Cross-Border Catch-Up: Charting Safe Passage Through Caribbean Workforce Restructurings

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Carlos Colón-Machargo: Welcome to the Cross-Border Catch-Up, the podcast for global employers who want to stay in the know about cutting-edge employment issues worldwide. My name is Carlos Colón-Machargo, and I’m here with my colleague, Kate Thompson. We are cross-border attorneys here at Ogletree. Today, we’re diving into paradise, but with a legal twist, by exploring how reductions in force or risks play out across the Caribbean. Kate, thank you so much for joining us today.

Kate Thompson: Thank you, Carlos. So, we have a ton to cover here. Today, we’re going to talk about defining individual versus collective redundancies and why that distinction matters. We’ll also touch on some key procedural traps, such as notice periods, severance payments, and consultation duties. We’ll discuss some jurisdictional quirks, so those got-yous that trip up, even seasoned employers, and then we’ll go over some best practice tips so that you can implement a riff without creating a litigation storm. So, rule number one, never assume that what works in Trinidad will fly in Barbados, or even that a Cayman style riff translates in Martinique. So, each island has its own legal microclimate. And as a starting point, employers should assess the number of impacted employees, because depending on the jurisdiction, collective redundancy rules could kick in.

Carlos Colón-Machargo: So, Kate, let’s start with terminology. What do you mean when you say collective redundancy?

Kate Thompson: Great question. So, a collective redundancy refers to the dismissal of a significant number of employees by an employer within a specific period of time. And the reason for that dismissal is not related to the individual employee, but instead could be due to a business closure or downsizing, technological changes, economic downturns, or perhaps a merger or acquisition. So, it’s really crucial for employers to understand which jurisdictions have collective redundancy rules and which do not, because the procedural steps vary dramatically by jurisdiction. And this means that this could impact the steps that employers have to follow when they’re proceeding with a reduction in force. The threshold number and the procedural steps, again, like I said, they really do vary. So, that’s something that employers who are undergoing a riff in the Caribbean will want to take into account.

Carlos Colón-Machargo: Great. Can you give us some examples of jurisdictions where collective redundancy rules apply?

Kate Thompson: Yeah, absolutely. So, for example, in Barbados, if an employer is eliminating more than 10% of their workforce, then that’s automatically going to trigger collective redundancy rules. So, this means that mandatory consultations with employees and unions are going to be required. They’re going to have to file paperwork with the labor department, and also demonstrate good faith exploration of alternatives before anyone receives a termination letter. Another important nuance with Barbados is that unions are really aggressive there, so employers need to take this into account and consider consulting with them even in the case of an individual redundancy.
And now let’s contrast that with the Cayman Islands, Guyana, Jamaica, and the Dominican Republic, where no collective redundancy statutes exist. Though, spoiler alert, that does not mean no rules. So, in those jurisdictions, you’ll want to proceed under the individual redundancy framework, which also varies greatly depending on the jurisdiction. So, for example, in the Dominican Republic, providing written notice and also notifying the Ministry of Labor is sufficient. But in Guyana, employers may still need to engage in a consultation process with employees and a union, if applicable, before they actually go ahead and issue those termination notices.

Carlos Colón-Machargo: Wow, this is a lot to consider. What would you say how far in advance employers should give notice to employees when undergoing a reduction in force?

Kate Thompson: Great question. And like everything else, the notice periods do vary depending on your jurisdiction, but the amount of notice usually depends on the employee’s length of service. So, using the Dominican Republic as an example, I’ll go over some of the notice periods. So, if an employee has been engaged for at least three months, but less than six months, an employer would have to give six days of notice. Another example is maybe they were employed for at least six months, but less than one year. That would require 14 days of notice. And then having at least one year of service would equate to 28 days of notice.
In many jurisdictions, like Jamaica, the DR, and the Cayman Islands, paying in lieu of providing that notice is permissible. An employer should also make sure that they’re checking the applicable collective bargaining agreement or an individual employment agreement, because that could provide for greater periods. And then in that situation, that you would have to follow that.

Carlos Colón-Machargo: What would you say is the typical statutory severance termination entitlement that employers are required to provide to these employees?

Kate Thompson: So, across the region, you’ll usually owe statutory severance or redundancy pay, accrued, but unused vacation, payment in lieu of notice, which we just talked about, if permissible, and then any contractual bonuses or allowances. Using Cayman as an example, there’s also an obligation to maintain employees on the company health insurance plan for up to three months post-termination, but it’s at the employee’s expense. Still an administrative step that employers need to make sure that they’re not ignoring. And employers should also be aware that, again, if greater termination entitlements are granted by that employment contract or even company policy, then those amounts are going to apply.

Carlos Colón-Machargo: Thank you, Kate. Let’s turn now on how employers decide who stays and who goes. Is there anything that employers should keep in mind when selecting which employees to terminate during a riff?

Kate Thompson: Definitely. So, certain jurisdictions in the Caribbean require employers to develop what’s called a selection matrix. And that outlines specific criteria that the company will use to determine which employees are actually going to be made redundant. And this is something that’s not necessarily unique to the Caribbean, but again, employers should be aware of depending on their jurisdiction. Additionally, countries like the Cayman Islands require that employers should discriminate positively in favor of individuals from Cayman. So, for example, if there are two employees in the redundancy pool and they’re both performing similar types of work and the employee dismissed is from Cayman, then the redundancy will be deemed unfair.
And in this example, the employer should actually have chosen the individual who was not originally from the Cayman Islands for the redundancy before the individual who was from the Cayman Islands or also a permanent resident. And finally, one other item that I’d like to flag today, but many countries in the Caribbean, they have categories of individuals who are protected from terminations. So, protected categories include pregnant women or even whistleblowers in Barbados or unionized workers and individuals who might have a dispute filed with the Ministry of Labor. And that example would be applicable to Jamaica.
On the other hand, countries like Guyana, and also Cayman, they don’t consider any groups of employees protected from termination. So, it’s really critical that employers pay attention to where protections do exist and how they should handle terminations in that situation. Now, what do we do if protected categories exist? Really, employers should assess the termination on a case-by-case basis. So, while it could be possible to terminate via a mutual separation or release agreement, employers should really seek specific legal advice in these situations, because the termination process does vary. Bottom line, though, is that always perform a jurisdiction-specific risk assessment before any termination notices are issued and in really any jurisdiction.

Carlos Colón-Machargo: I think this is about all the time we have for this episode today. The Caribbean may be paradise, but get the legalities wrong, and you’ll find yourself in choppy waters. Thanks for all your insight today, Kate. And thank you to our audience for joining us for today’s Cross-Border Catch-Up. Follow us to stay in the know about cutting-edge employment issues worldwide.

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