schemes.

CoSTS

The Labour Tribunal and the LAT have no power to order the payment of costs

so each party pays their own costs. Accordingly, at the Tribunal level, the losing party

will not be responsible for the other’s costs.

20

Established in 1965, the Cayman Islands Chamber of Commerce represents

more than 700 businesses and associations from every major industry sector.

The Chamber’s mission is to support, promote and protect the interests of its

membership and the wider community through advocacy, benefits, programmes

and services. The Chamber’s Professional Development and Training Centre

conducts more than 70 professional, affordable and quality courses each year

for employers and employees to improve organisational productivity and

profitability. For further information visit http://www.caymanchamber.ky

or stop by the Chamber’s offices in Governors Square on West Bay Road.

As an offshore legal services provider, Appleby lawyers advise on the

principal areas of corporate and commercial, litigation and insolvency, property,

and private client and trusts. Appleby’s Fiduciary and Administration group of

companies provide offshore management and administration services to high

net worth individuals, private companies, funds and global corporations. For

further information visit http://www.applebyglobal.com

A dedicated group of recruitment and immigration professionals

Building on the experience of Cayman’s longest established recruitment

consultancy, the Baraud team reflects the international diversity that makes

up the Cayman market. Deep local knowledge is balanced with a thorough

understanding of today’s recruitment standards and the realities of the modern

commercial world. Add to that, a Baraud team that hails from around the world

and you can see why we really know how to get on with people. For further

information visit http://www.baraud.com

800 TALENTED PEOPLE

VISION

applebyglobal.com/cayman

Jeremy WaltonCayman Practice Group HeadLitigation & Insolvency+1 345 814 2013jwalton@applebyglobal.com

Offshore Legal, Fiduciary and Administration Services

about the sponsors

21

800 TALENTED PEOPLE

VISION

applebyglobal.com/cayman

Jeremy WaltonCayman Practice Group HeadLitigation & Insolvency+1 345 814 2013jwalton@applebyglobal.com

Offshore Legal, Fiduciary and Administration Services

22

for superior HR support,talk to us at +1 345 945 1781

baraud.com

What’s the bestway to solve mycomplex HR issues?

Baraudknows.