Venezuela: Highlights Of The New Venezuelan Labor Law

1.1. The form of the monthly social benefit accrual changes under the new law. It must now be accrued on a quarterly basis instead of a monthly basis. Consequently, employers must now deposit 15 days of salary each quarter (instead of 5 days of salary per month) as a guarantee of the social benefits accrued by employees. This guarantee may be kept in a trust fund set up with a bank (the current trust funds may still be used), it may be kept in the employer's accounting records if so authorized by the employee or at the National Social Benefits Fund. Additionally, employees have the right to an escalating factor of 2 days of salary per year of service up to a maximum of 30 days of salary beginning after the first year of employment.

1.2. The law also provides that at end of the employment the social benefits shall be computed based on 30 days of the employee's final salary per year of service beginning as of 1997. Employees shall receive the higher amount between the social benefits computed based on 30 days of salary and the quarterly accruals. If the quarterly accruals results higher the employees simply receive the amount accrued. If the 30 day per year computation results higher, employees still receive the amount accrued together with a separate payment of the difference between both results.

1.3. When an employment contract ends and it has had a duration of less than three months, employees are entitled to receive social benefits calculated at five days of salary per month of employment.

1.4. Payment of the social benefits must be made within five days following the end of employment. In the event beach of this obligation, these amounts shall cause interest at the active rate set by the Central Bank of Venezuela.

1.5. The base salary for the computation of the social benefits of employees earning a fixed salary shall be the last salary earned by the employee. The social benefit for employees earning variable salary is computed based on the average salary of the preceding six months.

1.6. Termination without cause will only apply if an employee agrees to receive an indemnity equivalent to the amount of the social benefits that the employee is entitled to receive at the end his/her employment.

1.7. Employees hired under an indefinite term contract will have stability beginning after the first month of employment.

1.8. The maximum term for fixed term contracts is one year.

1.9. The new law eliminates the category of employee of trust.

1.10. The new law also eliminates atypical efficiency salary (percentage of salary excluded for purposes of calculating the social benefits).

2.1. The vacation bonus is increased from 7 to 15 days of salary after the first year of employment plus an escalating factor of one additional day of salary per year up to a total of 30 days of salary.

2.2. The base salary for computing vacations for employees earning variable salary will be the average salary earned during the three months preceding the vacation leave.

2.3. The minimum payment for yearend bonuses is increased from 15 to 30 days of salary. The same minimum payment shall be paid by non- profit employers or employers who did not have earnings during the fiscal period to distribute amongst its employees.

2.4. A qualified majority of the employees, the union or the labor board, may request the tax authorities to examine and verify the inventories and balances of the employer in order to compare and verify the earnings of the company. 2.5. In the cases of suspension due to injuries or sickness the employer is required to pay the difference of the salary that is not guaranteed by the Social Security Institute.

2.6. The new law prohibits the use of outsourcing. The law requires that those outsourced employees be transferred to the beneficiary company within 3 years from the passing and publication of the law. During the process of transferring the outsourced employees, these employees are protected against termination and shall keep the same employment benefits and conditions.

3.1. The work week is reduced from 44 to 40 hours a week.

3.2. Employees have the right to two consecutive rest days.

3.3. Nights shifts are limited to 35 hours per week and seven hours per day.

3.4. The law provides one year for employers to adapt to the new work hours.

3.5. The law includes Monday and Tuesday of Carnival as well as the 24th and 31st of December as holidays.

4.1. Mothers of newborn child are now protected against termination for a period of two years after the birth of a child.

4.2. Parents of adopted children under the age of three are also protected against termination up to two years from the moment they are given custody of the child.

4.3. The post-birth maternity leave is increased from 12 weeks to 20 weeks thereby increasing the total maternity leave from 18 to 26 weeks. (The pre-birth leave remains the same at six weeks).

4.4. Mothers shall have two rest periods during the day of an hour and a half each in the event that the employer does not have a breast feeding area at the workplace.

5.1. Employers who do not comply with orders to reinstate employees, those that violate the right to strike, and who obstruct or breach the actions of the authories shall Legal Report May, 2012 Hoet Peláez Castillo & Duque 09May12/ Nº 1_Ing be punished with 6 to 15 months of arrest.

5.2. Failure to pay fines may be punished with 10 to 90 days of arrest.

5.3. The law provides for fines between 30 tax units (Bs. 2,700) and 360 tax units (Bs. 32,400) for breach of employment obligations under this new law.

6.1. The statute of limitation for actions claiming social benefits is increased from 1 year to 10 years. The rest of the actions or claims under the law have a statute of limitation of 5 year.

6.2. Employees now have 90 days to accept or reject an employer substitution. The joint liability for both the new employer and the former employer in an employer substitution transaction increases from 1 year to 5 years.