Hiring Talent And Managing Payroll In Curacao

Agreements

• Agreements in Curacao can be written or verbal. However, written agreements are recommended.
• There are three types of agreements in Curacao -

  • Contracted work agreement: This is used for contractual works which have a fixed payment for that particular work.
  • Performance of fixed services agreement: This is used for the rendering of professional services (lawyer, accountant, etc.) as well as for work where there is no prior agreement (gardening, car washing, etc.)
  • Working agreement: This is used by full-time employees who are on a payroll, avail of various benefits and are required to work for the employer until the duration of the agreement. The agreement states the notice period, salaries, working hours, termination clauses, etc.
• The working agreement can be for any period of time as agreed upon by both parties.
• The agreement can be drafted in English, Dutch, or Papiamento to be considered legal.

Onboarding Process

• The new employee must be enrolled with the relevant authorities.
• The employer can conduct a background check of employees only upon receiving their consent.
• The employer must give the employee a copy of the agreement.

Minimum Wage

Payroll Cycle

Annual Bonus

Health Benefits

• Maternity benefits
• Sickness allowance (up to a certain period)
• Disability insurance

Working Hours and Overtime

• Work hours: A typical work week consists of 40 hours with a maximum of 10 hours per day.
• Break: A break of at least half an hour is to be given for every 5 hours of work.
• Overtime: Overtime payment is granted to those working for more than the maximum number of work hours. The overtime pay is decided in the agreement. The employer can also compensate the work by providing additional time off mutually agreed upon by both parties.

Social Security

• All residents of Curacao are required to contribute to the social security schemes.
• Social security in Curacao covers healthcare, old age insurance, and disability insurance. The benefits are provided under the General Old-age Insurance Act (AOV), the General Widows and Orphans Ordinance (AWW), and the General Insurance Extraordinary Sickness Ordinance (AVBZ).

Taxes for Employees

Termination

• The employer is required to file a request for the dismissal of an employee with the Directorate of Labor Affairs stating the reason for dismissal. Upon receiving the approval, the employee is to be given the agreed-upon notice period.
• If the termination is by mutual consent, there is no need for any approval and it can be done at any time.
• Immediate termination can only be done if there is a valid and urgent reason. This has to be conveyed to the employee immediately.
• The notice period can be up to 6 months and should be mentioned in the agreement.

Severance Pay

• The severance pay is as agreed upon in the working agreement and is based on the number of years the employee has worked.
• The employee must have worked for at least one year to claim severance pay.
• Employees are entitled to severance pay only if they are dismissed with no fault of their own.

Employees or Contractors

• Employees and contractors are treated differently and have different benefits in Curacao.
• Employees are those who are on the company payroll, get social security taxes, and receive benefits from the employer.
• Independent contractors are those hired on a project-to-project basis. They are paid fixed amounts for work previously agreed upon in the work contract. They do not get social security taxes and receive no benefits.
• Employers must be careful when stating whether they are hiring employees or contractors. Misclassification could lead to heavy fines.

Final Words