Unemployment Insurance (Cessantia)
What is unemployment insurance?
Severance pay is a payment that an employee is entitled to when they are retired without being fired. It is a form of retirement compensation.
Who is eligible for severance pay?
Any employee who has been with an employer for more than one year is eligible for severance pay. If an employee who is eligible for severance pay passes away, their immediate family is also eligible.
Public employees or employees with legal status equal to public employees are not eligible to receive severance pay.
Who is obligated to pay severance pay?
The employer is obligated to pay severance pay to the retiring employee.
What is the Cessantia fund?
Lawmakers in the past have taken into account that the employer may not be able to fulfill their obligation to pay severance. To guarantee that a worker can receive their severance under any circumstances, the Cessantia Law has established a Cessantia fund. The fund is administered by the SVb.
Who contributes to the Cessantia fund, and how much is the contribution?
Every employer is required to contribute to the Cessantia fund each year. The annual contribution is Afl. 40,-. for each employee in service on the first of January.
When is an employee entitled to severance pay?
An employee is entitled to severance pay when they meet the following requirements:
- They were retired without being fired.
- They have more than one year of service.
- They filed their Cessantia petition within one year of their retirement.
- They do not receive any income through an employer pension arrangement.
- They receive a pension directly after they have retired, and the amount of the pension is less than the AOV pension. Employees who receive a pension that is less than two times the AOV pension are also entitled to severance pay, even if the employee’s pension is reduced by a partial or complete deduction of the AOV pension from the pension arrangement plan.
When is an employee entitled to severance pay from the Cessantia fund?
An employee becomes entitled to severance pay from the Cessantia fund when the employer cannot fulfill its severance duty because of bankruptcy, suspension of payment, or can no longer meet its financial obligations. In the latter case, SVb conducts an investigation to determine this.
How does an employee request severance pay?
An employee must email the following documents to SVb, together with the Aanvraagformulier Cessantia (Severance Petition Form) to the email cessantia@svbaruba.org.
- A valid passport, ID card, or driver license.
- Their workbook or work contract.
- Their retirement letter, if possible.
- Their pay slips for the last two months; if you receive a bi-weekly paycheck, bring the last four pay slips.
If you cannot email (all) these documents, please call 527-2755.
How much is the amount of severance pay to which the employee is entitled?
The amount of severance pay depends on the number of years of service of the employee. The Cessantia Law prescribes that:
- For each year of service between 1 and 10 years, the employee receives a payment equal to the salary of one week.
- For each year of service between 11 and 20 years, the employee receives a payment equal to one and one-quarter (1¼) of their one week salary.
- For each year of service over 20 years, the employee receives a payment equal to 2 times their one week salary.
After the first year of service, any period longer than six months counts as a full year.
An example of how the severance pay is calculated
An example: an employee gets his retirement after he worked for a company for 23 years. His weekly salary is Afl. 700,-. His severance pay is calculated as follows:
- For each year of service between 1 and 10 years, he receives a payment equal to his 1-week salary (Afl.700, -). For the first 10 years of service, the employee receives the sum of (10 x 700) Afl. 7.000,-.
- For each year of service between 11 and 20 years, he receives a payment equal to 1¼ of a week’s salary (1¼ x 700 = 875). Thus, for years of service between 11 and 20 years, he receives the sum of (10 x 875) Afl. 8.750,-.
- For each year of service over 20 years, he receives a sum equal to 2 times his weekly salary (2 x 700 = 1400). So for the remaining three years of service over 20 years, the employee receives the sum of (3 x 1400) Afl. 4.200,-.
In this example, the total amount of severance pay is (7000+8750+4200)
Afl. 19.950, – (before taxes and premium payments of AOV/AWW and AZV).
Cesantia Calculator
Open the Cesantia Calculator here:
Maximum Wage Used for Cessantia Fund
The law stipulates a maximum weekly salary to calculate the amount of severance pay from the Cessantia fund. Currently the maximum weekly wage is Afl. 2.025,-, this is linked to the maximum income (loongrens) for ZV/OV premiums with a factor of 1.5. If an employee’s weekly salary is higher than the maximum salary, SVb uses the maximum salary to determine the amount of severance pay.
Withholding tax and premium
By law SVb is obliged to withhold wage tax and AOV/AWW and AZV premiums from the severance pay amount.
More information
For more information contact the SVb at 527-2700, via email at cessantia@svbaruba.org or through this form.
