COVID-19 Webinar: Supporting Businesses in a Time of Crisis | Webinar #1: Q&A

LEGAL ASSIST WEBINAR hosted by HSM

A Guide to Redundancies, Layoffs, and Work Permits Issues https://www.youtube.com/watch?v=kU13LyO91ts

Submitted question (Q): Over the years, companies have paid a repatriation fee to the Government; how can companies utilize the repatriation fee to assist employees wishing to leave due to company closures?

HSM: The repatriation fee is a fee that Department of WORC requires to be paid. It is a fee available to the Government to use if they are required to repatriate someone. It is not a fee available for companies to use.

Q: Can a layoff be repeated a year? Meaning if a company 'lays off' staff for a month, then takes them back on payroll, could they then do it again in a couple of months?

HSM: The Law is silent on this point but yes, it is possible to lay-off people multiple times, if there is a true economic need and the employee is treated as fairly as possible.

Q: Do you think Government might amend the regulations to extend the lay-off period during the pandemic?

HSM: The Government has not indicated that they will at this stage.

Q: If you temporarily layoff someone are you obliged to pay the 29 days (or whatever the payment interval between pay is) as well as the severance pay?

HSM: No, because they have been laid off during the interval. However, you should pay them all the salary they were entitled to before they were laid off.

Q: If someone works 3 1/2 years. Do you pro-rate or just pay the 3 years?

HSM: I presume you mean severance pay. Severance Pay is only calculated on complete years of service so if they have worked 3.5 years then the individual gets 3 weeks’ severance pay.

Q: What if the person is on an hourly basis, but their number of hours also varies from week to week?

HSM: In that case you would have to work out what their average yearly salary is then divide by 52 then multiply it by the number of years worked.

Q: Pay severance for serious misconduct as under the law?

HSM: No, you do not pay severance pay for serious misconduct. You do not have to pay notice pay either.

Q: On severance pay, do you have to pay health insurance for the 3 months following the severance date?

HSM: There is a requirement to keep an employee on the policy for 3 months after termination, but it is not tied to severance. The health insurance would be at the employees’ own cost.

Q: Is there a maximum payout of severance re: one week pay for each year of work? I thought it was 10 years max.

HSM: The max limit was removed in regard to severance. It is one week for EVERY completed year.

Q: Is the layoff trigger to redundancy pay on the 30th day? or the 29th day?

HSM: The law states 30 days but if an employee is made redundant after the 30 days then you are required to pay 10% (per annum) interest on the severance pay, which is why we suggest pulling the trigger at 29 days.

Q: Can you lay-off an employee for 29 days and provide Notice of Redundancy at the same time?

HSM: It would be prudent that when you are giving the employee notice of the temporary lay-off you should also include the details of what they would receive if they are not re-hired within the 29 days.

Q: If an employee is still under the probation period and resigns, are they eligible for a prorated vacation pay?

HSM: It will be dependent on the wording of their contract but the starting position under the Law is that vacation entitlement does not crystalise until they have finished their probation.

Q: Does the 29 days for layoff apply to hourly employees?

HSM: Yes, it does.

Q: Are we required to give notice for layoffs?

HSM: No, but if they are not rehired you will have to pay them out for their notice period.

Q: I had a new employee starting today but obviously that is not possible and they were advised last week. There was only an offer letter in place. Do I have any obligation to an employee that did not start?

HSM: The answer may be dependent on the offer letter.

Q: If an employee elects to leave the position is severance & notice pay still due?

HSM: They would be entitled notice pay (if they do not work during the notice period) but because they are the one who terminated the employment relationship they would not be entitled to severance.

Q: "Clear evidence" of acceptance of mutual agreement - can this be an email trail?

HSM: If the usual (or current) means of communication is via email then yes it could be supportive evidence that they agreed. It would be best if they signed something as well.

Q: In the construction industry as employment is often based on the length of a project, the long-standing process within the industry is that the employee can be laid off and can be recalled within six months. If the they are not recalled within six months, then it triggers severance pay. Is this correct?

HSM: Yes, the temporary lay-off provision is extended to 6 months for the construction and agriculture industries. However, there may be immigration aspects that need to be looked at. If for instance the employee cannot support himself during the period of lay off or he can’t support his dependents the Department might revoke the work permit.

Q: How long does the employee need to be recalled for before they can be laid off again for an additional 29 days?

HSM: The law does not give any guidance as to time between layoffs.

Q: If we offer employees different options i.e.: lay-off versus redundancy, can we have them sign non-disclosure agreements?

HSM: Yes, it is advisable to enter into a settlement agreement with the staff that includes a Non-Disclosure Agreement.

Q: If we terminate a permanent resident, we need to notify WORC? HSM: There is a duty for both the employer/ employee to notify either the Department or the Caymanian Status and Permanent Residency Board.

Q: Do you have to lay off staff if they are hourly? Since there is no work to assign? Or can you have them on "standby" and pay all benefits.

HSM: It would come down to the wording of their contract as it would depend whether there is a minimum number of hours guaranteed. However, it would be best practice to do a formal temporary lay-off in all situations.

Q: Can anyone comment on how WORC is accepting new permit applications during our lockdown? I have on employee whose temporary work permit expires today and no means of submitting the application or payment.

HSM: WORC’s new procedure is that work permits that expire during the “stay at home” will continue. The Department will require individuals to report to WORC offices when they reopen. However, to protect the business and the individual we are suggesting that an email is sent to the Department of WORC with the complete forms and documents. In regards to the fee, to protect you completely we would suggest that you obtain an Attorney to provide an undertaking to the Department that they are in funds and that those funds will be paid to the Department as soon as they can. In doing this we do not believe there can be a dispute as to whether the business had submitted a renewal for the work permit or not.

Q: We have two work permits and a Permanent residency fee all due essentially by the end of next week. Any practical guidance on getting them paid and acknowledged?

HSM: What we suggest is that you send all the appropriate documents to the Department via email. We then suggest that you instruct an attorney to provide an undertaking that they have the required fees and that they will pay them as soon as the Department is open again.

Q: Can you lay off someone on a fixed term 1-year contract?

HSM: The law is silent but yes, we believe you can temporarily lay-off people on a fixed term contract.

Q: How does it work when the employee is laid off and fully compensated to that point, for them to pay 100% of their health insurance? How can the company be obligated to provide health insurance when the payment obligation is for the employee?

HSM: It unfortunately becomes a commercial decision for the company about whether to pay it and try to seek reimbursement from the employee.

Q: As a matter of policy, can a company deduct the full 3 month health premium amounts from an employee's final pay if they do not have a new job yet, and agree to reimburse the employee if they are placed on a new insurance plan within that three months with a new employer?

HSM: We often suggest that the employer deducts the three months from the final pay if possible. Once the employee has obtained new coverage any sums owing to them can be reimbursed.

Q: What is the position concerning terminating employees who are on probation and regarding the 3-month health insurance obligation?

HSM: The 3-month health insurance attaches to all staff no matter their status.

Q: You mentioned that a company is responsible for the health premiums during the layoff period. In the construction industry would employers be responsible for paying health premiums for staff that have been laid off for the 6-month period.

HSM: Yes, they would. The law is clear a "laid off employee" remains an employee.

These responses by HSM are intended only to provide a summary of the subject matter covered. It does not purport to be comprehensive or to provide legal advice. No person should act in reliance on any statement contained in this document without first obtaining specific professional advice. Alternative solutions also exist which may better suit the requirements of a particular individual or entity.