Manage your business
When hiring employees, it is important to have a general understanding of labor legislation and your obligations as an employer.
- Hire and pay employees
- Comply with your obligations
- Take out employee insurance (“SVB”)
- The Department of Labor (DPL)
Hire and pay employees
Create an employee compensation plan before hiring the right candidate for the job.
To set up a payroll, follow the steps below:
- Apply for a tax registration number at the Department of Taxes (DIMP).
- Decide if you want permanent or temporary staff.
- Verify if the employee submits all the necessary information correctly and completely.
- Define the terms of payment and the deduction of social insurance contributions and taxes.
- Identify and plan the benefits, such as paid vacation and official holidays.
- Create a position for the administration and the payroll.
- Know which records must stay on file and for how long.
- File your payroll tax returns.
- Register your employees with the Social Insurance Bank (SVB).
Comply with your obligations
Labor and social security rules
You can offer the right employment conditions when taking into account the labor and social security rule. When taking into account the labor and social security rules, you can also provide optimal working conditions.
According to the National Ordinance on Sickness and Accident Insurance, you must register your company with the Social Insurance Bank (SVB) when you hire employees. Register your company via the following LINK.
When all positions have been filled, go to the Department of Labor (DPL) to provide a list of personnel. If you still need to fill positions, the DPL can assist you with a vacancy notice for local employees. You can hire foreign employees if the vacancy remains unfilled. You will need to post the job opening at the DPL for four weeks.
Then you must go to the Directorate of Labor and Research (“DAO”) and comply with the following:
At the Directorate of Labor and Research (DAO), you must submit a register of personnel hired using a template (Article 30, Labor Ordinance 2013), as well as a job list of the various jobs at the company, the working hours and days off (Article 28, Labor Ordinance 2013).
Take out employee insurance (“SVB”)
Register as an employer
What is an employer and why register with the SVB?
An employer is a natural person or a legal entity domiciled in Aruba and employing one or more people in the island. The employer provides sickness and occupational disability insurance to the employee(s) by contributing to the social security funds. The employer also contributes to other forms of national insurance, such as the unemployment fund (“cessantia”), the pension fund and the surviving dependents’ pension.
When do you register with the SVB?
If one or more employees are hired, the employer must register the company with the SVB. The controlling shareholder (50 percent or more of the shares in the share register) cannot be registered as an insured person with the SVB. The SVB will insure any owner or director who is not the controlling shareholder, and who receives a salary.
When does the employer need to contribute to the social security funds?
According to the law, when one or more employees are hired, the employer must contribute to the social security funds. If an employer completes the registration after hiring an employee, the contributions must be paid from the first day the employee is hired, not from the date of registration.
Digital portal for the employer: “MiSVb”
MiSVb is a digital platform that provides all of the SVB’s services to employers. The company must be registered with the SVB to gain access to the portal, and you must register for the portal through the SVB website.
The employer must notify the SVB when an employee is hired and begins working. Via the MiSVb 2.0 portal, the employer must fill out a registration form for the employee. The employer will start paying contributions for the new employee as of the first day of work.
Does the employee need to register with the SVB?
The employee does not register with the SVB. The employer is responsible for completing the registration process through the MiSVb 2.0 portal.
Changes in the situation of the employee
Every change in the employee’s situation should be reported to the SVB by the employer.
- the employment of a new employee;
- change in marital status;
- changes in salary;
- change of address;
- change of position within the company;
- termination of contract.
When is the employer obligated to insure the employee with the SVB?
The employer is obligated to ensure the employee with the SVB as soon as the employee starts a new job. Insurance coverage is not dependent on the duration of the trial period, the duration of the job or the number of hours worked (part-time).
Termination of social security insurance
When a contract is terminated, an employee’s right to claim social security benefits expires. The employer can inform the SVB hereof via the MiSVb 2.0 portal. Until the last day on the job, the employer pays the contributions for the employee.
Sickness insurance ensures that an employee earning less than AWG 5,850.00 per month receives part of his or her wages (compensation) in the event that he or she is unable to work due to sickness. An insured employee who is unable to work due to sickness is entitled to receive compensation equal to 80% of his or her daily wages from the fourth day after having called in in sick (sickness notification). For the first three sick days, the SVB does not pay any compensation.
After two years, the right to sickness compensation for the same cause of disease expires. The two-year period begins when the employee first reports sick to the SVB for this specific sickness.
The following categories of employees are not covered by sickness insurance:
- owner-manager (identified by the SVB as an employer);
- spouse, dependent children and parents of an independent employer who is not paid or receives a salary that is less than the minimum wages;
- domestic staff;
- captain or crew (sailors) on Aruban ships;
- civil servants or equivalent employees;
- domestic service employees working at home.
The SVB collects 2.65% of the employee’s gross wages. This contribution is paid fully by the employer.
It is against the law to have this contribution paid by the employee or to deduct it from his or her wages.
Accident insurance ensures that an employee receives part of his or her wages in the event of an industrial accident.
If the insured person dies as a result of his or her work, the accident insurance will apply in addition to the rights of his or her spouse, children or other dependents to the deceased person’s wages. Accident insurance is required for all private-sector employees, except the following categories.
The following categories of employees are not covered by accident insurance:
- the owner-manager who works at his or her own risk and who receives payment;
- spouse, dependent children and parents of an independent employer who does not receive payment or does receive a salary less than the minimum wages;
- domestic staff;
- captain or crew (sailors) on Aruba ships;
- civil servants or equivalent employees;
- domestic service employees that work at home.
What is a work-related accident?
- An on-the-job/work-related accident is one that occurs during working hours and is related to the performance of the job, with the result that the employees becomes unable to work.
- An accident that occurs while driving the shortest route to or from work.
- A sickness that occurs outside of working hours but is related to job performance.
How much is the compensation for incapacity for work (“AO”)?
After two days, the employee is entitled to compensation if he or she has notified the SVB that he or she is unable to work due to a work-related accident. As a result, the employee will receive 100% of his or her wages for the first year.
The compensation will be 80% of the wages after the first year. The SVB will determine the employee’s degree of incapacity if the employee remains permanently disabled. Following that, he or she will be paid a percentage of his or her wages based on the severity of his or her disability.
How much is the accident insurance contribution?
The accident insurance contributions range between 0.25% and 2.5% of the employee’s gross wages. This percentage is determined by the job’s level of risk. The SVB will determine the percentage related to the job after assessing the level of danger. These contributions are paid by the employee’s employer. It is not allowed to have an employee pay these contributions or to have an amount deducted from his or her wages.
Severance pay (“cessantia”)
Severance pay is the remuneration that an employer is required to pay to an employee on termination of employment, regardless of fault.
Every year, owners-managers are required to contribute to the “Cessantia Fund”. For each employee in service on January 1st, the annual contribution is AWG 40.00.
When is the employee entitled to receive severance pay?
According to the law, an employee is entitled to receive severance pay if he or she meets the following requirements:
- The employee is dismissed through no fault of his or her own.
- The employee has been employed more than one year.
- The employee has to submit his or her request for severance pay within one year after the date of his or her dismissal.
- The employee does receive an income based on a pension provision from the employer.
- The employee receives a direct work pension after retirement, with a lower pension rate than the old-age pension. An employee who receives a pension that is less than twice the old-age pension after deducting the old-age pension rate from the pension plan is also entitled to severance pay.
Payment to the SVB
Payment by bank transfer to the account of the SVB. It is recommended to include the company’s employer code, the person for whom the payment is being made, the period and year of assessment, and whether or not the payment is part of a payment arrangement.
Administrative fine policy
Owners-managers are required to provide complete and accurate information, as well as to register their employees with the SVB. The SVB may impose a fine if an employer/company fails to meet this obligation.
Amount of the administrative fine
If the SVB notices an infringement, the administrative fine policy contains different guidelines for determining whether or not a fine will be imposed, as well as the amount of the fine. This policy describes how the administrative fines provided for in the National Ordinance on Sickness Insurance and the National Ordinance on Accident Insurance will be imposed. It determines, among other things:
- Who can impose a fine.
- How a fine can be imposed.
- When a fine will cease to apply.
- How to determine the amount of the fine.
The management is responsible for ensuring that the law is applied proportionally and consistently.
Wage limits for sickness insurance and accident insurance:
- AWG 70,200.00 per year, AWG 5,850.00 per month, AWG 1,350.00 per week.
- AWG 270.00 per day (based on 5 workdays per week).
- AWG 225.00 per day (based on 6 workdays per week).
Contributions (in percentage of the wages)
|Contribution||Rate/ Percentage||Who pays?|
|Severance pay||AWG 40,-||Employer|
|Sickness insurance (“ZV”)||2.65% of the gross wages||Employer|
|Accident insurance (“OV”)||0.25-2.5% of the gross wages||Employer|
|Old-age pension (retirement), employer’s contribution (“AOV”)||9.5% of the gross wages||Employer|
|Old-age pension (retirement), employee’s contribution (“AOV”)||4% of the gross wages||Employee|
|Widows’ and orphans’ pension, employer’s contribution (“AWW”)||0.5% of the gross wages||Employer|
|Widows’ and orphans’ pension, employee’s contribution (AWW)||0.5% of the gross wages||Employee|
(These rates date from the year 2019 and can be changed by law)
For more information: Sociale Verzekeringsbank (SVB)
Mediante un formulario disponibel riba website di SVB
Mediante e MiSVb Helpdesk link riba e pagina aki
The Department of Labor (DPL)
Free services of the DPL:
- Recruiting local job seekers (non-permit).
- Providing information about and stimulating labor participation.
- Matching job seekers and local employers.
- Services are FREE OF CHARGE.
Job Seekers DPL:
- Registration in a database.
- Registration of vacancies.
- Job Center (Employment and Reintegration) will match job seekers with the vacancies.
- The Labor Market Admission Advice Division will assist in the hiring of foreign employees. This Division performs the labor market test based on the DPL policy.
- The Company Control Division audits each official request made by the employer, whether it concerns a vacancy or an unusual request (admission application advice).
The policy of the DPL on the protection of the local labor market is available to the public, and the most recent version can be found on the DPL website. The policy’s goal is to give local employees priority for open positions. As a result, locals are first hired to fill vacancies, and employers can only hire a foreign employee if the vacancy cannot be filled by a local.
The DPL Job Center
The DPL Job Center offers two types of services for open vacancies and vacancy notification.
This will be further explained below:
- Employers in need of local employees (immediately) can use Open Vacancy, and the DPL can help with a database of job seekers. The DPL can also advertise the job openings in local newspapers and on Facebook. The DPL can screen applicants before they apply for a position with the employer.
- Vacancy notification is a national policy that requires employers who want to hire an employee who is obligated to have a work permit to follow a DPL-mandated procedure. Before an employer hires an employee who is obligated to have a work permit, the policy states that the Job Center will scan the local database for three weeks to see if any local employees can fill the vacancy.
- If local workers in the database respond to the vacancy within three weeks and indicate that they are willing and able to fill it, the DPL will send a letter to the employer requesting an appointment with the local employee.
- The DPL services are free of charge and include filling out and checking forms for the employer.
- The DPL only provides services after making an appointment to ensure prompt and efficient service.
- The DPL offers a variety of job seekers in all sectors and at all levels.
- Open Vacancy is a service that screens job seekers for the employer without any commitment and connects the job seeker with the employer.