Guide to Doing Business
Termination of employment agreements
For dismissing personnel, the mandatory rules and regulations regarding termination of employment agreements have to be taken into account.
Generally, there are four ways to terminate an employment agreement:
- Termination by giving notice, in which event the prior approval from the Director of the Department of Labor and Research (Directie Arbeid en Onderzoek) has to be obtained pursuant to the Ordinance on Termination of Employment Agreements (Landsverordening Beëindiging Arbeidsovereenkomsten);
- Without such consent any termination by giving notice will be considered null and void;
- For completeness sake it is pointed out that the Ordinance on Termination of Employment Agreements does not apply in all events;
- Termination by mutual consent. In such event the employer and the employee themselves negotiate the terms and conditions for the termination of the employment agreement;
- Dissolution of the employment agreement by the Court of First Instance of Aruba;
- Immediate termination of the employment agreement, which is only allowed if there is an urgent reason, justifying an immediate termination. Such urgent reason and the immediate termination would immediately have to be informed to the employee.
In event of termination by giving notice after obtaining the required approval or in event of dissolution of the employment agreement by the Court of First Instance, it is possible that it is decided that a (termination) compensation will have to be granted to the employee.
When an employment agreement is terminated by giving notice, a notice period must be taken into account, which notice period is related to the years of service of the employee at the time of termination. The mandatory notice period to be taken into by an employer is:
- In case of an employment of less than five years: one month;
- In case the employee has been employed more than five but less than ten years: two months;
- In case the employment has lasted longer than ten years but less than fifteen years: three months;
- In case the employment has lasted more than fifteen years: four months.
The aforementioned notice period for the employer can be prolonged, but it can only be shortened in a collective labor agreement. If the agreement is terminated with the approval of the Director of the Department of Labor and Research, the term of the dismissal permit procedure can be deducted from the notice period. However, the minimum notice period must at least be one month. If an employer wants to prolong the notice period for employees, the notice period of the employer should then be twice as long as the notice period for the employee.
Employees are in principle required to work during the notice period. An employer may, however, relieve an employee from performing his duties prior to the expiration of the notice period. In such event the employer will, however, remain obliged to pay out the salary of the employee concerned.