Category Archives: HSM LAW
In a press release dated 15 April 2026, the Ministry of Caymanian Employment and Immigration announced:
”The Immigration (Transition) (Amendment and Validation) Act, 2025 introduces updated rules for work permit holders changing jobs, effective 1 May 2026.
Work permit holders can still change jobs. However:
• First-time work permit holders granted a permit on or after 1 May 2026 must remain with their sponsoring employer for at least 2 years
• If a worker leaves before completing this period without a valid reason, they will be required to leave the Cayman Islands for 1 year before applying for another permit
The Director of WORC may allow a job change in prescribed circumstances, including:
• Unpaid or uncompensated overtime
• Discrimination or retaliation
• Harassment, including sexual harassment or bullying
• Any other situation the Director of WORC deems justifies an exemption
Domestic Helpers: A special exception applies—workers may be able to change employers within the same role without leaving the Islands”.
While the above does provide insight into the operation of the “new” Section 64, it does pose more questions than answers it provides.
“First-Time Work Permit Holders”: A Concept Not Found in the Act
The press release states that:
“First-time work permit holders granted a permit on or after 1 May 2026 must remain with their sponsoring employer for at least 2 years.”
This formulation introduces a concept — “first-time work permit holders” — which does not appear anywhere in the new Section 64. The statutory language is notably broader. Subsection (1) applies to:
“A person who is the holder of a work permit…”
There is no distinction drawn between:
- first-time permit holders;
- repeat permit holders; or
- individuals already present and working in the Cayman Islands.
Equally, the press release states that the new Section 64 applies only to permits granted post 1 May 2026. If this is correct, what does that mean for existing work permit holders?
The Position of Existing Work Permit Holders
The starting point in the legislation is clear:
- Section 64 has been repealed and replaced in its entirety; and
- The new Section 64 contains no express limitation to future permits.
It does not preserve the former Section 64, nor does it disapply the new Section 64.
Accordingly, on a strict reading of the statute:
- existing work permit holders remain “persons who are the holder of a work permit”; and
- if they cease employment within two years of the grant of their permit after 1 May 2026, they would appear to fall within subsection (3), triggering the one-year departure requirement (absent an exemption).
This degree of freedom which the press release would seemingly point to, does not appear to align with the intention of the Act.
This disconnect creates legal uncertainty for both employers and employees, who may reasonably rely on the Government’s public guidance, but whose rights and obligations are ultimately determined by the legislation itself.
“Prescribed Circumstances” Without Regulations
The press release also attempts to give content to the “prescribed circumstances” under subsection (5), listing examples such as unpaid overtime, discrimination, and harassment.
While these examples are helpful from a policy perspective, they are not — at present — legally operative. It is suspected that new Regulations will be published but as of today’s date, no such Regulations exist.
The statute is explicit: exemptions depend on “prescribed circumstances”, which must be set out in regulations. In the absence of such regulations:
- there are no formally prescribed circumstances; and
- the exemption mechanism under subsections (4)–(5) remains incomplete.
- an employee who has been released from their work permit.
- An employee who claims to have been unfairly dismissed.
- An employee who has been made redundant.
Conclusion: A Need for Clarification
The press release provides a useful indication of policy intent, but it does not resolve the underlying statutory ambiguities. In particular:
- the concept of “first-time work permit holders” has no clear legislative basis;
- the position of existing work permit holders remains uncertain; and
- the exemption regime cannot function fully in the absence of regulations.
Given the significant consequences of Section 64 — including mandatory departure from the Islands — it is essential that these issues are clarified, either through regulations, formal guidance, or further legislative amendment.
Until then, there remains a real risk that the law, as enacted, may operate more broadly and more rigidly than the Government’s public statements suggest.
It is with deep sadness that we mark the passing of our much‑loved colleague and friend, Oscar DaCosta, who died this weekend past following a courageous battle with brain cancer.
Oscar obtained an LLB (Hons) Degree from the University of Liverpool (Truman Bodden Law School) in 2014 and also received a Commendation in the Professional Practice Course in 2017. Oscar was also an Accredited Civil and Commercial Mediator by the ADR Group – Civil Mediation Council (CMC) in London. Oscar joined HSM Chambers in March 2020 and we were proud to subsequently move his admission as a Cayman Attorney specializing in Property related matters and he later also served the firm with distinction as its Compliance Officer. Throughout his time with us, he exemplified professionalism, integrity, and quiet determination. He approached his work with care and precision, but it was his kindness, humility, and unfailing courtesy that left the most lasting impression on those around him. Oscar was a trusted adviser to clients and colleagues alike. He brought clarity to complex matters, calm to challenging situations, and an unwavering sense of responsibility to everything he undertook. His contribution to HSM Chambers extended well beyond his technical expertise.
Beyond his professional life, Oscar’s compassion and commitment to helping others shone brightly. Together with his wife, Melissa, he co‑founded The Grey Area, a Cayman‑registered charity dedicated to supporting and raising awareness around brain health and brain cancer. In the face of profound personal adversity, Oscar chose to create something hopeful and purposeful—an enduring legacy that will continue to make a meaningful difference in the lives of others. Oscar faced his illness with remarkable courage and dignity. Even during the most difficult periods, he remained thoughtful of others and deeply grateful for the support and kindness shown to him. His strength, grace, and generosity of spirit were an inspiration to all who knew him.
On behalf of everyone at HSM Chambers, I extend our heartfelt condolences to Melissa, his family, and the many friends whose lives he touched. He will be remembered not only as a dedicated lawyer and compliance professional, but as a genuinely decent and compassionate man. Oscar’s legacy lives on—in his work, in The Grey Area, and in the many people who were fortunate enough to know him. He will be greatly missed but never forgotten.
Huw St.J. Moses OBE
Managing Partner, HSM Chambers
Oscar DaCosta
On 19 March 2026, the Judicial Committee of the Privy Council delivered its judgment in A and Ors (Appellants) v C and others (Respondents) [2026] UKPC 11, overturning the Bermuda Court of Appeal and holding that the protectors of the X Trusts had the “wider” role, rather than a narrow supervisory one.
The decision has been closely watched by trust practitioners globally as it resolves a long-running uncertainty, namely, where a trust instrument requires protector consent as a condition to exercise a trustee power but the trust instrument is silent on how such consent is to be exercised, is the protector (a) confined to reviewing the rationality and legality of the trustees’ proposed decision, or (b) may the protector exercise an independent judgment on the merits?
The Privy Council has now made clear that, absent express language imposing narrower constraints in the trust instrument, the protector is not limited to acting as a mere watchdog. A protector may instead have a substantive fiduciary role to play and may withhold consent based on its own independent assessment of the merits of any trustee proposal.
Key takeaways
The decision suggests that where a trust instrument does not expressly limit the protector’s role, a fiduciary protector’s consent power will usually (subject to the terms of the trust instrument) be interpreted as a wider one. The court will not rush in to fill drafting silence with an implied narrow duty.
For existing trusts, trustee and protector provisions should be reviewed carefully. For new trusts, drafting should expressly state whether the protector is intended to have a narrow supervisory role or a wider fiduciary one.
Action points
For trustees
- Review the protector consent provisions in existing trust instruments to try to identify whether such powers are of a ‘narrow’ or ‘wide’ variety.
- If the protector powers in the trust instruments are silent or unclear, consider implementing clarifying amendments where possible.
- If the protector powers are silent or unclear, assume they are of the ‘wide’ variety.
- Keep a clear record of all protector interactions.
For protectors
- Ascertain whether the protector powers are of the ‘narrow’ or ‘wide’ variety and carry out your duties accordingly.
- If the powers are silent or unclear, consider implementing clarifying amendments to the trust instrument wherever possible in concert with the trustee.
- If the powers are silent or unclear assume they are of the ‘wide’ variety.
- Keep a clear record of trustee interactions.
For settlors
- Ensure the powers vested in protectors clearly indicate whether they are of the ‘wide’ or ‘narrow’ variety.
- Ensure there are deadlock-provisions in the trust instrument in the event a protector and a trustee cannot find common ground on any proposed course of action.
- Ensure any proposed protector fully understands the nature of their role, the expected duties, as well as their fiduciary responsibilities if their powers vested in them are of the ‘wide’ variety.
The facts and procedural history
In 2017, the trustees of the X Trusts developed proposals concerning the future of the trusts. Certain aspects of these proposals necessitated protector consent. After consultation, the protectors took the view that the proposals were unlikely to serve the beneficiaries’ best interests, and withheld consent. They approached the matter on the basis that their duty was of the wider variety and not a mere ‘rubber stamp’.
In June 2020, the Bermuda-based trustees applied to the Supreme Court of Bermuda for the court’s blessing of their preliminary proposals under the Public Trustee v Cooper route. One branch of beneficiaries and the protectors opposed the application, arguing that if protector consent was unlikely, further expense would be unjustified.
The trustees then sought declarations from the Supreme Court of Bermuda as to the basis on which the protectors could withhold consent, and specifically whether the protectors’ function was narrow or wider. One beneficiary branch argued for the narrow role and another for the wider role; the trustees and protectors remained neutral. On 22 November 2021, the Supreme Court of Bermuda held that the protectors had only a narrow role. That conclusion was upheld by the Bermuda Court of Appeal in February 2023.
In doing so, the Court of Appeal declined to follow the Jersey Royal Court’s reasoning in In the matter of Piedmont Trust & Riviera Trust [2021] JRC 248, where materially similar trust wording had been interpreted as conferring a wider role on the protector.
The Privy Council’s reasoning
The Privy Council rejected the framing of the issue as a simple binary choice between two default models. Instead, it held that the correct question was what constraints, if any, the trust instrument actually imposed on the protector, read in context and together with the general law.
That approach mattered. The trust deeds conferred clearly defined powers on the protectors, but were silent as to how those powers should be exercised. The Privy Council held that this silence did not justify implying a narrow restriction. On the contrary, where a settlor has deliberately created fiduciary offices and specified powers without prescribing a detailed decision-making standard, that gap may well be intentional.
Relying on principles approved in Attorney General of Belize v Belize Telecom Ltd. [2009] UKPC 10, the Privy Council held that if the settlor had intended something further to happen, the instrument would ordinarily have said so. An apparent gap may therefore be a deliberate gap, reflecting a choice to trust the good sense of fiduciaries rather than constrain them with detailed rules.
The Privy Council found nothing in the X Trusts’ deeds that supported the narrow role. By contrast, several features supported the wider role.
First, the deeds permitted the protector powers to be released or waived. That was difficult to reconcile with the suggestion that the protectors were simply there to police legality. As the Privy Council noted, it would be unusual to permit a “watchdog” to abdicate that function permanently.
Secondly, where there was more than one protector, unanimous consent was required; failing unanimity, the trustees could proceed without protector consent so long as they consulted the protectors and took their views into account. The Privy Council considered that structure consistent with protectors having an independent evaluative role. It made little sense if a protector’s task were merely to identify unlawfulness.
Thirdly, consent was required only for a limited category of especially important acts, including appointments of capital and dealings with specified securities. That selective allocation of consent rights strongly suggested that the settlor intended the protectors to exercise real judgment in relation to major decisions.
The Privy Council also emphasised that fiduciary status does not itself narrow the protector’s function. A fiduciary protector must avoid conflicts and exercise powers for proper purposes, but those duties are entirely consistent with a wider role.
Deadlock and practical significance
The Bermuda Court of Appeal had been concerned that a wider role risked duplication and deadlock. The Privy Council rejected that as a reason to prefer the narrow interpretation. The very purpose of a protector with meaningful consent rights may be to stop a major transaction that the protector considers inappropriate. The possibility of deadlock was therefore contemplated.
If you are a concerned trustee, protector or settlor, please reach out to Robert Mack or Hilary Brooks who would be pleased to guide you.
On Friday, 27 March 2026, the Government announced that the “Immigration Law changes will take effect on Friday, 1 May 2026”. It appears that the Act which was passed in December 2025 and amended, prior to coming into force on 25 March 2026, will be the Law of the Cayman Islands as of 1 May 2026. It appears that all the amended sections will come into force on 1 May 2026. This means that it is likely that a further set of Regulations will have to be published between now and 1 May 2026. These Regulations are needed to prescribe in what circumstances a work permit holder can change employer during the first two years of Employment. The new Section 64 of the Act which comes into force on 1 May 2026 sets out that only those work permit holders who satisfy the prescribed circumstances will be able to change employers during the first two years of employment. In the absence of prescribed circumstances, a work permit holder who leaves their employment during the first two years of employment will have to leave the Cayman Islands for a year if they wish to obtain a new work permit.
The absence of Regulations, means that as of 1 May 2026, work permit holders may be subject to the full effect of Section 64 and the mandatory departure requirement, while being unable in any meaningful way to access the exemption regime intended to mitigate its harshness. In effect, subsection (4)–(5) risks being rendered temporarily inoperable, as these were the subsections which provided the exemption from the requirement to leave the Cayman Islands and which the prescription would relate. This raises not only issues of fairness and proportionality, but also legal uncertainty for both employees and employers, who are left without clear guidance as to how applications will be assessed in the interim. Unless and until the relevant regulations are introduced, the new Section 64 may operate in a manner that is more rigid than the legislature may have intended.
Despite the need for Regulations in regard to Section 64, it is not clear why these Regulations are yet to be published. The Government have published new Regulations in respect to Fees in 2026, but not substantive Regulations in regards to this section 64. Why this is, is not clear but it is hoped that Regulations will be published. Since the Immigration (Transition) (Amendment and Validation) Act, 2025 was passed last year, the issue of Section 64 and the uncertainty surrounding it, has been the area in which the most advice has been provided to clients. The fact we are now a month a way from this law coming into force and are none the wiser is neither fair nor appropriate to employees or employers.
The latest work permit statistics released by Workforce Opportunities & Residency Cayman (WORC) show that there are currently 37,075 work permits in place as of 11 March 2026.
This represents a small decrease from February 2026, when 37,267 work permits were recorded.
While monthly fluctuations are common, the broader trend over the past 18 months is notable. Since September 2024, the total number of work permits has remained remarkably stable at around 37,000. At no point during this period has the total exceeded 38,000, suggesting that the Cayman Islands labour market has reached a relatively steady plateau following the post-pandemic growth period.
One question that naturally arises from the data is whether the Cayman Islands may have quietly reached a ceiling in the size of its expatriate workforce. This may also prompt a deeper question: are there now structural limits, such as housing availability, cost of living pressures, tighter regulatory scrutiny, or businesses not recruiting, that are beginning to cap further growth in the workforce? The numbers alone do not provide the answer, but the plateau is certainly worth watching.
Another notable trend emerging from the data is the increase in Working by Operation of Law (WOL) permits. WOLs are granted if a work permit has been rejected and appealed. Therefore, at the current time it appears that 61 work permits rejections are current under appeal.
The data shows a clear upward trend in the rejection of work permits or the delays in processing appeals or both:
- 1 May 2025 — 17 WOLs in place
- 11 August 2025 — 25 WOLs in place
- 4 November 2025 — 53 WOLs in place
- 11 March 2026 — 61 WOLs in place
This represents more than a threefold increase within less than a year.
While the underlying reasons may vary from case to case, the trend suggests that work permit refusals or complications in the appeal process may be increasing.
Either way, the growing number of WOLs is an important signal worth monitoring, especially if it is the case that Work Permit rejections are increasing.
Clarity on Factor 8 of the PR Points System: IAT Provides Guidance on Dual Nationality
For many years, there has been uncertainty surrounding how points should be awarded under Factor 8 of the Permanent Residence (PR) Points System in the Cayman Islands.
Factor 8 states:
“To maintain a demographic and cultural balance in our community, points will be awarded based on the applicant’s country of origin.”
Despite the significance of this factor in the overall points assessment, there has historically been little guidance or formal policy explaining how the Workforce Opportunities & Residency Cayman (WORC) or the Immigration Appeals Tribunal (IAT) should determine an individual’s “country of origin.” This lack of clarity has been particularly problematic in cases involving applicants with dual nationality.
The Recent IAT Decision
A recent decision by the IAT has provided some much-needed clarity.
In the case before the Tribunal, the Director of WORC assessed a Permanent Residence applicant who held dual British and Irish nationality as being British for the purposes of Factor 8. As a result, the applicant was awarded 5 points, rather than the 10 points that would have been awarded had the applicant been assessed as Irish.
The applicant appealed this decision to the IAT.
After reviewing the matter, the Tribunal determined that the Director’s approach was erroneous and ultimately quashed the decision.
The Tribunal’s Approach
In explaining how Factor 8 should be applied in cases involving dual nationality, the Tribunal indicated that the appropriate approach is to assess the applicant in a way that avoids unnecessary disadvantage. The IAT stated:
“The Appellant holds dual nationality and therefore, the Tribunal has resolved to approach the matter of Factor 8 — to award points based on the least likely to impose detriment to the Appellant.”
In practical terms, this means that where an applicant holds more than one nationality, the nationality that results in the higher score under Factor 8 should be used.
A Welcome Clarification
This decision represents a welcome clarification in an area that has long lacked formal guidance.
While decisions of the Immigration Appeals Tribunal are not strictly binding on WORC, they are nevertheless highly persuasive. As such, it is hoped that WORC will adopt this approach moving forward when assessing PR applications involving dual nationals.
Greater consistency in the application of Factor 8 will not only improve transparency in the PR process but will also help ensure that applicants are not unfairly disadvantaged simply because they hold more than one nationality.
Further clarification still needed
As was pointed out recently, Nepalese employees now make up, potentially, more than 5% of the work permit holder, if you exclude Government workers. This is still the case. Points are awarded for Factor 8 based upon the number of Work Permits held by nationals of a country. It has long been unclear whether or not the Department are considering Government Workers, who are exempt from the Work Permit regime, as holding a Work Permit for the purposes of Factor 8.
If Government workers are included in the consideration of Factor 8, the Nepalese applicants will receive 10 points for Factor 8. If Government Workers are not included then Nepalese individuals will receive 5 points for Factor 8.
Currently, from the statistics provided, we can see that there are at least three Nepalese individuals awaiting a decision on their PR application. This issue has needed to be resolved for a while now, especially as it is expected that more and more Nepalese individuals will be applying for PR in the upcoming years.
Recent immigration developments in the Cayman Islands represent meaningful progress, but they also highlight the need for greater transparency and certainty as further changes are introduced.
Positive Developments: Protection for PR Holders and Applicants
The Government should be applauded for the introduction of the Immigration (Transition) (Amendment and Validation) Bill 2026. In particular, the decision to grandfather those who have already applied for Permanent Residence and are awaiting a decision, as well as those who currently hold Permanent Residence or another form of permanent immigration permission, is both sensible and fair.
At a time of significant legislative reform, this measure provides reassurance to individuals and families who have made long-term commitments to the Cayman Islands. It reflects a recognition that those who have already engaged with the system under the previous framework should not be disadvantaged by subsequent amendments.
Immigration (Transition) (Fees) Regulations 2026
On Friday, 20 February 2026, the Government published proposed new regulations introducing updated immigration fees. If brought into force, these will become the Immigration (Transition) (Fees) Regulations 2026.
While it is understandable that fees may require adjustment, what is less clear is why the Government appears to be taking a piecemeal approach to the publication of Regulations.
Rather than releasing individual regulations incrementally, there is a strong argument that a comprehensive suite of draft regulations should be published together. This would allow stakeholders, including employers, expatriates, and professional advisors, to understand the full scope of the changes and how they interact.
What Further Regulations Are Required?
The Immigration (Transition) (Amendment and Validation) Act 2025 (“ITAV 2025”), which passed in December 2025, contains a number of substantive legal changes that will require accompanying regulations in order to operate effectively. These include:
- The financial standing required in order to have dependants reside in the Cayman Islands.
- The form of local media (beyond a traditional local newspaper) in which businesses may advertise employment vacancies.
- The circumstances in which an expatriate may change employers during the first two years of a work permit, subject to the approval of the Director of WORC.
Each of these areas has practical implications for both businesses and individuals. However, the most pressing uncertainty surrounds Section 64 of the ITAV 2025.
Section 64: Change of Employer Restrictions
Section 64 regulates the circumstances in which expatriate workers may change employers within the first two years of the grant of a work permit. However, the section appears to depend on prescribed circumstances that are yet to be set out in regulations.
It is unclear how section 64 can come fully into force without the necessary regulations defining those circumstances. It is also unclear whether the prescribed circumstances will be subject to consultation, and if not, why?
The ongoing uncertainty surrounding section 64 is causing considerable concern. Since the beginning of the year, this has been one of the most frequent areas of enquiry from both expatriates and Caymanian businesses.
It is important to remember the potential implications:
- It is expected to become harder for expatriates to change employers within the first two years of a work permit.
- The restriction appears to apply to each new employer during the first two years of any grant of a work permit, not simply the first two years of residence in the Cayman Islands. This means that an expatriate who has lived in the Islands for six years, but who is on a new work permit with a new employer, may be subject to the restriction.
- It is unclear whether the provision will apply to those who hold a Permission to Continue Working.
- There appears to be no transitional provisions. As soon as ITAV 2025 is brought into force, the restriction may apply immediately.
These unanswered questions create uncertainty at a time when stability is needed.
The Need for Transparency and Certainty
With expatriates and Caymanian businesses attempting to digest substantial immigration reforms, clarity is essential. Publishing regulations incrementally risks confusion and unnecessary anxiety.
A more transparent approach would include releasing the full suite of proposed regulations for review at the same time, which would allow for meaningful engagement and informed planning. Immigration policy has far-reaching consequences for families, businesses and the wider economy. Predictability and clarity are therefore critical.
Reform is welcome. But reform must also be accompanied by certainty.
Over the past decade, the demographic composition of the Cayman Islands’ expatriate workforce has undergone a notable transformation. These changes have important implications not only for labour market planning but also for the operation and perceived fairness of the Permanent Residence points system administered by Workforce Opportunities & Residency Cayman (WORC). HSM Partner Alastair David highlights points of interest in this article.
The Position in 2015
In September 2015, there were 22,148 expatriates employed in the Cayman Islands. The composition of that workforce reflected long-standing migration patterns within the region and from key labour-sending countries:
- Jamaican nationals: 9,149 (41%)
- Filipino nationals: 2,849 (13%)
- British nationals: 1,846 (8%)
- United States nationals: 1,332 (6%)
- Canadian nationals: 1,117 (5%)
- Indian nationals: 893 (4%)
- Honduran nationals: 840 (4%)
At that time, the Permanent Residence framework incorporated a nationality-based component—commonly referred to as Factor 8—which awarded points according to the relative size of a nationality within the expatriate workforce.
In practical terms, this meant:
- Nationals of the largest expatriate groups, including Jamaicans and Filipinos, were awarded 0 points on the basis of nationality.
- British, United States, and Canadian nationals were typically awarded 5 points.
- All other nationalities were awarded 10 points.
This structure was intended to encourage demographic diversity within the expatriate population. However, it also created significant disparities in outcomes, particularly for applicants from countries that historically supplied large numbers of workers to Cayman’s service, construction, and domestic sectors.
The Emergence of New Nationalities
In 2015, Nepalese nationals did not rank among the top fifteen nationalities holding work permits in the Cayman Islands. By 2016, there were 122 Nepalese expatriates, marking the first time that nationality appeared within the top fifteen.
Over the subsequent decade, the growth of the Nepalese workforce has been striking, reflecting both employer demand and evolving migration networks.
The Position in 2026
As of January 2026, the distribution of work permits has shifted:
- Jamaica: 37.20%
- Philippines: 18.71%
- India: 5.99%
- United Kingdom: 5.69%
- Nepal: 5.02%
There are approximately 1,806 Nepalese work permit holders in the Cayman Islands. When government employment is included, however, the figures change slightly. Only two Nepalese individuals are employed directly by government, and when government workers are combined with work permit holders in calculating overall percentages, the Nepalese share reportedly falls to approximately 4.81%, placing it just below the 5% threshold that has historically influenced nationality-based scoring.
One of the most significant demographic shifts in the Cayman Islands’ expatriate workforce over the past decade has been the growing presence of workers from Asia, particularly from the Philippines, India, and Nepal. While Filipino nationals have long formed a substantial part of the labour force for a long period of time, their numbers have increased steadily, rising both in absolute terms and as a percentage of total work permit holders.
At the same time, Indian nationals have consolidated their position among the largest expatriate groups, and the growth of the Nepalese workforce has been especially striking, expanding from a negligible presence a decade ago to one of the top nationalities by 2026. This trend reflects broader changes in global labour migration and recruitment patterns, as employers increasingly look beyond traditional regional sources of labour. The result is a workforce that is becoming more geographically diverse, which could therefore lead to a change in the social and cultural landscape of the Cayman Islands.
Uncertainty in the Application of Factor 8
This situation highlights a significant issue: it is not clear how WORC calculates nationality percentages for the purposes of Factor 8. Specifically, there has been limited public guidance on whether:
- The calculation is based solely on work permit holders, or
- The calculation includes all expatriate workers, including those employed directly by government or statutory authorities.
This distinction is not merely technical. It may determine whether a nationality crosses a threshold that changes the number of points awarded under the Permanent Residence system.
In the case of Nepalese applicants, the question is straightforward but consequential:
- If Nepalese nationals are treated as representing more than 5% of the expatriate workforce, they may fall into a lower scoring band and receive 5 points.
- If they are treated as representing less than 5%, they may receive 10 points.
For individual applicants, a difference of five points can materially affect the likelihood of obtaining Permanent Residence.
Broader Implications
The changing composition of Cayman’s workforce illustrates a broader reality: immigration policy mechanisms designed around historic migration patterns may struggle to keep pace with demographic change. Nationality-based criteria, in particular, require transparent and regularly updated methodologies if they are to maintain public confidence.
Greater clarity from policymakers on how workforce percentages are calculated—and how often they are reviewed—would assist applicants, employers, and practitioners alike. Transparency would also help ensure that the points system operates in a manner consistent with its stated objectives.
Conclusion
The rise of new nationalities within the Cayman Islands’ labour force, including the rapid growth of the Nepalese community, underscores the dynamic nature of migration to the jurisdiction. As the face of Cayman continues to evolve, immigration policy and its administration must adapt in ways that are clear, consistent, and equitable.
The unresolved question surrounding the calculation of Factor 8 is therefore more than a technical issue; it is emblematic of the need for ongoing review and modernization of the immigration framework to reflect the realities of a changing Cayman.
The HSM Group is pleased to be featured by Chambers & Partners in their 2026 Global Legal Guide.
Our Intellectual property practice, HSM IP, has once again been ranked as a top tier law firm in their Global (Caribbean-Wide) Intellectual Property 2026 Guide. This marks the seventh year in a row being ranked and highlights our ability to successfully handle Intellectual Property (IP) registrations, filings and infringement matters across the Caribbean.
Citing Chambers and Partners, a commenter shared that “The team at HSM IP is distinguished by its responsiveness, approachability and prompt, thorough service,” and “has very mature experience and deep knowledge.”
HSM Chambers has also been ranked for Real Estate (Cayman Islands) with HSM Partner Linda DaCosta. Our team is praised for handling contract negotiations, conveyancing, acting for banking institutions and ensuring timely completions. Linda DaCosta leads the property team at HSM Chambers. She advises on all facets of real estate transactions, including with regard to the financing considerations, and in connection with leasing documentation. “She’s pleasant to deal with,” shares a Chamber’s commentator.
Chambers and Partners is a prestigious hub for lawyer and law firm recommendations. They diligently research and feature the world’s best lawyers and have done so since 1990, covering over 200 jurisdictions.
Section 64 of the Immigration (Transition) Act (2022 Revision) (“the Act”) and its earlier iterations has long governed the circumstances in which a work permit holder may change employment in the Cayman Islands. Historically, the provision operated as a relatively flexible mechanism, allowing movement between employers where special circumstances existed. With the enactment of section 29 of the Immigration (Transition) (Amendment and Validation) Act, 2025 (“the Amendment Act”) Section 64 has been repealed and replaced with a markedly different framework.
At the current time, it is understood that the Amendment Act is to commence on 1 March 2026.
HSM Partner, Alastair David, explores how Cayman’s new section 64 redefines work permit mobility.
Past Issues
In the past, the laws governing the ability of expatriates to change their employers has been slightly “hit and miss”. At HSM Chambers we have heard of employees “self releasing” and been granted a new work permit much to the chagrin of their former employer. Equally, the Immigration Authorities have gone through periods where it rigorously enforces the law in regard to changing employers thus causing employees serious issues.
It is understood that one of the reasons for the change in the Law was to stop the misuse of the Immigration system. Anecdotally, it is understood that unscrupulous employers have applied for and been granted work permits for positions that do not exist. This has resulted in expatriates coming to the Cayman Islands and finding that there is no job awaiting them and they then must search for alternative employment. These expatriates are provided with a “release letter” and are then free to obtain alternative employment.
This article compares the former Section 64 of the Act with the newly enacted Section 64, and considers in particular the likely scope and effect of the “prescribed circumstances” referenced in subsection (5) of the new provision.
Section 64 under the Immigration (Transition) Act (2022 Revision)
Under the Act, Section 64 was framed as a permissive provision. In general terms, a work permit holder could change employer during the currency of the permit where the Director of WORC or the Board was satisfied that special circumstances existed. The list of “special circumstances” was not exhaustive and therefore many different circumstances could qualify.
The emphasis of the former provision was therefore on discretion and flexibility. Although the default position was that a work permit was tied to a specific employer, the legislation contemplated that employment relationships might break down or that labour market realities might require movement, and it vested decision‑makers with broad discretion to authorise changes on a case‑by‑case basis.
Section 64 of the Act also applied to whole of the nine years that the expatriate was in the Cayman Islands working via a work permit.
The New Section 64 of the Amendment Act: Structure and Effect
The new Section 64 represents a clear policy shift. The starting point is now an express statutory prohibition on changing an employer within the first two years of the grant of a work permit.
General Prohibition
Subsection (1) provides that a work permit holder “shall not change the person’s employer within the first two years of the grant of the work permit.” This establishes a rigid baseline rule which at first blush is more generous than the former section which applied during the currency of the work permit, whether that was in the first year or the ninth year of residence.
Domestic Helper Exception
Subsection (2) carves out a limited exception for domestic helpers, who may change employer within the first two years provided they are seeking employment as a domestic helper with another employer. This exception appears to recognise the particular vulnerabilities and employment dynamics associated with domestic work but also limits future employment only to a domestic setting, so therefore an expatriate cannot come to the Cayman Islands as a domestic helper and then three months later become a Food and Beverage Server.
Mandatory Departure Requirement
Subsection (3) introduces a significant enforcement mechanism. Where a work permit holder ceases employment within the first two years (and the domestic helper exception does not apply), the person must leave the Islands for a period of not less than one year before another employer may apply for a work permit in respect of that person.
This requirement fundamentally alters the consequences of early termination of employment, converting what was previously a regulatory issue into a mandatory exclusionary outcome, subject only to limited exemptions.
Exemptions and the Role of Prescribed Circumstances
Subsection (4) introduces a narrow pathway for relief. A work permit holder who ceases employment within the first two years may apply to the Director of WORC to be exempted from the one‑year departure requirement.
What is not clear is whether this exemption will be as “generous” as the previous “special circumstances”. The exemption mechanism appears to be tightly structured and depends on the existence of “applicable prescribed circumstances” and also the grant, in advance of the submission of a Work Permit, by the Director of WORC.
Subsection (5) requires that any application for exemption be accompanied by:
- proof of the existence of the applicable prescribed circumstance; and
- any other particulars as may be prescribed.
This wording is significant. It signals that:
- Exemptions are not grounded in general notions of fairness or special circumstances;
- Relief is available only where circumstances have been formally defined in subsidiary legislation; and
- The burden rests squarely on the work permit holder to prove that those circumstances exist.
Likely Scope of “Prescribed Circumstances” under Subsection (5)
Although the Act itself does not define the prescribed circumstances, the structure and policy intent of the new Section 64 allow some reasonable inferences to be drawn.
Because Section 64 is going to be changed, we believe that the prescribed circumstances are likely to be narrow, specific and objectively verifiable. They may include, for example:
- termination of employment for reasons wholly outside the control of the employee, such as redundancy or business closure;
- serious breach of employment obligations by the employer, including non‑payment of wages;
- substantiated cases of abuse, exploitation or unsafe working conditions;
- circumstances where continued employment is impossible or unlawful;
- other humanitarian or exceptional grounds expressly set out in regulations.
What is notable is what is unlikely to qualify. General dissatisfaction with employment, better career opportunities, or voluntary resignation without compelling justification are unlikely to fall within prescribed circumstances, given the clear policy objective of limiting labour mobility in the early years of a work permit.
Procedural and Practical Consequences
Subsection (6) further tightens the regime by providing that an applicant for exemption may not work while awaiting determination of the application. This creates a period of enforced unemployment and financial vulnerability, even where an application is ultimately successful.
The combined effect of subsections (3) to (6) is therefore to strongly discourage early termination of employment, except in clearly defined and provable circumstances.
Subsection (7) preserves a discrete exemption for government employees affected by administrative rearrangements, reflecting the different policy considerations applicable to the public sector.
Comparative Assessment: From Discretion to Prescription
The contrast between the 2022 and 2025 versions of Section 64 is stark.
- The former regime relied on administrative discretion and flexible assessment of individual circumstances.
- The new regime appears to rely on statutory prohibition, mandatory consequences, and what we believe will be narrowly defined prescribed exceptions.
The indications are that the shift from “special circumstances” to “prescribed circumstances” is more than semantic. It represents a deliberate move away from case‑by‑case judgment toward a rule‑based system designed to reduce mobility, increase certainty, and advance broader labour market policy objectives.
Benefits to employees
While employees may be concerned about this change, all is not lost for them. Provided the employee has been employed for more than two years, they are free to change employer, absent any enforceable contractual provisions. This is certainly an advantage under the Amendment Act which will more than likely require employers to review their post termination restrictive covenants to ensure that they are enforceable and offer sufficient protection.
Equally, it appears that the drafters of the Amendment Act have potentially left a rather large gap in the Act which employees could take advantage of but it would require them to leave their employment before the commencement date of the Amendment Act and ensure that their work permit is cancelled before then.
This gap arises where a work permit holder ceases employment before the commencement date of the Amendment Act, but applies for a new work permit after the repeal of the former Section 64 has taken effect. In such circumstances, the former Section 64 no longer exists in law and cannot apply, having been repealed in its entirety. At the same time, the new Section 64 does not apply retrospectively and is triggered only where a person “ceases to be employed”, i.e. post commencement date and while the new provision is in force.
The result is a narrow intertemporal gap: the old law has been extinguished, and the new law does not reach backwards to regulate past cessations of employment. In the absence of an express saving or transitional provision, there is no statutory basis upon which either version of Section 64 can properly apply.
While this outcome may appear anomalous from an administrative perspective, it is entirely consistent with orthodox principles of statutory interpretation. Repealed provisions do not survive unless expressly preserved, and new provisions do not operate retrospectively unless clearly stated. Administrative inconvenience cannot justify reading words into the legislation, which are not there.
In practical terms, individuals falling within this category would be subject only to the general work permit application framework and prevailing policy considerations, rather than any specific restriction under Section 64. Whether this was an intended consequence of the legislative drafting, or an unintended lacuna, remains to be seen.
Attempts have been made to reach out to the authorities to seek clarity on this issue have not been addressed.
Conclusion
The new Section 64 fundamentally reshapes the legal position of work permit holders in the Cayman Islands. By imposing a two‑year lock‑in period, mandatory departure requirements, and a tightly controlled exemption process dependent on prescribed circumstances, the legislature has signaled a clear intent to prioritise employment stability over labour mobility.
Much will ultimately depend on how the prescribed circumstances are defined in the regulations and how strictly they are applied in practice. Until then, subsection (5) stands as the critical gateway provision: the narrow hinge on which any relief from the new regime will turn.
As the government prepares for a commencement date of 1 March 2026 for the Immigration (Transition) (Amendment and Validation) Act 2025 (“the Amendment Act”), it is becoming increasingly obvious that there will be a large number of individuals adversely affected by the changes.
Perhaps most surprisingly, either by design or implication the Government has introduced a two-tier Permanent Residence system, in which a number of individuals including children will be adversely affected.
The recent Amendment Act introduces new transitional provisions under what is to become Section 83A of the Caymanian Protection Act, designed to address the status of permanent residents (PRs) under the revised immigration framework. The Transitional Provisions protect a limited group of Permanent Residents. This group will be able to apply for the Right to be Caymanian after 15 years of residence (provided they are Naturalised / Registered as a BOTC) or 5 years after Registration / Naturalisation (“Tier 1”). A close review indicates that they may inadvertently exclude several longstanding categories of lawful permanent residents, which will mean that they are not protected (“Tier 2”).
What is not clear is why the Government has decided to include some groups of Permanent Residents and not include other Permanent Residents, hence what appears to be a two tier system.
Which Permanent Residents are Protected – Tier 1
Section 83A(4) and (5) of the Amendment Act provides that the new timeline to apply for the Right to be Caymanian (RTBC) will not apply to the following categories of individuals provided they hold the relevant permission on the day of grant:
- Individuals granted permanent residence after at least eight years’ lawful and ordinary residence;
- Spouses or civil partners of Caymanians or PR holders holding a Residency and Employment Rights Certificate (RERC) by virtue of marriage or civil partnership;
- Holders of a Certificate of Permanent Residence for Persons of Independent Means (PIM); and
- Spouses, civil partners, and dependents of PIM certificate holders. Provided they are British Overseas Territories Citizens
These categories form a closed list, leaving a gap for long-term residents who do not fall neatly within the above categories.
Which Permanent Residents are not protected – Tier 2
The provisions exclude several long-term lawful permanent residents, including:
- RERC holders granted under section 39 of the current Immigration Act;
- Children registered as BOTCs under sections 15(1) or 15(4) of the British Nationality Act, who are BOTCs by entitlement and have independent permanent residence under section 36(4);
- Adult dependent relatives listed on another person’s RERC (e.g., parents);
- Spouses of PR holders who are listed as dependents but do not hold an RERC of their own; and
- Refugees granted indefinite leave to remain under the Customs and Border Control Act.
Perhaps the strangest categories to exclude are the children of Permanent Residents who have either been registered by entitlement or hold an RERC in their own right pursuant to Section 39 of the current Act. These children’s immigration permissions are arguably stronger than the children of Certificate holders as a Person of Independent Means but their ability to apply for Caymanian Status after 15 years is not preserved. These individuals with the strongest ties to the Cayman Islands and most integrated are being excluded from the protections of the transitional provisions for a reason which is not clear.
It should be noted that these changes to the Transitional Provisions have changed since they were first made public on the publication of the proposed Bill in October 2025. The original relevant section stated:
(4) Section 10(a) and (b) of the principal Act as amended by the Immigration (Transition) (Amendment and Validation) Act, 2025 shall not apply to a person in respect of whom a certificate, permission or exemption —
(a) is issued under —
(i) the principal Act;
(ii) the repealed Immigration Act (2015 Revision); or
(iii) any prior immigration law saved by the repealed Immigration Act (2015 Revision); and (b) is in force at the date of the commencement of the Immigration (Transition) (Amendment and Validation) Act, 2025,
and such a person may apply in accordance with the relevant Act under which the person’s certificate, permission or exemption is issued for the grant of the right to be Caymanian under section 28(3) or (4) of the principal Act or under any other earlier analogous provision.
This section as originally drafted “grandfathered” in a wide group of people. On 8 December 2025, the Government published amendments to the Bill, and the new law (coming into effect on 1 March 2026) states:
(4) Section 28(3) and (4) of the principal Act as amended by section 10(a) and (b) of the Immigration (Transition) (Amendment and Validation) Act, 2025 shall not apply to a person referred to in subsection (5) —
(a) who has been granted the right to reside permanently in the Islands, or whose Certificate has been issued, under —
(i) the principal Act;
(ii) the repealed Immigration Act (2015 Revision); or (iii) any prior immigration law saved by the repealed Immigration Act (2015 Revision); and
(b) whose right to reside permanently in the Islands or whose Certificate is in force at the date of the commencement of section 10(a) and (b) of the Immigration (Transition) (Amendment and Validation) Act, 2025.
(5) For the purposes of subsection (4), the persons are as follows —
(a) a person who has been granted the right to reside permanently in the Islands after having been legally and ordinarily resident in the Islands for a period of at least eight years other than a person referred to in section 37(1)(a), (b), (c), or (d) of the principal Act;
(b) a spouse or civil partner of a Caymanian or permanent resident who is the holder of a Residency and Employment Rights Certificate by virtue of marriage to, or civil partnership with, the Caymanian or permanent resident;
(c) a person who is the holder of a Certificate of Permanent Residence for Persons of Independent Means; and
(d) a spouse or civil partner, and any dependants, of the holder of a Certificate of Permanent Residence for Persons of Independent Means who is the holder of a Certificate of Permanent Residence for Dependants of Persons of Independent Means.
The above section is far more restrictive than the proposed provisions of October 2025. What is most concerning is that from the most recent Cayman Compass Article on this point, dated 16 January 2026, the effect of the transitional provisions was potentially not fully understood by the Ministry.
In an attempt to seek further guidance on the issues, HSM Chambers have recently written to the Director of WORC and the Ministry requesting clarity as to what is to happen to those Permanent Residents who fall within the “second tier” of the Permanent Residence system.
In our view, the commencement of this new legislation should be delayed until the Government can give due consideration to the “Tier 2” issues if the possibility of litigation is to be avoided.
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