Rivermate | Cayman Islands flag

Cayman Islands

Termination and Severance Policies

Learn about the legal processes for employee termination and severance in Cayman Islands

Notice period

In the Cayman Islands, the Labour Law (2011 Revision) stipulates the legal requirements for notice periods during employment termination.

Minimum Notice Periods

The law sets different minimum notice periods based on the employee's status:

  • Probation Period: Employees on probation must be given a minimum of 24 hours' written notice for termination from either party.
  • Employees Not on Probation: For employees who have completed their probation, the minimum notice period is either equal to the interval between paydays or thirty days, whichever is shorter.

For instance, if an employee is paid bi-weekly (every two weeks), the minimum notice period would be two weeks.

Contractual Notice Periods

An employment contract can specify a longer notice period than the legal minimums. In such cases, the employer or employee must adhere to the notice period outlined in the contract.

For example, an employment contract might stipulate a one-month notice period for termination, regardless of the employee's probationary status or pay frequency.

Employer's Obligation During Notice Period

If the employer terminates the employment before the notice period ends, they are obligated to pay the employee a sum equivalent to the wages they would have earned during the remaining notice period, assuming the employee would have continued working.

For example, if an employee receives bi-weekly paychecks of CI$1,000 and the employer terminates their employment with one week remaining in the notice period, the employer must pay CI$1,000 in lieu of notice.

Severance pay

In the Cayman Islands, the law mandates severance pay for employees whose employment is terminated for reasons other than misconduct.


An employee is eligible for severance pay if they have completed at least one year of continuous employment with the same employer and the termination is not due to cause, such as misconduct or gross negligence.


Severance pay is based on the employee's "basic wage," which is their regular pay excluding overtime, bonuses, and other supplementary income. The amount is calculated as one week's basic wage for every full year of employment. For example, an employee who earns a basic wage of CI$500 per week and worked for an employer for three years is entitled to a severance payment of CI$1,500 (3 x CI$500).

Important Considerations

Employees made redundant are entitled to severance pay. Severance pay must be made to the employee within a reasonable time after termination, typically along with their final paycheck. If the employer is bankrupt, severance pay obligations are given priority over other unsecured debts.

Termination process

The termination process in the Cayman Islands must adhere to the guidelines set out in the Labour Law (2011 Revision). Here's a breakdown of the key steps and legal considerations:

Grounds for Termination

Employers in the Cayman Islands can terminate employment for the following reasons:

  • Cause: Dismissal due to misconduct, negligence, or other serious breaches of contract. The employer must demonstrate just cause according to the Labour Law.
  • Redundancy: Termination due to economic reasons, restructuring, or the position becoming obsolete.
  • Mutual agreement: Both the employer and employee agree to end the employment relationship.
  • Other reasons: As stipulated by the employment contract or as permitted by the Labour Law.

Fair Termination Procedures

Cayman Islands employers must follow fair procedures during the termination process. This includes:

  • Reason for termination: Provide the employee with a clear and specific explanation for the termination.
  • Opportunity to improve: In cases of misconduct or poor performance, the employee should generally be given warnings and an opportunity to improve before termination.
  • Right to appeal: Employees should have the right to appeal their dismissal within a reasonable time frame.

Additional Considerations

  • Contractual Obligations: Employment contracts may specify additional procedures or benefits related to termination.
  • Anti-Discrimination: Termination must not be based on discriminatory grounds such as race, gender, religion, or disability.
  • Record-Keeping: Employers must maintain accurate records of employment, including the reason for termination.
Rivermate | A 3d rendering of earth

Hire your employees globally with confidence

We're here to help you on your global hiring journey.