New St. Maarten Case Law on the Validity of a Calamity Clause

Being familiar with the risks of hurricanes, many employers on St. Maarten invoke a provision of St. Maarten law to (partially) avoid the obligation to continue paying employees during calamities, such as a hurricane. This is done via a calamity clause in the employment agreement (known as “force majeure” or “act of god” clauses in some other countries).

However, a court has declared a calamity clause that sought to end employment due to a calamity (and not just avoid payment of salary) null and void, as being in conflict with the mandatory rules on employment termination of St. Maarten.

On September 6, 2017, St. Maarten was hit by Hurricane Irma. In addition to the extensive physical damage this hurricane inflicted to property such as hotels, many employers suffered a drastic loss of income as the number of tourists visiting the island decreased dramatically.

In the matter that was brought before the court, the calamity clause stated that in the event an employer is unable to make use of the services of its employees due to a calamity for a period exceeding three months, the employer’s obligation to pay wages should cease and the parties should do all that is legally necessary to terminate the employment agreement as soon as possible. This is a common calamity clause that is used by many employers on the island.

However, according to the court, this mechanism for termination of employment did not comply with the mandatory rules on employment termination of St. Maarten, and therefore the calamity clause was null and void.  The court also ruled that the right to agree to a discontinuation of the payment of wages during calamities is limited to a period of three months.

Comment

The ruling of the court is legally questionable. However, it is in line with the outcomes of previous employment cases in connection with the aftermath of Hurricane Irma, which all favored the employee. An appeal against this ruling is pending.

Written by Sophie van Lint and Thies Leijsen of VanEps Kunneman VanDoorne and Roger James of Ogletree Deakins