Payroll is an essential aspect of compliance wherever you decide to grow your company. Learn how to establish and manage payroll in the Cayman Islands.
Taxation laws in the Cayman Islands (UK)
The Cayman Islands does not impose income tax on individuals, and there are no required contributions for a pension fund or social insurance scheme.
How to set up payroll in the Cayman Islands (UK)
To establish payroll, you’ll need your employees’ bank account information to deposit their paychecks. Since the country does not enforce income tax or social insurance payments, you will not need to collect additional IDs from your employees.
You can handle payroll management in various ways:
- Remote: In this case, you will manage your international payroll alongside your payroll processes at home. This option might save you money, but your existing payroll team will need to be wary of the compliance differences between jurisdictions.
- Local: You may choose to work with a payroll processing company in the area to handle the responsibility. However, you will still be liable for any mistakes this company makes.
- Internal: If you take the time to establish a subsidiary, you can develop an internal payroll team in the country. This option requires many resources and time.
- Global employment platform: A global employment platform manages the payroll process for you — without requiring local subsidiary or bank account setup. Leveraging this technology reduces your responsibilities and mitigates risk of noncompliance.
Termination and entitlement
Any employee who has been continuously employed by an employer for at least one year is entitled to severance pay upon termination. There are exceptions to this rule. Severance is not required if the employee is terminated for misconduct or failure to perform their written duties.
Severance pay is generally due in the cases of redundancy, inability to work for legal reasons, or any other substantial cause that would require an employer to dismiss an employee. The calculation of severance pay is one week’s wages for each completed 12-month period. For part-time employees, severance should be calculated as a ratio of hours compared to the standard workweek.
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