Uruguay: Employment Law – The Basics

Last Updated: 20 June 2017
Article by Matilde Campiotti and Mark Teuten

The Uruguayan labour force is the best educated in Latin America, with many English speakers and well-qualified professionals in many fields.

While Uruguay's labour market is characterized by strong protections, it is still an attractive place in which to open business, particularly for regional operations.

The applicable legal norms for hiring workers in Uruguay are set out in the Constitution, specific Laws and Decrees, and regulations from the Ministry of Labour.

Much of Uruguay's labour legislation is based on international norms adopted by the International Labour Organisation (ILO). These norms establish a set of guarantees to protect employees, which at the same time act as a limit to the rights of the employer.

Our country is an active member of the ILO, which itself seeks to defend employees' rights. Most of, Many of the regulations and court judgments handed down are in accordance with conventions adopted within the framework of the ILO, which are designed to establish minimum rights for employees.

1. FORMAL REQUIREMENTS TO HIRE AN EMPLOYEE.

There are no formal requirements to establish an employment relationship. As a matter of good practice a written contract should be signed, in order to be clear about the rights and obligations of each party, which can be essential for the employer in the event of a dispute arising.

In principle employment contracts are for an indefinite period of time. However, the parties can agree on a specific period. It is common practice to have a probation period of up to 3 months to see if an employee is suitable to the job.

It is obligatory to register the employee for social security purposes (BPS) and in the list of employees, which is open to inspection by the Ministry of Labour (MTSS) at any time. Employees must also be insured at the State Insurance Bank (Banco de Seguros del Estado -BSE) in order to cover any illness or workplace accident.

2. BENEFITS TO WHICH ALL EMPLOYEES ARE ENTITLED.

Employees are entitled to:

Payment of salary. Under a new law which has just come into force all payments must be made by means of a financial instrument, such as a cheque or bank transfer. Except for minor exceptions, cash payments are no longer allowed.

The Ministry of Labour fixes a minimum national salary. Additionally, each area of business activity has its own minimum salary for workers in that field.

These minimum salaries are set out in collective agreements negotiated in Wage Panels ("Consejos de Salarios"), made up of employers, employees, and government representatives.

Salaries can be paid monthly, weekly or daily.

Working hours. The normal working day is fixed at 8 hours and 48 hours per week and 44 hours for retail workers.

The parties can agree to work less, but not more.

Overtime. This must be paid at double the normal rate when it is on a working day. When it is a non-working day the rate is two and a half times.

Aguinaldo. This is a legally required bonus payment equal to one month's salary, known as a 13th salary. It is payable in two instalments, part in June and part in December.

Paid holidays. Every employee is entitled to 20 days of paid holiday every year. For every 5 years of work with the same employer they are entitled to 1 additional day per year.

During the first year of employment the employee is not entitled to any holiday – during that first year they accumulate the right to take holiday in the following year.

Other special situations. Employees are entitled to additional leave (paid) as follows:

  • Maternity leave (12 weeks)
  • Paternity leave (3 days)
  • Marriage Leave (3 days)
  • Study leave for university students ( 6, 9 or 12 days per year depending on the number of hours worked)
  • Leave for family death (3 days)
  • Leave for union activities – depends on the collective agreement).

Payment of holidays. All employees are entitled to paid holidays i.e. in addition to their right to 20 days of paid holiday leave, they must be given an additional payment, equivalent to 100% of their take home pay for those 20 days.

The idea being that they need their normal salary to pay their basic needs and this additional money is to enable them to actually take a holiday.

3. FORMS OF TERMINATING EMPLOYMENT.

Apart from fixed term contracts, when the relationship is terminated by the employer the employee is entitled to an indemnization equivalent to one month's salary for every year worked, up to a maximum of 6 months' salary. (The calculation includes holiday pay, other benefits, commissions and aguinaldo).

The exceptions to this are in cases of serious misconduct (but this can be very difficult to prove), seasonal workers and those on probation.

Special additional payments on termination. Additional payments are due in some cases e.g. firing of a pregnant woman, firing for illness or after a work accident or for union related activity.

4. UNIONS AND THE RIGHT TO STRIKE.

Uruguay has a culture of collective negotiation. Article 57 of the Constitution contains the right for employees to participate in collective action, the right to strike and the right to organize unions.

Employees have the right to take part in union activities and become union leaders. Employers cannot take any action to prevent an employee from joining or leaving a union.

As mentioned above, there are Wage Panels which set minimum salary levels. Additionally, unions are entitled to negotiate working conditions with employers.

One aspect of workers rights which has been a source of continued discussion is whether employees are entitled to take control of a work place away from the employer and occupy it, as an extension of the right to strike.

According to the Trade Union head office, they are prepared to negotiate a protocol governing conflicts so that a definite period of time must go by before a strike is declared. But they do not seem prepared to give up the possibility of occupying the work place.

5. LEGAL PROCEEDINGS IN EMPLOYMENT MATTERS.

Uruguay has special employment courts with special procedures for employees, which are much quicker than other court cases, and is free for employees.

In general, the burden of proof is on the employer to refute a claim, rather than for an employee to prove a claim.

Prior to filing any claim there is an obligatory mediation stage at the Labour Ministry (MTSS).

CONCLUSION.

Uruguay's legal regime is very protective of employee legal rights in general. For employers, these rights can represent a significant burden.

This means that employers are careful about hiring and will often look at alternatives to an additional employee, such as contracting out non-essential functions, using short fixed term contracts, and/or hiring people as independent contractors.

Some view Uruguay's labour regime as a barrier to employment, and hence a cause of unemployment by themselves. Against this, the rate of unemployment in Uruguay is now quite low (around 8.1%) on a historical basis.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions