In the aftermath of hurricane Irma, we are receiving many legal questions, mainly focused on employment law, insurance law and bankruptcy law. We have summarized these into a Q&A: a basic guide on how to act (legally) in these exceptional circumstances, in order for you to have some initial advice directly available to you online and free of charge. Should you need more assistance, you can contact our SXM Helpdesk.
Can I terminate employment agreements?
Case law with respect to the 1995 hurricane Luis (a category 5 hurricane, as was Irma) shows that situations like these do not result in automatic termination of employment agreements. Employers remain obligated to terminate the employment agreements validly.
Which formalities do I need to exercise when terminating employment agreements?
Also in situations like these, like any other termination, validly terminating employment agreements can only be done either by:
- mutual consent;
- giving notice (after having obtained the required permission thereto from the Secretary General from the Ministry of Public Health, Social Development and Labor); or
- by requesting the Court to dissolve the employment agreements.
How can we help?
What is the best solution in your specific situation, depends on a number of factors. If employees are understanding, you might be able to reach agreements with each individual employee. Should you need to go to Court, you cannot do this until they have reopened and are fully operational again. You can find updates regarding this here. If you need assistance in this regard, contact our SXM Helpdesk to see what we can do free of charge, and what services fall outside the scope of our free legal helpdesk.
What notice periods apply when terminating employment agreements?
Pursuant to the Civil Code of St. Maarten, the following notice periods – which are related to the years of service of the employee at the time of termination – are mandatory for the employer:
- In case of an employment of less than five years: one month notice period.
- If the employee has been employed 5 years or longer, but less than 10 years, the notice period to be taken into account is two months.
- If the employee has been employed 10 years or longer, but less than 15 years, the notice period to be taken into account is three months.
- If the employee has been employed more than 15 years, the notice period is four months.
Are employees entitled to a severance payment, and if so, how much?
Generally there are two calculations used in connection with the termination of an employment agreement: cessantia and the court formula.
By law, an employee is entitled to cessantia (severance) upon termination of the employment agreement, if the employment agreement was terminated for reasons that cannot be attributed to the employee. The amount is related to the years of service of the employee:
Years of service
Applicable cessantia compensation
1 to 10 years
1 week’s salary per year of service
11 to 20 years
1¼ week’s salary per year of service
over 20 years
2 week’s salary per year of service
In The Netherlands a formula has been developed by a group of subdistrict courts to calculate a reasonable compensation to be granted to the employees. This court formula is not mandatory and it is up to (each) court to decide whether or not it will use the formula.
This formula consists of a multiplication of the factors A x B x C:
- A stands for ‘weighed’ years of service.
- B stands for the usual gross salary, including fixed wage components.
- C stands for the so-called correction factor to correct the outcome of the multiplication exercise, and usually varies from 0 – 2. It is used to express who is (predominantly) accountable for termination of the employment agreement or who bears the risk of termination (more). The more the employer is responsible for the termination, the higher the C factor. A correction factor of 1 means that neither party is more to blame for the termination.
How can we help?
If desired, we can calculate termination compensations to be offered to your employees, based on the court formula. To do such, we would need some information regarding your specific situation. Please contact our SXM Helpdesk if you would like our assistance in this regard.
What if the employer isn’t solvent and cannot pay salaries?
When a business doesn’t have assets in excess of liabilities and isn’t able to pay its debts, then an insolvency is a likely scenario. If an employer goes bankrupt, the cessantia is paid from the governmental cessantia fund.
This overview is a work in progress, and new Q&A’s on for instance insolvency and liquidation will be added soon. Do you want to stay informed on new additions to this webpage? Follow us on Twitter and LinkedIn and you’ll be notified when additional Q&A’s are published.