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Termination and Severance Policies

Learn about the legal processes for employee termination and severance in Aruba

Notice period

In Aruba, the Landsverordening Burgerlijke Dienstbetrekking (LBDB) governs the notice periods required for employment termination for both employers and employees.

Notice Period for Employer-Initiated Termination

Under LBDB Article 7:1, if an employer decides to terminate an employee's contract, they are required to provide written notice with a minimum notice period that depends on the employee's length of service:

  • For employees with less than five years of service, a one month's notice is required.
  • For those with five to ten years of service, a two months' notice is necessary.
  • Employees with ten to fifteen years of service require a three months' notice.
  • If an employee has served for more than fifteen years, a four months' notice is required.

Regardless of seniority, a minimum of one month's notice is required for all termination scenarios.

Notice Period for Employee-Initiated Termination

As per LBDB Article 7:2, employees also have the right to terminate their employment contract. They must provide the employer with written notice, with a minimum notice period of one month.

Exceptions and Agreements

According to LBDB Article 7:3, there are certain exceptions and agreements that can be made:

  • Mutual Agreement: Both parties can agree on a different termination date that deviates from the standard notice period.
  • Urgent Reasons: In cases of severe misconduct or other pressing situations, employers may be able to terminate an employee's contract without notice. However, such situations require justification and may have potential legal consequences.

Severance pay

In Aruba, employees are entitled to severance pay under specific circumstances, primarily when an employer initiates termination not based on the employee's fault. This is outlined in the Landsverordening Bezoldiging Landsdienaren (LBL).

Eligibility for Severance Pay

According to LBL Article 61, employees are eligible for severance pay if their employment contract is terminated by the employer for reasons unrelated to the employee's fault, such as economic conditions or restructuring. Additionally, they must have completed at least one year of continuous service.

Calculation of Severance Pay

The severance pay calculation is based on the employee's length of service. For 1 to 10 years of service, it's one week's salary for each year of service. For 11 to 20 years of service, it's one and a quarter (1ΒΌ) weeks' salary for each year of service. For more than 20 years of service, it's two weeks' salary for each year of service.

Exceptions and Limitations

Employees terminated for valid cause due to misconduct or poor performance are generally not entitled to severance pay. Employers contribute to a "Cessantia Fund" throughout the employee's service, and the severance pay entitlement is drawn primarily from this fund.

Other Considerations

Severance pay rules differ slightly in cases of retirement. Some industries may have additional severance pay provisions outlined in collective bargaining agreements. It's advisable to consult a lawyer or HR professional for specific details.

Termination process

The termination process for employees in Aruba is governed by several legal acts, including the Landsverordening Burgerlijke Dienstbetrekking (LBDB) and the Landsverordening Bezoldiging Landsdienaren (LBL).

Notice of Termination

In the case of employer-initiated termination, employers must provide written notice of termination. If an employee decides to resign, they must provide at least one month's written notice to their employer.

Documentation and Finalization

The employer should issue a detailed letter formally stating the termination date and reason (if applicable). Employers are obligated to provide a certificate of employment detailing the employee's position, start and end dates, and remuneration. All owed wages and unused vacation days need to be included in the final paycheck.

Additional Considerations

Employers may have the right to terminate employment for cause (e.g., misconduct, poor performance) without notice. The Cessantia Fund, managed by SVb (Social Insurance Bank of Aruba), plays a role in termination processes. Employees can raise disputes regarding termination via the Department of Labor Affairs and Mediation or through labor courts.

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