TRANSITORY PROVISIONS OF THE MINISTRY OF LABOR, EMPLOYMENT AND SOCIAL SECURITY

Within the framework of the health emergency ordered by the national government due to the risk of spread of the Coronavirus (COVID-19), the Ministry of Labor, Employment and Social Security (“MTESS”) has issued some recommendations to employers and adopted exceptional and transitory containment measures coinciding with the duration of the emergency declaration, which we highlight below:

(I) Grant vacations in case less active personnel are needed.

Vacations may be granted by exempting the employer from notifying the employee 15 days prior to the date of the usufruct, according to Resolution MTESS No. 499/2020 of March 17, 2020.

In addition, the MTESS recommended early payment of unearned vacations corresponding to 2020 and 2021.

(II) Pay Christmas bonus in advance.

It also recommended bringing forward the payment of the proportional Christmas bonus for 2020.

(III) Suspension of the employment contract.

As a last measure, the MTESS regulated the legal figure of total or partial suspension of employment contracts provided for by the Labor Code, according to MTESS Resolution No. 500/2020.

The aforementioned resolution provides that the suspension of labor contracts will require the prior authorization of the MTESS in order for it to be feasible and for such purpose the employer must comply with certain requirements and submit a series of documentation.

If this alternative is chosen, the company must inform the workers or their representatives, in writing and no less than 5 days in advance, of the start and end date of the suspension of the contract.

Within the same period, the employer must communicate to the MTESS the start and end date of the suspension and the reasons for it, and the following documents must be attached to the note:

(i) Tax identification of the company,

(ii) Indication of the legal representative and the document that accredits him/her,

(iii) List of affected workers with their respective data,

(iv) Notifications sent to the affected workers with acknowledgement of receipt thereof,

(v) List of insured members of the Social Security Institute,

(vi) Acuerdo con los trabajadores sobre la suspensión de los contratos en caso de que existiese, y,

(vii) Authenticated copy of accounting documents in order to demonstrate the solvency of the affected company, such as: (a) balance sheet for the last 3 years, (b) VAT return for the last 12 months, (c) merchandise inventory book for the last 12 months and (d) economic reactivation plan of the company.

Administrative procedure without agreement between employer and employee: the MTESS will previously review compliance with the formal prerequisites and if there is no prior agreement between the employer and employee on the suspension of the contract, it will give the employee the opportunity to express his or her opinion regarding the measures intended by the employer.

Then, the MTESS will analyze the reasons alleged by the employer and will issue a resolution authorizing or not the suspension of the employment contracts. This resolution may be appealed before the Minister of Labor within three (3) days after notification of the resolution. The duration of this process is unlikely to be less than 30 days.

Administrative procedures without agreement between employer and employee: analysis will not be necessary and the MTESS will issue a resolution ordering the suspension.

Suspension requested with pay: in this case, no prior analysis will be necessary and the MTESS will issue a resolution ordering the suspension.

(iv) Refinancing of Employer Contributions

With the enactment of the Emergency Law on March 26, employer contributions may be refinanced interest-free for up to 18 months. IPS will regulate the application of this benefit. Workers will maintain their coverage and benefits.