Ecuador: Regulation For The Implementation Of The Organic Law Promoting Youth Employment, Exceptional Working Day, Severance And Unemployment Insurance

Last Updated: 23 September 2016
Article by Daniel A. Palbuchta

The Labour Ministry, through the supplement to Official Gazette No. 820 dated 17 August 2016, has issued the regulation for the implementation of the Organic Law Promoting Youth Employment, exceptional working day, severance and unemployment insurance.

Hereunder a summary of the highlights of the previously mentioned norm:

Youth employment

  • Youth employment contracts shall be understood as those concluded with people between 18 and 26 years old, regardless of whether the contract´s completion is subsequent to the date in which the hired person turns 27 years old.
  • With the purpose of being elegible to the benefit embedded in Article 34.3 of the Labour Code, which establishes that the payment of the employer´s contribution to the welfare system in youth employment contracts shall be covered by the State up to two unified basic monthly salaries in general for one year (provided that the number of youth employment contracts does not exceed the 20% of the total of the payroll of the company), the contract entered into with youngsters aged between 18 and 26, shall be concluded in writing and registered on the Computerised system of the Labour Ministry.
  • The minimum number of young workers to be associated to each company regarding the net increase of workers generated on each final year, will result from the application of the following chart, in accordance with the respective activity:

1. AGRICULTURE AND FIELDS 3 for every 10

2. LIVESTOCK PRODUCTION 2 for every 10

3. FISHING, AQUACULTURE AND MARICULTURE 3 for every 10

4. MINES, QUARRIES AND OILFIELDS 3 for every 10

5. FOOD-PROCESSING (INCLUDING AGRIBUSINESS) 3 for every 10

6. INDUSTRIAL PRODUCTS, PHARMACEUTICALS

AND CHEMICALS 2 for every 10

7. BEVERAGE AND TOBACCO INDUSTRIAL

PRODUCTION 2 for every 10

8. METAL-MECHANIC INDUSTRY 1 for every 10

9. TEXTILE PRODUCTS, LEATHER AND FOOTWEAR 2 for every 10

10. VEHICLES, RAILCARS AND CAR BODIES AND ITS PARTS 1 for every 10 11. TECHNOLOGY: HARDWARE AND SOFTWARE (TIC´S INCLUDED) 3 for every 10

12. ELECTRICITY, GAS AND WATER 1 for every 10

13. CONSTRUCTION 2 for every 10

14. COMMERCIALISATION AND SALE OF GOODS 3 for every 10

15. TURISM AND FOOD 3 for every 10

16. TRANSPORTATION, STORING AND LOGISTICS 1 for every 10

17. FINANCIAL SERVICES 2 for every 10

18. ACTIVITIES CONCERNING SERVICES 2 for every 10

19. TEACHING 1 for every 10

20. HEALT RELATED ACTIVITIES 2 for every 10

21 COMMUNITY ACTIVITIES 2 for every 10

In order to verify this association, the age of these workers to be taken into account is that at the time of linkage to the company.

Companies with less than 50 workers will not be subjected to control concerning a minimum percentage of youth employment.

Should the young employee be dismissed before twelve months of work, the employer shall return the amount subsidised by the Sate within -and up to- 30 days.

The mentioned amount shall not be returned only in the following scenarios:

  • Disassociation by termination requested by the employee;
  • Death or visto bueno (request for termination of contract) against the employee.

Internships in institutions, companies and foundations in the private sector

Internships should be taken to be the pre-professional training performed by students of higher education institutions in companies, institutions and foundations of the private sector with the purpose of applying their knowledge, developing their skills and specific abilities necessary to the fulfilment of their future career.

Companies with more than 100 stable employees are obliged to associate a number of interns not below 2% of the workers that hold a professional degree. The number resulting from the application of the mentioned percentage will be calculated concerning the workers that the company had at the beginning of the fiscal year and it can be complied with any time of the year considering that interns cannot hold that position for more than six months.

Inobservance of such requirement shall be sanctioned in accordance with Article 628 of the Labour Code por each month of inobservance and for each intern missing in order to complete the number to be reached by the company.

Extended working day

Extended working day enables work to be performed for more than eight hours a day, provided that the extension does not exceed forty weekly hours, nor ten hours a day, in schedules that can be distributed irregularly in five days a week, as long as mandatory rest is guaranteed for two consecutive days.

The hours that exceed the limit of forty weekly hours or 10 a day, shall be payed in accordance with Article 55 of the Labour Code.

This working day is only feasible when there is agreement in writing. The extended working day is to be applied exceptionally and, therefore, cannot be prolonged for more than six months in each fiscal period, except for express renovation of the agreement between the parties.

This working day excludes teenagers, pregnant women and people who, due to disability, cannot work under this regime. in addition to this, the extended working day shall not be applied to employees who work underground and in activities which, because of their nature, are to be performed during a determined period of time. In order to apply the extended working day, such request must be presented before the Regional Labour Director or the provincial delegate of the Labour Ministry and it must be accompanied by:

  • Agreement concluded between the parties, which must contain the specific new working day to be applied, the schedule in which it will be performed, the days in which the employee will undertake the task, the period during which the working day will last and the guarantee of receiving a minimum of 48 hours of mandatory rest. Should these requirements be met, the petition shall be approved immediately, otherwise, it will be denied, which allows the submission of a new request that meets all of the afore mentioned criteria.

Reduced working day

  • This modality is only applicable when companies have legitimately justified its necessity due to circumstances in which it is indispensable to temporally reduce costs or expenses of the company in order to guarantee an appropriate performance.
  • Should employers decide to adopt this measure, they shall present their request before the Regional Bureau of Labour, which must contain:
    • Identification of the authority to whom the petition is addressed to; o Full name of the employer´s firm and its legal representative;
    • Explanatory statements that justify the application of the measure; o Austerity plan to be executed by the company in order to change its status, including the additional measures that had been taken or will be taken with the purpose of facing the situation which motivates the reduction of the working day;
    • Specification of the time the reduced working day will last;
    • Schedule in which the working day will be performed.
  • The documents that must be presented are the following:
    • Agreement concluded between the parties, duly signed; o Last payed income tax filing; o Six last value-added tax filings; o Document that reflects up-to-date compliance with employer contributions.
  • Once the mentioned information has been presented, the Regional Labour and Public Service Director will verify whether they meet the respective criteria.
  • If the petition is not clear or does not meet the criteria, the authorities can request clarification of the request within 3 days.
  • The decision must be made within three days.

License or unpaid leave for childcare

  • This figure can be granted to both mother or father, starting from the termination of the maternity or paternity leave, respectively, until the date in which nine months have passed after the termination of those leaves.
  • Should the license be granted for a period shorter than nine months, it can be extended for one time only provided that it does not surpass the date previously mentioned. For this purpose, the mother or father shall present the respective petition 15 days in advance to the completion of the granted license or unpaid leave.
  • Once the license or unpaid leave ends, the female worker can invoke the breastfeeding leave embedded in Article 155 of the Labour Code at any moment before 12 months after giving birth have passed. However, in order to receive the benefits of severance, this shall be requested within the three days after the termination of the license or maternity/paternity leave.

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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