Venezuela's Ministry of Labor has enacted the establishment
of a forced labor program, which will require public and private
sector employers to supply their workers as "temporary
loans" to State-owned companies to boost the country's
economic development in essential industries, such as
In accordance with the program and under the presidential
decree, known as the "State of Economic Emergency Decree No.
2,323"1, employers must loan workers who either are
physically fit or have the necessary professional skills to perform
the activities that are on demand by the requesting State-owned
company. The program is effective as of July 22, 2016, and can be
applied for a 60-day period, which may be renewed indefinitely.
This mandatory program will have significant implications for both
the workforce and private sector employers.
Job Suspension and Security
During the time in which the "borrowed workers" render
services to the State-owned company, their employment status will
be suspended (just as though they were placed on unpaid leave) and
they will enjoy job security protecting them from dismissal. Under
the labor law, job security (known as
"inamovilidad") means that the employer cannot
terminate the employment relationship without a fair cause and
unless the dismissal is authorized by the Labor Inspector's
Office after a hearing.
Wages, Meal Benefits and Seniority
During the period of temporary loan, the borrowed workers are
not required to render services to their employers nor are
employers required to pay their employees a salary or cover the
meal benefit (known as "Cestaticket
Socialista"). Rather, the borrowed workers' wages and
meal benefits must be paid by the requesting State-owned
However, the employer that lends the workers must continue to
make contributions into their social security funds, even while the
borrowed workers render services to the requesting entity. Further,
during the temporary loan, the borrowed workers will retain their
seniority for purposes of calculating their entitlement to a garden
variety of social benefits.
Reinstatement and Job Placement
Once the period of the temporary loan is completed, the borrowed
workers will return to work for their employer under the same terms
and conditions that were present previously. In the event the
borrowed workers became disabled during the temporary loan ---
whether the disability is due to an occupational or
non-occupational illness or accident --- the employer is required
to accommodate the workers by placing them in jobs that are most
suitable for their abilities.
Although the temporary loan is established as a mandatory
program, the State of Economic Emergency Decree is silent on
whether sanctions or a fine might be imposed for its noncompliance.
The temporary loan might be deemed forced or compulsory labor and a
violation of fundamental human rights under the International
Labour Organization's Forced Labour Convention No. 29. If a
worker refuses to participate in the program, the employer should
obtain a signed, written statement from the worker where he or she,
in no uncertain terms, explains the reasons for noncompliance with
the program arise from his or her own volition. Such statement will
serve as proof that the employer's noncompliance with the
government's order is due to the worker's refusal and not
Employers can maintain the company's productivity during the
period in which their employees participate in the program by
replacing the borrowed workers with workers hired under a
fixed-term employment contract, which would be lawful under the
Venezuelan Labor Law. For such cases, the parties should agree to a
written contract that clearly sets forth that the employer is
hiring the worker temporarily and for the limited purpose of
supplying a replacement during the temporary loan period to enable
the employer's compliance with the program.
Lastly, prior to sending off a worker to perform services for a
State-owned company, the parties involved (i.e., the employer, the
State-owned company, and the borrowed worker) should enter into a
health, safety and environmental compliance agreement, whereby a
medical provider will certify --- before and subsequent to the
temporary loan --- that the worker's health is satisfactory.
Such certifications may help the employer defend against any claim
for indemnity for an occupational illness or disability that may
arise in connection with the services the worker rendered under the
temporary loan program.
1 The State of Economic Emergency Decree No. 2,323 was
published on the Extraordinary Official Gazette No. 6.227, on May
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.
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