Employer of Record in Cayman Islands

An Employer of Record (EOR) in the Cayman Islands legally hires employees for your company. This lets you build a team in the country without setting up a local entity. The EOR handles all legal and HR tasks. You still manage your employees' day-to-day work. For companies that want to hire in the Cayman Islands, an EOR like Rivermate simplifies the process.

How an Employer of Record (EOR) Works in Cayman Islands

Using an EOR to hire in the Cayman Islands is a simple process. Here is how it works step by step:

1. You Find the Talent: You choose the candidate you want to hire in the Cayman Islands.
2. The EOR Hires Them: The EOR uses its local business entity to legally employ the worker.
3. Contracts and Compliance: The EOR creates a compliant employment contract that follows local labor laws. You can learn more about these regulations from the Cayman Islands Department of Labour & Pensions at https://www.gov.ky/dlp.
4. Onboarding: The EOR takes care of the onboarding for your new team member.
5. Payroll and Benefits: The EOR manages all payroll, taxes, and benefits according to local rules.
6. Ongoing HR Support: The EOR offers continuous HR support to make sure you stay compliant with local laws.

Why use an Employer of Record in Cayman Islands

Using an EOR in the Cayman Islands gives you several benefits. It helps you enter a new market and hire people quickly. When you partner with an EOR, you can focus on your main business. The EOR handles the complex local employment laws.

• Enter Markets Faster: Hire employees in the Cayman Islands without the long process of setting up a legal entity.
• Lower Costs: Avoid the high costs of creating and running a foreign subsidiary.
• Stay Compliant: EORs know local labor laws well, so your hiring is always fully compliant.
• Simple Payroll: The EOR handles everything related to payroll, like taxes and social contributions.
• Work Permit Help: An EOR can sponsor the work permits your employees need, which saves you a lot of paperwork.

Rivermate's transparent pricing model eliminates complexity with a single, competitive monthly fee per employee. Unlike traditional PEO providers, our pricing in Cayman Islands includes comprehensive HR support, benefits administration, compliance management, and access to our proprietary dashboard for real-time workforce analytics. No hidden costs, no setup fees—just straightforward pricing that scales with your business needs while ensuring full legal compliance in Cayman Islands.

Hiring in the Cayman Islands is straightforward when you understand the local labor laws. The legal framework provides clear guidelines for employers, ensuring fair treatment for employees. This guide will walk you through the key aspects of hiring in the Cayman Islands, from employment contracts to working hours, to help you navigate the process with confidence.

Employment contracts & must-have clauses

While you can have a verbal agreement, it's always best to have a written employment contract. In the Cayman Islands, you are legally required to provide employees with a written statement of their terms and conditions. A clear, written contract helps both you and your employee understand the role and expectations.

Your employment contracts should include these essential clauses:

• Names of the employer and employee: Clearly state the full names of both parties.
• Job title and description: Provide a clear description of the employee's role and responsibilities.
• Start date: The date the employment begins.
• Duration of the contract: Specify if the contract is for a fixed term or is indefinite.
• Place of work: The primary location where the employee will work.
• Working hours: The expected hours of work.
• Compensation: Detail the salary or wages and how often they will be paid.
• Holiday and sick leave: Outline the entitlements for vacation and sick days.
• Notice period: The length of notice required for termination by either party.

Probation periods

Probation periods are common in the Cayman Islands and allow both you and the new employee to assess the fit. A typical probation period is between three and six months. During this time, the notice period for termination is often shorter than the standard notice period. Be sure to clearly state the terms of the probationary period in the employment contract.

Working hours & overtime

The standard workweek in the Cayman Islands is typically 40 to 45 hours, spread over five days. Any hours worked beyond the standard are considered overtime. Overtime is generally paid at a rate of 1.5 times the employee's regular hourly wage.

Public & regional holidays

Your employees are entitled to paid time off for public holidays. Here is a list of the public holidays in the Cayman Islands for 2024:

Hiring contractors in Cayman Islands

You can also hire independent contractors in the Cayman Islands. Unlike employees, contractors have control over how, when, and where they complete their work. They are not covered by labor laws, so you do not provide benefits or withhold taxes.

It is crucial to correctly classify workers. Misclassifying an employee as an independent contractor can lead to penalties, including fines and back payments for benefits.

An Employer of Record (EOR) can help you mitigate this risk. An EOR ensures that your workers are classified correctly and that you comply with all local labor laws. This allows you to hire talent in the Cayman Islands without the legal risks associated with misclassification.

Understanding compensation and payroll in the Cayman Islands is straightforward. The government makes it easy for businesses to operate and pay their teams. A key feature is the absence of direct taxes like income tax. This simplifies payroll processing significantly. Still, you need to follow the rules set out in the country's labor laws to ensure you are compliant.

Payroll cycles & wage structure

You should pay your employees at least once a month. While monthly pay is common, you can also choose a bi-weekly schedule, especially for hourly workers. The most common payment method is direct bank transfer. This is efficient and ensures your employees receive their pay on time.

When setting wages, remember that salaries are influenced by industry, experience, and skills. Key sectors like finance and tourism often offer competitive packages to attract top talent. Beyond the basic salary, many employers offer performance bonuses and housing allowances, especially for employees who have relocated.

Overtime & minimums

The standard work week is 45 hours, with a standard workday of 9 hours. If an employee works beyond these hours, you must pay them overtime. The overtime rate is one-and-a-half times the employee's regular pay.

The national minimum wage is KYD 6.00 per hour for most employees. For service employees who receive gratuities through a registered system, the minimum wage is KYD 4.50 per hour.

Employer taxes and contributions

In the Cayman Islands, you do not have to worry about corporate income tax. However, you are responsible for other contributions.

Employee taxes and deductions

One of the biggest advantages for employees in the Cayman Islands is the lack of income tax. This means you do not have to withhold any income tax from their paychecks.

When you hire in the Cayman Islands, you need to understand the local rules for leave and benefits. This ensures you treat your employees fairly and follow the law. Offering a good benefits package also helps you attract and keep the best talent. It shows you care about your team's well being.

Statutory leave

The law in the Cayman Islands requires you to provide several types of paid leave.

• Vacation Leave: Employees get a minimum of two weeks of paid vacation each year after their first year with you. This increases to three weeks after four years and four weeks after ten years of employment.
• Sick Leave: You must provide paid sick leave. The first 10 days are paid.
• Maternity Leave: Female employees receive at least 12 weeks of maternity leave. You pay their full salary for the first 20 days and half for the next 20 days.
• Paternity Leave: Male employees are entitled to two weeks of paternity leave after one year of continuous employment.

Public holidays & regional holidays

Your employees get paid time off for public holidays. If they have to work on these days, you must pay them a premium rate.

Typical supplemental benefits

To stay competitive, you should offer more than the legal minimum. Here is a look at both required and common additional benefits.

How an EOR can help with setting up benefits

Setting up a benefits plan in a new country is complex. An Employer of Record (EOR) makes it simple.

An EOR already has a legal entity in the Cayman Islands. They understand the local laws and market. This means they can create a competitive and compliant benefits package for your team quickly.

Using an EOR saves you time and reduces risk. You do not have to research laws or find local providers. The EOR handles everything, from health insurance to pension plans. This lets you focus on growing your business.

When your business in the Cayman Islands needs to part ways with an employee, it's important to follow a clear and fair process. This involves understanding the rules for notice periods, severance pay, and proper dismissal procedures. Handling terminations correctly protects your business and respects employee rights, ensuring a smooth and lawful exit for everyone involved.

Notice periods

When ending an employment contract, you must provide a minimum amount of notice to your employee. The required notice period is based on how long the employee has worked for you continuously.

Here are the minimum notice periods required by law:

You must give notice in writing. If you prefer, you can pay the employee their regular wages for the notice period instead of having them work. This is known as pay in lieu of notice.

Severance pay

Employees in the Cayman Islands are typically entitled to severance pay when their employment is terminated by the employer. To be eligible, an employee must have at least one year of continuous service.

Severance pay is calculated as one week's wages for each completed year of service. This is based on the employee's most recent basic wage.

You do not have to pay severance if you dismiss an employee for serious misconduct.

How Rivermate handles compliant exits

At Rivermate, we ensure that all terminations and offboarding processes in the Cayman Islands are handled correctly and in compliance with local labor laws.

Here’s how we manage the process:

• Clear Procedures: We follow a structured process for every termination, whether it's for cause or without cause.
• Documentation: We prepare and manage all necessary documentation, including written notices and final pay calculations.
• Fair Treatment: Our procedures include fair steps like conducting investigations for misconduct and providing warnings for performance issues when appropriate.
• Final Payments: We make sure that the employee's final pay is calculated correctly, including any outstanding wages, vacation pay, notice pay, and severance pay.
• Compliance: We stay up-to-date with the Cayman Islands' Labour Law to ensure every step we take is compliant, reducing legal risks for your business.

If you want to hire someone to work in the Cayman Islands, you need to understand the visa and work permit rules. The government requires that any non-Caymanian who wants to work in the country must have a valid work permit. As the employer, you are responsible for handling the application process for your international hires. This process ensures that employment in the Cayman Islands is regulated and meets local requirements.

Employment visas & sponsorship realities

An Employer of Record (EOR) can be a practical solution for hiring in the Cayman Islands, especially if you don't have a local entity. An EOR can legally hire employees on your behalf and sponsor the necessary work permits. This removes a significant administrative burden from your shoulders.

Here’s what an EOR can typically sponsor:

• Temporary Work Permits: For short-term roles, an EOR can secure permits for up to six months.
• Annual Work Permits: For longer-term employment, an EOR can apply for and renew annual work permits.

The reality of sponsorship is that the employer, whether it's your company or an EOR, must prove they tried to hire a local resident first. This often involves advertising the position locally and showing the results of that search.

A key point to remember is that work permits are tied to the specific employer and role. If an employee's job changes significantly, a new permit may be needed.

Business travel compliance

For short-term business visits, you have a few options. It's important to choose the right one to stay compliant.

Recent changes have made it easier for some business travelers. In many cases, you can now stay for up to 10 working days for business meetings or short assignments without needing a work permit. However, for any activities beyond the approved list of business activities, a work permit is necessary.

You can visit the Cayman Islands for tourism or business for up to six months without a visa. But you cannot apply for a work permit while you are in the country as a visitor. Always secure the correct permits before any work begins.