Learn about the legal processes for employee termination and severance in Aruba
In Aruba, the Landsverordening Burgerlijke Dienstbetrekking (LBDB) governs the notice periods required for employment termination for both employers and employees.
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:
Regardless of seniority, a minimum of one month's notice is required for all termination scenarios.
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.
According to LBDB Article 7:3, there are certain exceptions and agreements that can be made:
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).
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.
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 (1¼) weeks' salary for each year of service. For more than 20 years of service, it's two weeks' salary for each year of service.
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.
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.
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).
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.
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.
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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