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Termination and Severance Policies

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

Notice period

In Curaçao, the National Ordinance Termination Employment Agreements outlines specific notice periods for terminating employment contracts. These periods are dependent on the employee's length of service.

Notice Periods for Employers

Employers are required by law to provide a minimum notice period based on the employee's tenure:

  • For less than five years of service, one month's notice is required.
  • For five to ten years of service, two months' notice is required.
  • For ten to fifteen years of service, three months' notice is required.
  • For over fifteen years of service, four months' notice is required.

It's important to note that in most cases, the Director of the Ministry of Social Development, Labor and Welfare must approve termination by notice. Exceptions may exist depending on the specific employment relationship.

Extending Notice Periods

Employers and employees can agree to extend the notice period beyond the legal minimum. This agreement must be documented in writing. However, employers cannot shorten their own notice period through an agreement with the employee. Shortening the notice period can only occur within a collective labor agreement.

Notice Period During Dismissal Approval Process

The waiting period for approval from the Ministry of Social Development, Labor and Welfare can potentially be deducted from the notice period. This is only allowed if at least one month of notice remains after the deduction.

Trial Period Exceptions

There's an exception for the initial trial period within an employment contract. Both employer and employee can terminate the agreement immediately during this trial period without following notice period requirements. However, the trial period cannot exceed two months and must be established in writing.

Severance pay

In Curaçao, severance pay, also known as Cessantia, is a mandatory requirement for employees who are involuntarily terminated.

Severance Pay Conditions

Severance pay is typically applicable when an employer terminates the employment relationship due to economic or business reasons, company reorganization, or the employee becoming permanently disabled. However, severance pay is not required if the employee chooses to terminate the contract, is dismissed for serious misconduct, or if the contract ends upon reaching a stipulated date or project completion (fixed-term contract).

Severance Pay Calculation

The calculation of severance pay is based on the employee's length of service. For the first ten years of service, one week's salary for each year of service is given. From the 11th to the 20th year of service, one and a quarter week's salary for each year of service is given. From the 21st year onwards, two weeks' salary for each year of service is given. For calculation purposes, a period exceeding six months of a year of service counts as a full year of service.

Employer Contributions to SVB

Employers are required to contribute an annual premium to the Social Insurance Bank (SVB) to fund severance payments. The current contribution amount is ANG 40 per employee per year, payable in June.

Additional Factors

Some collective bargaining agreements may provide for higher severance pay than the legal minimum. If a disagreement arises regarding severance pay, employees can file a complaint with the Ministry of Social Development, Labor, and Welfare (SOAW).

Termination process

In Curacao, there are four primary ways to legally terminate an employment relationship. These include termination by giving notice, termination by mutual consent, dissolution by the court, and immediate termination for an urgent cause.

Termination by Giving Notice

Termination by giving notice is the most common method. The employer must obtain prior approval from the Director of the Ministry of Social Development, Labor, and Welfare ("SOAW") in line with the National Ordinance on Termination of Employment Agreements ("Landsverordening Beëindiging Arbeidsovereenkomst"). Termination without this consent (unless the Ordinance is not applicable) is considered void.

In the case of termination by mutual consent, both the employee and employer amicably agree to end the employment. In this case, terms and conditions can be freely negotiated.

Dissolution by the Court

Either the employer or employee can petition the Court of First Instance of Curacao to dissolve the employment agreement.

Immediate Termination (Urgent Cause)

Immediate termination is only permitted when a serious reason exists, such as gross misconduct by the employee. The reason for the urgent termination must be communicated to the employee immediately.

Process for Termination by Giving Notice

  1. Request for Approval: The employer submits a dismissal request to the SOAW, outlining the grounds for termination.

Important Considerations

  • Employment Contracts: Termination terms are frequently outlined in employment contracts. It's crucial to always review these.
  • Collective Bargaining Agreements: If applicable, these agreements may offer additional stipulations and protections regarding termination.
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