Termination of employment agreement
For termination of employment agreements pursuant to Curaçao law, 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 in Curaçao:
- Termination by giving notice, in which event the prior approval from the Director of the Ministry of Social Development, Labor and Welfare (Ministerie van Sociale Ontwikkeling, Arbeid en Welzijn) has to be obtained pursuant to the National Ordinance Termination Employment Agreements (Landsverordening Beëindiging Arbeidsovereenkomst). Without such prior consent, a termination by giving notice will be considered null and void, unless, the National Ordinance Termination Employment Agreements is not applicable to a certain labor relationship. The National Ordinance Termination Employment Agreements is for example not applicable to teaching and lecturing personnel who work at a educational institution.
- Termination by mutual consent. Termination by mutual consent is possible at any time, in which event the employer and the employee can freely negotiate the terms and conditions for the termination of the employment agreement.
- Dissolution of the employment agreement by the Court of First Instance of Curaçao.
- 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 have to be communicated to the employee ‘forthwith’.
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.
For completeness sake it is pointed out that employment agreements that have been entered into for a defined period of time, terminate by operation of law upon the expiration of the period of time for which they have been entered into (unless otherwise agreed).
When an employment agreement is terminated by giving notice, a notice period must be taken into account. The notice period is related to the years of service of the employee at the time of termination. The mandatory notice periods that must be taken into account by the employer are as follows:
- 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 notice period to be taken into account by an employer may be extended, only if the extended notice period has been agreed to by parties in writing (shortening the notice period to be taken into by the employer can only take place in a collective employment agreement).
From the notice period the waiting period to obtain the required approval from the Director of the Ministry of Social Development, Labor and Welfare may be subtracted, provided that the remaining notice period will be at least one month.