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The Trade & Business Licensing (Amendment of Schedule) Regulations, 2020 (the “Amendment Schedule”) has been gazetted as of 1 May 2020.

Whilst earlier amendments to the Cayman Islands Trade & Business Licencing (“TBL”) regime got much coverage in the local press those earlier amendments merely deferred the CI$75.00 application fee for a short period. Whilst a temporary CI$75.00 savings should not be discounted as many local businesses are struggling during these times the Amendment Schedule provides much greater reprieve for local small and micro businesses.

In all cases Micro Businesses will have the TBL fees reduced by 100% and with the application fee deferral mentioned above this will mean that a Micro Business will not have to pay anything on application or renewal initially.

Important changes to note:

  • The Amendment Schedule will expire on 31 December 2021.
  • Small Businesses[1] and Micro Businesses[2] that are independently owned and operated; are for profit and have close control over operations with decisions taken by the owner will see temporary reductions in TBL fees (as outlined below).
  • Auditing service firms, financial service firms (other than insurance agents) and exempted companies which fit the definition of Micro Business or Small Business are excluded from the fee reductions.
  • Mobile Businesses[3] which fit the definition of Micro Business or Small Business will be eligible for the TBL fee reductions but the location of the mobile business will be determined by the block & parcel number on the TBL/application form.
Location of trade
of business		 Percentage reduction
on fee
George Town Micro Business 100%
Small Business 50%
West Bay Micro Business 100%
Small Business 50%
East End Micro Business 100%
Small Business 75%
North Side Micro Business 100%
Small Business 75%
Bodden Town Micro Business 100%
Small Business 75%
Little Cayman Micro Business 100%
Small Business 50%
Cayman Brac Micro Business 100%
Small Business 50%

 
HSM can assist with all TBL applications and renewals and can provide the necessary advice as to whether you qualify under the Small/Micro business incentive programme as well as updating the TBL Board should there be any change to the revenue of the business, number of employees and ownership of any business benefitting from the reduced fees.

Footnotes
[1] ‘Small businesses’ are those that, among other conditions, employ up to 12 employees (excluding the owner), and have an annual gross revenue not exceeding CI$750,000 in the preceding fiscal year.

[2]  ‘Micro businesses’ are those that, among other conditions, employ up to four employees (excluding the owner), and have an annual gross revenue not exceeding CI$250,000 in the preceding fiscal year.

[3] “Mobile Business” is a business that is not operated from a fixed location but from a pedal cycle, motor cycle, motor car or other motor vehicle.

Key Contact

Peter de Vere
Head of Corporate and Commercial
Tel: 1 345 815 7360
pdevere@hsmoffice.com

The HSM Group will be acquiring the Cayman operations of Higgs & Johnson, with whom we have had a long established relationship. Further announcements will be made as the transaction progresses and once the necessary regulatory approvals are obtained.

With recent developments concerning the global spread of COVID-19 and the impact it has had on the economy, the Cayman Islands Government (CIG) has implemented a series of regulations under the Public Health Law (2002 Revision). Amongst these have been the previously enacted Public Health (Control and Suppression of COVID-19) Regulations, 2020, the Public Health (Control and Suppression of COVID-19) (Amendment) Regulations, 2020 and the Public Health (Control and Suppression of COVID-19) (No. 2) Regulations, 2020.

Late on 30 April 2020 new regulations, styled the Prevention, Control and Suppression of COVID-19 Regulations, 2020, (“New Regulations”) were published. They will come into force on 4 May 2020, and last for two weeks. Contemporaneous with them coming into effect, the previous regulations referenced above will be repealed. The New Regulations set the framework for a continuation of many provisions whilst providing for an initial stage of relaxation of the existing measures, and are the long anticipated first step in what is anticipated to be a multi-phased re-opening back to normality. Each step is anticipated to endure for 2 weeks, subject of course to ongoing control over the spread of the Coronavirus within our shores.

The details of each stage of the road to recovery are unknown, but details will be released with time including during the regular COVID-19 government press briefings. What appears clear at present is that the restriction on all public meetings (widely defined as generally including gatherings of more than two people) continues. Nevertheless, listed exemptions are clearly stated. For example, Regulation 3. confirms that the regulation of public meetings does not extend to any activity in the following public places (provided always that the owner/operator of any of the above public places restricts the number of persons inside the place of business at any one time so that each customer is able to distance himself or herself at least 6 feet from any other person):

(a) health care facilities;
(b) supermarkets;
(c) convenience stores and minimarts;
(d) pharmacies;
(e) retail banks, building societies and credit unions;
(f) gas or refilling stations;
(g) post offices;
(h) money remittance facilities, subject to such conditions as may be imposed by the Competent Authority; and
(i) such other public places as may be specified by the Competent Authority and notified in the Gazette, in any other official Government website or official means of communication, subject to such conditions as may be imposed by the Competent Authority.

The “Competent Authority” is defined as “the member of Cabinet charged with responsibility for international trade.”

Public meetings, processions or festive ceremonies remain prohibited until further notice.

Similarly, for the purposes of preventing, controlling and suppressing the spread of the virus, all public places (with the exception of “essential” establishments, institutions, businesses, organisations and offices, remain closed. “Essential establishments, institutions, businesses, organisations and offices” are defined as those in which persons specified in regulation 8 are employed. These include:

  • Police, Customs and Border Control, Prison and Fire Officers;
  • Persons involved in the provision of child protection and residential care, in the Department of Children and Family Services;
  • Waste and sanitation workers;
  • Healthcare staff within a health care facility or persons delivering emergency medical services;
  • Essential officers of any water, electricity or other sector encompassing the provision of electronic communications including print and electronic media;
  • Persons employed to physically deliver water or cooking gas to premises;
  • Persons who provide care to other persons with a disability or who are otherwise vulnerable persons;
  • Non-profit organisations and other persons engaged in the preparation and delivery of food and supplies to persons with disabilities or to persons who are vulnerable persons, where those non-profit organisations and persons are approved by the Competent Authority;
  • Subject to prestrictions as to numbers of passengers and distancing, persons who operate taxis;
  • Persons involved in agriculture and food production;
  • Persons engaged in the provision of emergency veterinary services;
  • Persons engaged in the provision of pet grooming services and persons employed by them to provide collection and delivery services in respect of the pets;
  • Persons engaged in the provision of pool maintenance, grounds maintenance, landscaping and gardening services;
  • Postal workers and persons employed by mail or parcel courier services to collect and deliver mail and parcels;
  • Persons who are involved in the distribution of school supplies at educational institutions;
  • Persons who operate retail stores and persons employed by retail stores to provide delivery services in respect of the goods;
  • Persons who operate car dealerships and persons employed by car dealerships to provide delivery services in respect of the vehicles;
  • Persons who provide mobile car wash services or mobile tyre repair services;
  • Persons who provide laundromat services and persons employed by laundromats to provide collection and delivery services in respect of the items;
  • Persons engaged in the exercise of Cabinet, parliamentary or judicial duties;
  • Persons providing services connected with the loading and unloading of cargo ships and with the storage and delivery of goods;
  • Persons employed by a business licensed to provide security guard services;
  • Persons employed by restaurants to provide food delivery services, until no later than 10:00 p.m.;
  • Persons employed by businesses other than restaurants to provide food or grocery delivery services, until no later than 10:00 p.m.;
  • Persons who travel to restaurants which provide drive-through or curb side collection of food or provide for the take out of food, until no later than 7:00 p.m.;
  • Civil servants as designated by the Chief Officer of the Portfolio of the Civil Service, for the purposes of performing their employment duties;
  • Other members of an essential service or an essential services provider, as designated by the Competent Authority after consultation with the Hazard Management Department of the Cayman Islands, for the purposes of performing their employment duties; and
  • Other persons involved in such other activities, duties, businesses, purposes or undertakings as may be specified by the Competent Authority and notified in the Gazette, in any other official Government website or official means of communication, subject to such conditions as may be imposed by the Competent Authority.

The above listed categories of person are exempted from Shelter in Place restrictions while carrying out their official or employment related duties. Other restrictions remain, including for example that convenience stores and mini-markets remain unable to have more than six customers at any time.

Strata pools and playgrounds remain closed and access to grocery stores and the like based on last name continue for the time being.

This partial opening of available business services will be welcomed by many.

Any person contravening the public meetings or, shelter in place or social distancing restrictions is confirmed to be committing an offence and is liable on conviction to a fine of one thousand dollars and to imprisonment for six months.

There is no doubt the COVID-19 pandemic has turned the world — and many lives — upside down. Certainty has been replaced by uncertainty, and many plans for the future are now in doubt. One may feel a loss of control and helplessness as the pandemic continues to wreak havoc on finances, relationships, employment, and just about every other thing imaginable.

While some things are outside our control, we should all take comfort in knowing that we still have powerful things within our control, such as (finally) getting our estate plan in order.

Robert Mack, HSM’s Head of Private Client & Trusts, provides his top five recommendations for getting your estate plan in tip-top condition. Robert also recently gave a presentation on this (in partnership with the Cayman Islands Chamber of Commerce) and provided further guidance on the private client industry by discussing wills, estates and succession planning with COVID-19 in mind. You can watch a recording of this presentation here.

Tip 1: What’s the plan?
The first question to ask yourself is whether there’s a plan in place; if so, does it reflect your current wishes? As a basic, a Will is a key part of any estate plan. Failure to have a valid Will means the law decides who gets your property and in what shares after you die (known as an “intestacy”). In some cases the intestacy formula can work well as the law seeks to distribute your assets equitably to the persons most closely related by blood or marriage. However, in many cases the intestacy formula does not produce the result one would have wanted and intestacy does not deal with the issue of guardianship of minor children.

Although a Will is a vital tool to ensure your wishes are respected there are alternatives to Wills, including placing assets/property into joint names so they pass outside of your estate automatically on death. Life insurance, trusts, and foundation companies are also powerful tools which can allow you to implement more complex estate plans so you can be confident your loved ones will benefit precisely as you wish them to.

Whatever your plan is, review it. If there is no plan, there is no time like the present to put one in place. Illness, whether caused by COVID-19 or otherwise, can sometimes impair your mental faculties, which can prevent you from taking the necessary steps to put your affairs in order so it’s best not to delay.

Tip 2: Where are your assets located?
If you have valuable assets located outside of the Cayman Islands, then its best to speak to an estate practitioner in that place, in addition to a Cayman-based attorney to ensure your foreign assets pass the way you want them to. Often it is necessary to have multiple Wills in each country as each country will have its own rules and regulations on succession.

If you’re unsure of how to find a foreign estate lawyer, a good place to start is the Society of Trust and Estate Practitioners, which is a global association of professionals who specialise in this type of work (www.step.org/for-the-public).

Your local Cayman trust and estates attorney should also be able to recommend a suitable foreign estate attorney to assist and both attorneys should work in tandem to ensure your global estate passes in the way you want it to.

Tip 3: How much are your assets actually worth?
Global personal wealth has taken a collective nosedive across the entire spectrum. As a result, the value of estates will inevitably suffer.

Therefore, it’s a good idea to review your Will (if you have one) to see whether any gifts to loved ones are now in need of adjustment, as gifts that were highly valuable just a few months ago (eg, quoted shares) may be less valuable now. This is important in order to achieve a sense of balance and fairness with loved ones, and to stave off any estate disputes from those who feel they were not treated fairly, which is one of the primary causes of estate litigation.

Although nobody has a crystal ball, it is more likely than not global markets will improve over the course of time, and ‘paper losses’ may be recovered. Until that happens, however, those who are seeking to spread their wealth fairly amongst their loved ones should take a sober look at their current net wealth and adjust their plans accordingly. Those who do not yet have a succession plan should take this into consideration when creating their estate plan.

Tip 4: Who are you?
This may seem an odd question to ask, but it’s important to understand what sort of connections you may have with other countries as this could affect payable taxes (outside of the Cayman Islands only), and claims on your estate.

For example, in Cayman it is not uncommon for persons, especially the older generations, to have been born in the United States despite never living there or never obtaining a US passport. The United States assigns citizenship to any person born on its soil, and since it also taxes its citizens no matter where they reside it’s very important that your estate attorney takes that point into consideration and works in tandem with a US-based estates attorney to ensure your estate is as tax-efficient as possible and that all necessary IRS forms are filed.

Also, your estates attorney will need to ascertain your ‘domicile’ status, which is a technical legal test which requires your advisor to identify connections to other countries (including but not limited to citizenship) to ascertain whether (or not) the laws of that country may affect your estate. This can often be an issue for expatriate workers in the Cayman Islands on work permits who maintain strong links to their country of origin, as some expatriate workers may remain ‘domiciled’ abroad despite residing in Cayman and therefore may subject to tax and succession laws in those countries.

In addition, many countries such as the United States seek to tax individuals if they spend a certain number of days within the country. It is therefore possible for a non-US taxpayer to inadvertently fall into the US tax net through no fault of your own if they happen to be stranded in the US due to travel restrictions imposed by COVID-19. This could have a knock-on effect on estates if such individuals die while tax resident in a foreign country. If such persons are concerned, they should consult a local tax professional and take such legal steps as soon as possible to lessen the tax payable, and if necessary, adjust their succession plan accordingly.

Tip 5: Be kind, be charitable
For those fortunate enough to have preserved their wealth throughout this crisis, there is a great opportunity to make a social impact by making a gift to worthy causes for those most impacted by COVID-19. It is a sad reality that many people are suffering in the Cayman Islands and many will continue to suffer as the pandemic unfurls and employment becomes scarce. There are a multitude of good charities to choose from in Cayman which could deploy such gifts for the benefit of the wider community, or you could select charities which focus on particular types of charitable activities such as provision of food for persons who are failing to make ends meet, or even animal charities for our furry friends. A charitable legacy is one of the noblest gestures an individual can make, and the world needs such selfless gestures at this moment to remain hopeful and optimistic in these most challenging of times.

The Cayman Islands Intellectual Property Office (CIIPO) is working remotely during the COVID-19 crisis and as a way to assist brand owners, has extended the deadline for the payment of 2020 annual fees for IP rights to 30 June 2020 with no penalties to be incurred until 1 July 2020. Under previous conditions, the deadline to pay annual fees is 1 January with a grace period for payment without penalty until 31 March of each year. Time limits for all other filings remain.
CIIPO shared that substantive examination of applications for registration, office actions and all other notices/reports will continue as per normal.

 

With recent developments concerning the global spread of COVID-19 and the impact it has had on the economy, the Cayman Islands Government (CIG) has implemented a series of amendments to what is commonly referred to as the Islands’ Immigration Regime. Amongst the changes first formally communicated were directives issued by Workforce Opportunity and Residency Cayman (effectively a policy statement) on 15 April 2020. These have since been followed by the Immigration (Transition) (Work Permit Exemptions) Regulations, 2020, the Customs and Border Control (Amendment) Bill, 2020, and the Immigration (Transition) (Amendment) Bill, 2020. The Guidance and Regulations are now in effect, whilst the Bills are yet to receive formal passage and become Law. All are described more fully below.

WORC Guidance/FAQ
Dated 15 April 2020, the Workforce Opportunities & Residency Cayman (WORC) Frequently Asked Questions can be found here. In essence they have confirmed a new and streamlined methodology by which various applications can continue to be made notwithstanding the physical closure of WORC’s offices. The guidelines also provide for various other requirements being simplified or even waived. They brought into operation Electronic Funds Transfer (“EFT”) payment mechanisms, and confirmed that in so far as Work Permit applications are concerned, only 3 month Temporary Work Permit applications would be considered at this time.

Whilst not having the force of Law, they provide a pragmatic and helpful interim solution for those needing various permissions and seeking the assistance of the authorities. In limited cases they may not be appropriate to everyone’s circumstances, but those exceptions are (and we expect will continue to be) rare. Several of the “loose ends” created by the Guidance are tidied up by the Immigration (Transition) (Amendment) Bill, 2020 as described below. For now we continue to make all manner of immigration applications and the authorities are continuing to deal with urgent matters.

Amongst key aspects of the guidance are:

  1. A variation of the visitor extension process.
  2. A waiver of any requirement to provide a medical for work permit applications filed between 20 March 2020 and 20 May 2020.
  3. An ability to continue working (temporarily) post expiry of a work permit in limited circumstances, including (for so long as “shelter in place” restrictions continue), past any expiring term limit.
  4. A waiver of the requirement to provide wet-ink signatures, police clearance certificates; photographs and accommodation forms.
  5. A waiver of any requirement to advertise, however with an expectation that all vacancies be duly published via the JobsCayman portal with an expectation that all vacancies be registered and good faith efforts to employ a Caymanian on a priority basis still be demonstrated.

Particularly notable is the policy direction that no new Work Permit Grant applications can be made, and that no cover letters are required. There will nevertheless be circumstances where both may appropriate, and we are making such applications (and indeed renewals) where appropriate. We are conscious of the fact that at present the Law requires renewals or even applications for the Grant of a Work Permit, RERC’s as the Spouse of a Caymanian, Permanent Residence and Permission to Continue Working to be made prior to the expiry of any existing permission. We are accordingly continuing to seek to comply as fully as possible with all the requirements of the existing Law, where practicable. Applications for Permanent Residence and the Right to be Caymanian are being filed by us weekly, and annual declaration and variation applications continue to be accepted. Not everyone has however been able to maintain every aspect of their immigration permissions and there will plainly be substantial “cleaning up” to be done in the future, and likely within a short (30 day) timeframe. New forms are expected but (it appears) are yet to be published.

These FAQ’s appear largely to be crafted so as to endure only for so long as the “shelter in place” suppression measures continue, although they will be replaced by new and updated approaches to various applications, including in consequence of the Immigration (Transition) (Amendment) Bill, 2020, described below.

The Immigration (Transition) (Work Permit Exemptions) Regulations, 2020
These were passed by Cabinet on 21 April 2020 and are already in effect. They are of immediate relevance only to those operating in the healthcare field, and operate so as to permit non Caymanians to be recruited by the Health Services Authority or any private hospital without the constraints which may otherwise apply under the Work Permit/Immigration Regime. A primary effect will be to exempt persons, subject to specific conditions, from having to have a work permit. They appear intended to allow the rapid deployment of medical personnel (including from overseas subject to quarantine controls) wherever required should a need arise. The regulations are intended to be limited in duration, although their expiry will be at a date to be specified by Cabinet and notified by Gazette, official Government website or other official means of communication.

The Customs and Border Control (Amendment) Bill, 2020
This was published on 22 April 2020 and is expected to pass through the legislative process in the coming weeks. It will amend the Customs and Border Control Law, 2018 to provide for the giving of directions by Cabinet to the Director of Customs and Border Control. This is anticipated to provide the Government with greater flexibility in its management of the entry and departure of individuals (and materials) in the weeks and months ahead.

The Immigration (Transition) (Amendment) Bill, 2020
Like the above this was published on 22 April 2020, and is expected to pass into legislation in the coming weeks. It is substantial and will formalize aspects of the Frequently Asked Questions Guidance published by WORC on 15 April 2020. It will bring into force a number of new requirements and formalize aspects of the Guidance issued by WORC. In particular:

  1. With effect from the commencement of this Law, the longstanding requirement to advertise in two issues of a newspaper (unless exempted by Cabinet, the Board, or the Director of WORC), will no longer apply. It is formally replaced (unless exempted) with a long-anticipated requirement for any vacancy to which a full work permit relates to be registered “in an electronic portal established and managed by WORC for fourteen days before the submission of an application…” Advertising in a newspaper remains an option, but only in addition to registering in the “electronic portal” understood to be the jobs.ky website. The registration is confirmed to be for the purpose of ascertaining the availability of a Caymanian, Permanent Resident, or other person already lawfully resident for any position (in that order of priority). The former preference for Spouses of Caymanians over other Permanent Residents will no longer exist, with all Permanent Residents with Residency and Employment Rights Certificates issued under section 37(5) or 37 (16), and those issued under s. 38 being afforded equal protection.
  2. Section 58 of the existing Law will also be amended by the deletion of the word “willfully” in the context of describing the offence of withholding information as to whether a local resident has applied for any position; or providing inaccurate or incomplete information in an attempt to deceive the authorities in an application for a work permit. It follows that the offence now becomes one of strict liability, making it easier to prosecute and in effect placing the burden of proof on the applicant for the work permit. It will no longer be a defence if a local applicant for a position that is subsequently the subject of a work permit application was overlooked by mistake. Employers and HR professionals (in particular) should take particular note. The penalties for the offence remain unchanged (a fine of CI$20,000 and a year in prison for a first offence, and CI$30,000 and imprisonment for two years for a second or subsequent offence).
  3. A series of transitional measures are introduced. If the Bill passes in its current form, it confirms that where a work permit expired on or after 27 March 2020, and the employer or self-employed worker was unable to make an application for the renewal of the work permit due to the closure of WORC, the worker is deemed not to have committed any offence under the Immigration (Transition) Law by continuing to work under the same terms and conditions PROVIDED an application for a renewal of the work permit is (as matters stand) made within 30 days of the commencement of the Bill. Interestingly, no corresponding protection is provided to employers in the present draft. That does not appear to us to be deliberate, and may change before passage. The Bill does however confirm that if no application is made within the 30 day window to be made available, then the worker must cease working. If employment nevertheless continues, both the worker and the employer will have committed an offence and be liable on conviction to a fine of CI$5,000 and/or imprisonment for one year. If an application is made within the 30 day window then the right to work (and to employ) by operation of Law is preserved pending determination, or any appeal.
  4. Where a worker’s term limit has expired on or after 27 March 2020 and an employer is thereby unable to make an application for the renewal of a work permit, and the worker has nevertheless continued in employment, neither the worker nor their employer will be deemed to have acted in contravention of the Immigration (Transition) Law where the worker continues to work on the same terms and conditions as applied to the final work permit, during the period between 27 March and ninety days after the commencement after what will be the Immigration (Transition) (Amendment) Law, 2020.
  5. Finally, the proposed legislation confirms that where a worker has continued in employment after the expiry of their work permit on or after 27 March 2020, they are deemed not to be in contravention of the Law for the period until their employment ends. It is assumed that the legislative intent of this provision is not that such persons be permanently excused from holding a work permit and that it will only apply for up to 30 days following commencement of the amending legislation.

Any applications filed before the future commencement date of this amending legislation will be dealt with under the Laws in place on the date of their application (for example relying on newspaper advertisements to determine the availability of local persons for any positions). Both employers and employees should pay close attention to these developments.

It remains to be confirmed how the interplay between workforce opportunity, border control, employment and even pensions will ultimately resolve (including how WORC will treat periods of extended layoff).

For the immediate we recommend that all employers with work permit needs in the coming months register themselves and any vacancies (which would include any position for which a work permit is or will be required) on the jobs.ky portal. Doing so now will enable employers the benefit of a full 30 day window within which to regularize any renewal applications which may be made “out of time.”

We are advising clients and assisting in the making of all manner of applications, including registration of employers and positions on the jobs.ky portal.

With recent developments concerning the global spread of COVID-19 and the impact it has had on the economy, the Cayman Islands Government (CIG) has implemented an amendment to the Labour Law (2011 Revision) (the “Law”) and enacted the Labour (Extension of Severance Pay Period) Regulations, 2020.

The Labour (Amendment) Law, 2020
The amendments that have been made to the Law are largely procedural and will have a minimal impact, if any, on the day to day working relationship between the employer and employee.

The Law has made an amendment to the procedure relating to the service and sending of documents by adding provisions under s.84 of the Law that allow a person that is required to serve any document required under the Law to be able to properly affect service by electronic means. Not only is this amendment a welcome addition due to the effect of the Government’s stay at home regulations but it also recognises the role that email and other forms of electronic communication now play in modern society.

The other change to the Law is the inclusion of a power to allow the Cabinet in the time of emergency or calamity, to grant, on a case by case basis, extensions or exemptions in relation to any prescribed period of compliance set out in the Law. This new power is then transferred to the Director of the Department of Labour enabling him to issue temporary certificates reflecting the grants and setting out any necessary conditions or procedures in relation to the grant made by the Cabinet. These grants can be made retrospectively if the Cabinet decide that the best way forward is to turn the clock back or if necessary stop it from running all together.

The Labour (Extension of Severance Pay Period) Regulations, 2020
Under s.42 (2) and (3) of the Labour Law (2011 Revision) an employer has the power to temporarily terminate or lay-off an employee for a certain amount of time without the need to pay that employee. During this lay-off period the employer/employee relationship continues, including the requirement to continue the employee’s health insurance coverage.

This means that in circumstances of a temporary lay-off under s.42 (2) of the Labour Law (2011 Revision) the employer is not required to pay severance at the time when the contract of employment is temporarily terminated. The notification of temporary termination sent to the employee must state that the termination of employment is on a ‘temporary basis’, and state the intention to recall the employee at a future unspecified date or specify a specific date on which the employee must return to work. Under s.42 (2) of the Labour Law (2011 Revision) the maximum permitted time allowed for an employee to be temporarily “laid off” is 30 days, except for those employed in the construction or agriculture industries where the maximum permitted time allowed for a temporary lay-off is 6 months (s.42 (3) of the Labour Law (2011 Revision)). If the employee is not recalled on or before day 30 or within 6 months as the case may be the employer is then obliged to pay severance pay to the employee (provided they have been employed for 12 months). Severance pay is calculated at the rate of one weeks’ pay for each completed year of service.

In recognition of the adverse economic impact of COVID-19 and the implementation of Government policies and regulations whose objective is to suppress the local transmission of the COVID-19 virus, the Government has enacted the Labour (Extension of Severance Pay Period) Regulation, 2020 to extend the period of permitted lay-off from 30 days to 60 days, which now means that, for employees that do not fall under s.42(3), that as long as the recall date is less than 60 days from the temporary termination date, no severance pay is due to be paid to the employee. For employees that fall within the scope of s.42 (3) as long as the recall date is less than 7 months from the date of termination, no severance pay is due to be paid to the employee. The extension of the lay-off period can only be relied upon by the Employer if the extension of the lay-off period is COVID-19 related.

If, for whatever reason, the employer is unable to specify a recall date, severance will now be payable 60 days’ after termination if the employee has not been ‘recalled’ within that period; and, the employee will also be entitled to interest on the amount of severance pay due at the rate of 10% per annum for the interval between the date of temporary termination date and the date of actual payment of the severance pay.

It should be noted that provided the employee is recalled within 60 days of termination, continuity of employment is preserved for the purposes of future employment rights. If, however, severance is paid and the employee is subsequently re-employed by the employer, the employee is treated as if he/she has been newly hired and the commencement date of his/her employment (for the purposes of future employee rights under the Labour Law) shall be from this date.

We are advising clients on the proper way to implement temporary terminations and the extension of existing lay-offs already in progress. A number of questions have arisen between the interaction of s.42 with contractual provisions and the redundancy provisions set out in the Labour Law. Any employer seeking to implement a s.42 temporary termination should obtain legal advice.

Sunday, 26 April 2020 marks the 20th World Intellectual Property (IP) Day, with the theme this year being “Innovate for a Green Future”.  

Every IP practitioner will, at one time or another, experience the administrative burden of preparing, executing, collating and authenticating original documentation in carrying out their role. Despite the growing trend in commerce and industry to paper-free working, many intellectual property offices still rely on the provision of original documents. This is particularly true in the Caribbean, where it is relatively rare for IP offices to accept electronic documents in support of trade mark matters.

The Cayman Islands is leading the way in being one of several IP offices in the Caribbean to operate on a mostly paper-free basis and allow electronic filings. All trade mark processes, from applications to the payment of annual maintenance fees, are carried out electronically, and require no original documentation. Furthermore, the IP Gazette is published online. Operating in this way offers many benefits to both IP practitioners and clients alike, making it easier to ensure records on the Cayman Register are up-to-date at all times.

The current and ongoing disruption caused by the COVID-19 pandemic has thrown the benefits of operating on a paper-free basis into sharp relief. Caribbean intellectual property offices have had to adjust to working without the provision of original documents on a temporary basis, at least. A paper-free process makes the registration and maintenance of trade marks more attractive to brand owners, reducing costs and having a positive impact on carbon emissions.

HSM IP is working hard at this time to encourage IP offices and registries in the Caribbean to accept paperless applications, with the view that one positive outcome of this difficult time may be that IP offices and registries still reliant on hard copy documents evaluate the necessity of such documents going forward.

While a pandemic is an incredibly rare occurrence, the geographical location of the Caribbean renders it vulnerable to hurricanes, earthquakes and other natural disasters that can create difficulties for businesses operating under paper-based systems. Shifting to electronic, paper-free practices is beneficial to IP offices and brand owners alike, helping to ensure records may be more easily preserved and protected.

In the meantime, there are a number of positive steps businesses may take to become paper-free, such as:

  • engaging a document maintenance system that enables paper-free storage of documentation
  • encouraging contacts to operate on a paper-free/scanned document basis
  • evaluating the need to keep paper documents against the related costs and practicalities – space in many offices is often at a premium
  • working where possible with paper-free suppliers

We at HSM IP have found that adopting a largely paper-free working environment beneficial to the smooth running of our IP practice. We are committed to encouraging more Caribbean IP offices to adopt this approach for the benefit of both the environment and brand owners.

To all our clients and colleagues, we wish a very happy, safe and healthy World Intellectual Property (IP) Day 2020!

UPDATE (30 April 2020): Following our review of the National Pensions (Amendment) Bill 2020 (Cayman Pension Update April 23), the National Pensions (Amendment) Law, 2020 (Law) was passed by the Legislative Assembly but contains two important changes from the original Bill:

  1. The temporary suspension of pension contributions (the pension holiday period) which applies to both employers and employees, continues to commence retroactively from 1 April 2020, but will now continue through to 30 September 2020 and not 30 November 2020; and,
  2. The remaining provisions of the Law concerning the emergency withdrawal of pensions will now expire on 31 October 2020.

However, these dates may be extended by an Order made by Cabinet.

Withdrawals from private pensions by Public Servants
We previously took the view that section 52I(3)(b) meant that Public Servants could not make any withdrawal from any private pension plan which they may hold. Section 52I(3)(b) is open to a number of interpretations and our view was in part driven by the Premier’s comments during the COVID-19 press briefings, in which he stated that the amendments to the pension law (then a bill not law) would not benefit public servants as a matter of policy because public servants remained fully employed and their pension contributions were continuing. However, during the COVID-19 briefing on 27 April 2020, the Premier in answering a direct question from a member of the press, stated that public servants could make withdrawals from a private pension plan provided that contributions to that plan did not come from a statutory authority or a government company, as defined in section 2 of the Public Authorities Law (2020 Revision).

Frequently Asked Questions and Answers
To provide further guidance, we have prepared a briefing on frequently asked questions (FAQs). Click here to download this briefing.

The National Pensions (Amendment) Bill, 2020 (“Bill”) has now been released. Its foremost purpose is to provide for the ‘temporary suspension of pension contributions’ and ‘to enable specified members of a pension plan to withdraw a single lump sum amount from their account in the pension plan’.

During the daily COVID-19 press conference on April 20 2020, the Premier announced proposals to amend the National Pensions Law (2012 Revision) (the “principal Law”) of which there were two key provisions:

  • there would be a 6 month pension ‘holiday’ which would operate retroactively from April 1 2020; and,
  • ‘eligible’ persons would be permitted to withdraw up to 100% of the value of their pensions which would be capped at CI$10,000. However, those persons with a pension value over CI$10,000 would be able to withdraw an additional 25% of their remaining pension pot.

The following briefing covers key aspects of the Bill which amends and repeals certain parts of the principle Law. It is important to note that the Bill is intended to be a temporary measure. Upon coming into force as the National Pensions (Amendment) Law, 2020, it will expire on November 30 2020 (unless extended by an Order of the Cabinet), the effect of which will be as though the principal Law had not been amended. Please keep in mind that this is a preliminary review and items are subject to change upon becoming Law.

Temporary suspension of pension contributions by the introduction of the ‘new’ Part 1A
By virtue of section 5A, a ‘pension holiday period’ is introduced which commences retroactively from April 1 2020 (“commencement date”).

In combination with section 5B, in practice this means that from the commencement date, pension contributions by both employees and employers are suspended until either November 30 2020 or any date extension subsequently ordered by Cabinet. This provision equally applies to self-employed persons who hold individual retirement accounts.

This is a default measure but upon careful reading of the wording of section 5B, the section essentially places a choice on both the employee and employer (individually) to suspend pension contributions – it is not a mandatory provision. Thus, there is no prohibition on an employee making voluntary contributions into a pension plan but the section provides that for the pension holiday period, the employer would not be obliged to contribute to the plan (and vice versa).

Notwithstanding, a note of caution should be exercised. The statutory amendments to the principal Law do not expressly prevail over any contractual arrangements between the employee and employer. There may be, for example, a term in the employee’s contract of employment which contractually obliges an employer to ‘match’ pension contributions made by the employee. Consequently, if an employee were to continue making contributions to a pension plan during the pension holiday period, the new statutory provision would not necessarily protect the employer from a breach of contract claim.

Pension arrears

It is clear by section 5C(2) that any arrears of pension contributions which accrued before April 1 2020 remain ‘payable’ and an employer will be liable to pay interest on those unpaid funds in accordance with section 50 throughout the pension holiday period.

Sections 25(1), (2), (3), (5) and (6) are not affected by the pension holiday and shall continue to apply. In essence, this means that should an employer recruit any ‘new’ employees during the pension holiday period, those employees will still be required to be members of a pension plan (with full contributions paid) subject to any exceptions set out under sub-section(2). Section 25 applies equally to self-employed individuals who set up a business during the pension holiday period.

Finally, in circumstances where a Caymanian has previously made a withdrawal from his/her pension either for the purposes of using that amount as a deposit for a residential dwelling or to pay-off an existing mortgage, the requirement to contribute an additional 1% into a pension scheme is also suspended for the duration of the pension holiday period in accordance with the introduction of sub-section (5) to section 52(D).

The emergency withdrawal by ‘members’ of pension funds by the introduction of the ‘new’ Part VIIB
Section 52I (2) recognises the distinction between defined contribution plans and defined benefit plans in which the value of the former will depend on factors such as the amount that is paid into the pension and the fund’s investment performance; whereas the value of the latter is determined by more dynamic circumstances such as age at retirement, years of service, and level of salary during the final years of employment. This is important as the value of defined contribution plans is aligned to the financial markets and are now the most common type of pension schemes.

Notwithstanding, in either case, the provisions for emergency withdrawal of pension funds are essentially the same:

Where the balance in a members’ defined contribution account or the commuted value of the members accrued benefits under a defined benefit –

  • does not exceed CI$10,000, the member may withdraw up to 100% of the balance; or,
  • if the balance exceeds CI$10,000, the member may withdraw CI$10,000 and up to 25% of the remaining balance.

For example, a member who has ‘pension pot’ of CI$100,000, may withdraw CI$10,000 + (25% x CI$90,000) = CI$32,500.

Any such withdrawals shall be taken as a single lump sum payment.

Eligibility for pension withdrawal under Part VIIB

Those eligible to apply for a withdrawal of pension in accordance with Part VIIB must:

  • either be presently in the Cayman Islands; or,
  • departed the jurisdiction between February 1st 2020 and November 30th 2020 (unless otherwise extended).

However, by virtue of section 52I(3), the ability to withdraw does not apply to a member who:

  • has claimed benefits under normal or early pension entitlement; or
  • is a public servant as defined by section 2 of the Public Authorities Law (2020 Revision) with pension contributions under this Law which were paid by a statutory authority or a government company as defined by section 2 of the Public Authorities Law (2020 Revision), is not entitled to apply and shall not apply to withdraw an amount from the member’s account in a pension plan in accordance with this Part.

Thus, in respect of section 52I(3)(a), those members who are currently drawing on their pension will not be able seek a lump sum pension withdrawal. Furthermore, the prohibition on public servants in (b) not only applies to withdrawals from their public service pension fund but also extends to any private sector pension they may have from previous employment. This is likely to be a ‘public policy’ decision owing to the fact that public servants are not yet facing redundancy or any reduction in pay and therefore, there is no legitimate need to access any of their pension funds.

There are strict penalties for any member referred to in sub-section (3) applying for a withdrawal of pension under Part VIIB. Any such application is deemed to be a criminal offence which carries a fine of CI$10,000 and/or a term of imprisonment of one year.

The application process

Any eligible member of a pension scheme seeking to make a withdrawal in accordance with Part VIIB is required to submit an application to his/her relevant pension administrator by way of a prescribed form. As far as we are aware, the application form has yet to be approved by the Director of the Department of Labour and Pensions (“Director”).

At the same time, it will be necessary to submit original government-issued photo identification or otherwise notarised (or certified) copies. The Director may require other documents upon request.

Sections 52I(8) & (9) thereafter provide a timetable in which the administrator is required to render a decision on the application. In summary, the timetable is as follows:

  • Within 7 days of receiving the application, the administrator is required to notify the applicant of receipt;
  • Within 14 days of notifying the applicant of receipt, the administrator shall notify the applicant of the decision to either approve or refuse the application;
  • If the application is ‘approved’, within 45 days from receipt of the application, the Administrator shall notify the applicant that either a cheque for the amount applied for has been prepared or a payment has been made by direct deposit to a financial institution as directed by the applicant. The applicant may choose either of the two forms of payment.

An application may, however, be refused by the administrator on two grounds:

  • where the administrator is not satisfied that the applicant qualifies to make a withdrawal under Part VIIB; or,
  • if any other requirement(s) under Part VIIB have not been met by the applicant.

Where an application has been refused, the administrator shall notify the applicant accordingly within 14 days of having notified the applicant of receipt of the application and provide reasons in writing. However, an applicant has the right to refer the administrator’s decision (in effect, an appeal) to the Director for reconsideration. In the event that the Director overturns the administrator’s decision, this will bind the administrator unreservedly.

The government clearly expects a pension administrator to adhere strictly to its obligations and the timetable set out in the legislation. Penalties are severe and non-compliance is an offence for which liability on summary conviction bears a fine of CI$10,000 and/or a term of imprisonment of one year.

Additional Voluntary Contributions

Section 47 has also been amended which now permits members, on becoming unemployed, to withdraw any additional voluntary contributions (“AVCs”) which have been paid into a pension plan.

As there is a general right for eligible members to withdraw from their pensions under section 52I(2), the section 47 amendment should be read as a separate and additional measure restricted to benefit those persons who are unemployed.

The legislation is ‘silent’ however, in respect of the applicable time period as to when the member became unemployed. Does the section 47 amendment only apply to those who become unemployed from the date of the amended section, or, does it apply to a person who may have been unemployed for many years? The position is not clear but given the text of the Memorandum of Objects and Reasons which preface the legislation, we are of the view that provided a member is unemployed at the date of application, the amendment to section 47 permits the withdrawal of AVCs:

“Clause 3 seeks to amend section 47 of the principal Law to allow a member to access the member’s additional voluntary contributions, upon providing the administrator with evidence of the member’s unemployment.”

There are no prescribed constraints on the amount of AVCs that may be withdrawn in these circumstances although the pension administrator will need to be satisfied of the member’s unemployment. The application

process is self-contained in section 11 and shall be made to the pension administrator in the manner designated by the Director.

Conclusion
This is a dramatic piece of legislation in an attempt to boost the local economy and assist those primarily, who have been dismissed from their employment in the current COVID-19 crisis. However, the wide-ranging effect is to also permit those in the private sector – who remain employed on full-salaries – to access their pensions for a lump sum withdrawal.

Critically, those individuals who are considering a withdrawal should, in the first instance, contact their respective pension administrators to ascertain current pension values. The recent extraordinary falls in the stock market will undoubtedly affect the majority of pension values significantly.

If you have any questions or need assistance, please reach out to a member of our team or contact us at info@hsmoffice.com.

In what will be seen by some as a welcome measure by the Cayman Islands’ Government, the Premier announced two proposed legislative changes to the National Pensions Law (2012 Revision) during the daily COVID-19 press conference on April 20 2020.

Firstly there would be a 6 month pension ‘holiday’ which would operate retroactively from April 1 2020. This means that pension contributions paid by both the employer and employee would be suspended during the period until November 1 2020.

Secondly, ‘eligible’ persons will be permitted to withdraw up to 100% of the commuted value of their pensions which will be capped at CI$10,000. Those persons with a commuted pension value of over CI$10,000 may withdraw an additional 25% of their remaining pension pot.

For example, an individual who has a commuted pension value of CI$100,000, may withdraw CI$10,000 + (25% x CI$90,000) = CI$32,500.

Withdrawals will be taken as a single lump sum and the proposed scheme applies to anyone contributing to a private pension. It does not, however, apply to those persons currently drawing on their pensions.

Cabinet will be considering the proposed changes and the corresponding legislation will be placed before the Legislative Assembly on Wednesday (April 22 2020)/Thursday (April 23 2020) before passing into law. The mechanics of the application process has not yet been set out.


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