St. Maarten’s Top Incomes Law (LNT) reaches three-year evaluation point

GREAT BAY--The clock has run down on the built-in review period for St. Maarten’s Landsverordening Normering Topinkomens (LNT), the law that caps salaries for top officials in the public and semi-public sector. Enacted in late 2022, the ordinance included a three-year evaluation clause requiring government to assess whether the legislation is functioning as intended and to report on its effectiveness.

That evaluation window is now due

Professionals speaking on condition of anonymity has described the law as an obstacle in attracting professionals to functions. The LNT was introduced amid broader governance reform efforts aimed at promoting transparency, cost control, and proportionality in public-sector compensation. The ordinance places a ceiling on remuneration for top functionaries within government, government-owned companies, and certain subsidized entities.

In St. Maarten, the Top Incomes Ordinance sets a hard cap on what senior public-sector leaders and top executives in government-linked entities can be paid. The general salary ceiling is currently around Xcg 427,000 per year for top functionaries. The law also limits how much board members and chairs can earn, and puts a cap on severance and termination payouts. It requires public disclosure of salaries and external review by independent auditors.

At the time of its passage, the LNT was framed as a necessary step to restore public confidence, align compensation with fiscal realities, and prevent excessive payouts within public institutions.

Importantly, the law provided for:

• A transition period for existing contracts that exceeded the ceiling
• A structured phase-in mechanism to bring salaries into compliance
• A mandatory evaluation within three years of entry into force

With the law entering into effect in December 2022, the evaluation period now falls squarely in late 2025 and early 2026.

The purpose of the three-year review is to determine whether the law has achieved its objectives, whether enforcement mechanisms are effective, and whether adjustments are required based on practical experience.

However, reliable and well-placed sources indicate that the law may be producing unintended consequences. According to these sources, the salary ceilings have made it increasingly difficult for St. Maarten to recruit and retain top-tier professional talent, particularly in specialized managerial, financial, and technical roles within government-owned companies and critical public institutions.

The argument, according to insiders, is not centered on defending excessive pay, but rather on market competitiveness. Small jurisdictions already face structural constraints in attracting highly qualified executives. With caps that may not align with regional or international benchmarks, St. Maarten risks narrowing its talent pool at a time when institutional strengthening remains a national priority.

"This tension raises a fundamental question that the evaluation must answer: has the LNT struck the right balance between fiscal discipline and institutional performance?" one source questioned. “We understand the need to control spending, and nobody is arguing for unreasonable salaries. But if the pay is set too low compared to other islands or countries, qualified professionals simply will not come here, or they will not stay. Running major public companies and institutions requires experience and expertise. If we cannot offer competitive compensation, we make it harder for St. Maarten to attract and even keep the people needed to keep those institutions strong and stable.”

Regional context: Curaçao’s 2027 compliance deadline

The discussion is not unique to St. Maarten. In Curaçao, similar provisions under its LNT framework have triggered renewed debate.

In Willemstad, it was recently reported that by December 21, 2027, all top officials within the Curaçao government and state-owned companies must comply with the legally established salary ceilings under the LNT, which entered into force on December 21, 2022.

For large state-owned companies in Curaçao, the maximum annual salary is capped at 386,000 guilders, while smaller public entities face a lower ceiling of 297,000 guilders per year.

Curaçao’s framework includes a transitional arrangement for officials who were earning above the permitted limits when the law took effect. After an initial two-year period, salaries must be adjusted in no more than three steps over a maximum of three years, with full compliance required by the end of 2027.

Notably, Curaçao’s government is now considering whether medical specialists should be granted a higher salary norm. According to its explanatory memorandum, this potential exception aims to address healthcare system challenges, including specialist shortages and long waiting lists. Any such change would require formal amendment and political approval.

The debate there mirrors the core issue facing St. Maarten: how to reconcile strict cost control with the need to safeguard essential services and maintain institutional competence.

A pivotal moment for St. Maarten

As St. Maarten approaches the formal evaluation stage of its own LNT, key questions for the government and Parliament:

• Has the salary cap improved transparency and financial discipline?
• Has it strengthened or weakened the performance of government-owned entities?
• How many positions remain difficult to fill under the current ceiling?
• Has talent migration increased in capped sectors?
• Is legislative adjustment required?

The evaluation requirement is a safeguard built into the law itself, designed to ensure that reform does not become rigidity.

With regional peers grappling with similar tensions and compliance deadlines approaching elsewhere in the Kingdom, the forthcoming review report will determine whether the LNT remains fit for purpose, or whether recalibration is necessary to ensure that governance reform does not come at the expense of national capacity. The government nor the Parliament of St. Maarten has addressed this issue.

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