The use of term limits to regulate expatriate populations is nothing new. In Bermuda, the work permit term limits policy was implemented on 31 March 2001, and in the Cayman Islands, on 31 December 2003. In both jurisdictions however, the effect is only becoming widely felt now.

Both Cayman and Bermuda have for some time suffered a shortage of local individuals to fill the diverse and often specialised positions available in their rapidly growing and diversifying economies. The result has been an influx of expatriate workers, many of whom have remained for extended periods.

Despite strict work permit requirements that made it clear that the grant of a work permit did not confer any expectation of renewal, or for example, conferred a condition that steps be taken to ensure that a local person replaced the permit holder within a reasonable period, a sense of entitlement to remain indefinitely developed in some sectors.

Indeed, in both jurisdictions, many long-term permit-holders were given permanent security of tenure by Working Resident's Certificate (1998) and grant of Permanent Resident's Certificate (2002) in Bermuda and of citizenship in the Cayman Islands in 2003.

Neither community is able to indefinitely absorb continuing mass long-term immigration. In order to discourage the expectation of permanent residency rights (and to make clear at the earliest stage), consideration had to be given to control and monitor the grant of work permits for extended periods. With added speculation of human rights provisions requiring the grant of citizenship to persons resident more than 10 years, and political pressure mounting, both jurisdictions adopted the term limits solution.

While there are some significant differences in approach as the table below sets out, the similarities between the sister jurisdictions are striking.

Jurisdiction

Cayman–Bermuda

Estimated Current Population Approximately 52,000 (Labour force survey report Spring 2006) 65,000

Estimated Total Workforce Approximately 35,000 (Labour force survey report Spring 2006) 35,000

Workforce on permits Approximately 20,000 ( Immigration statistics as at 27 February 2007) (does not include expatriates in government employment, persons working 'By Operation of Law' or persons with Residency and Employment Rights Certificates) Approximately 10,000 (Includes circa 800 expatriates in government employment)

Do expatriate government employees require work permits? No. Yes.

Approximate % expatriates in workforce 65% (author's estimate - includes some allowance for expatriates in government employment and persons working by operation of law) 30%

Term Limit if not Key Employee: 7 years 6 years

Term Limit if Key Employee: 9 years

• 3 year extension to 9 years; or Waiver (exemption) of term limits.

Criteria for qualification for key employee (only one of which need be satisfied) –•The person is recognised as having particular expertise in his field, trade or employment and it is recognised that there is difficulty in attracting such persons to the Islands or retaining such persons within the Islands. • The person is among the best practitioners in the world.

• The person is or will be directly involved in training Caymanians or developing their skills in the field in which employed, and the person's expertise is important to the effective continuation of such training and development. –• The person has rare specialised expertise that cannot be easily found worldwide.

• The person is or will be a professional employee whose expertise and skills are in short supply globally and are not available in adequate measure in the Islands, and it is of economic and social benefit to the business or the Islands to attract such skills to the Islands. • Although not particularly specialised, there is a "severe shortage" of the person's particular skills, that is, a shortage in Bermuda arising from the difficulty of recruiting persons because there is a general, chronic shortage of resources overseas.

• The person's absence from the Islands will be detrimental or cause serious hardship to the person's employer, to Caymanians, or to the Islands. · Without the continued presence of the individual, the business will be seriously injured to its own detriment and to that of the interests of Bermuda and Bermudians.

• The person's business contacts are or will be of importance to the continued success of the business or its contribution to the Islands. –•The person has crucial business contacts that are critical to the business's continued success.

• There exist other economic or social benefits to the Islands by virtue of securing or retaining the person's specialist skills or expertise. –•The individual is directly responsible for creating well-paying jobs to which Bermudians can aspire.

• The circumstances of the person's particular case are considered by the Board to be exceptional, and to justify a special reason to employ him or to allow him to be designated as a key employee. –• The person is directly responsible for training Bermudians in worthwhile careers and the business, based on its objective assessment of the individual's attributes, relies on his or her skill and expertise in this regard.

Re-application permitted for key employee designation if first application not successful? Yes (No sooner than 3 months after refusal provided within 7-year term limit). Possibly - Should new grounds emerge or if the occupation becomes scarce in Bermuda or world-wide.

Required break of residence following expiry of term limit 1 year 2 years

Permanent residency possible for key employee? Yes (application permitted upon reaching 8 years continuous residence). No.

Acquisition of status (nationality) possible based on residency? Yes. No.

Do term limits apply to Government employees? No. Yes.

Are limited exemptions to term limits possible for persons within work-permit regime? No. Yes.

Now each overseas territory watches the other again as the tightrope of implementation is walked between the needs of each jurisdiction's booming offshore business sector, and the expressed concerns of much of the local populace.

Inhibiting long-term residency and dispelling the expectation of permanency may be achieved in other ways, but for the moment term limits are a fact of life and they will ultimately limit the appeal of both jurisdictions to potential expatriate workers.

If there were sufficient workers to fill the jobs of expatriates, term limits would not pose a problem but as it is attracting the best of the world's talents to our shores suddenly becomes a whole lot harder.

Attorney E. Kelvin Hastings-Smith, FCIArb, is Counsel and Manager of the Litigation Practice Group at Appleby in Bermuda. Partner Nicolas Joseph is Head of the General Litigation Practice Team at Appleby in the Cayman Islands. A copy of this column can be obtained on the Appleby website at www.applebyglobal.com.

This column should not be used as a substitute for professional legal advice. Before proceeding with any matters discussed here, persons are advised to consult with a lawyer.