Labor regulations in Bolivia have created a worker-friendly environment with protections to help the workforce. While this is beneficial to employees, it brings many challenges to employers especially when it comes to dismissing employees that are underperforming.
HR rules and regulations are among the reasons that Bolivia ranked as one of the most complex countries in the world to do business in, according the Global Business Complexity Index 2019. Understanding the local laws and how to correctly create an employment contract can help your business when dismissing employees.
Importance of the employment contract
Before the employee begins their role within the company, the employer must create an employment contract which contains information about employee performance. This contract must very clearly state the rights and obligations that the worker or employee has towards the company and the rights and obligations that the company has towards the worker or employee, as well as conform to the General Labor Law, which regulates employment in Bolivia. Poor or low performance stipulations should be included in the labor contract.
The laws in Bolivia that regulate labor are under the General Labor Law, the New Supreme Decrees and the Political Constitution of the State. Supreme Decree 28,699 was enacted on May 1, 2006, which establishes labor stability in its Article 11, while Article 10 discusses dismissal of employees. It states that the worker has the right to be reinstated when the cause of dismissal is not properly justified by the company. The company must prove the employee's poor performance based on the Decree. If it is not properly justified, the worker goes to the Ministry of Labor and requests his or her reinstatement to an inspector which starts the process. Reinstatement, in this situation, is mandatory within three working days.
Before 2006, an employer could dismiss an employee without cause, but now the burden of proof shifts to the employer, any dismissal or warning must be justified. A good employment contract can help to outline the rights and responsibilities that must be complied with by the worker and the company.
Dismissing an employee
When dismissing an employee, employers must comply the sanctions stated in Article 16 of the General Labor Law or Article 9 of the Regulatory Decree, which states the process for justifying that the worker has not complied with his contract before the Ministry of Labor. Unfortunately, the Ministry of Labor tends to almost never accept the grounds for disciplinary dismissal because there should be a work regulation in the company approved by the Ministry. Ironically, since 2008, no internal regulations have been received to be approved. If an employee is not reinstated through this process and are dismissed, they will receive a "desahucio". This means three gross monthly salaries are given as a subsidy so that the worker can seek another job or re-enter the labor market.
Prior to a dismissal, an employer can document the low-performance of an employee through warnings, which are submitted to the Ministry of Labor. This can help make the firing process easier. After the third warning, the employee can be immediately dismissed. If you will be dismissing an employee, they are also entitled to the annual bonus that Bolivia grants based on the country's internal GDP. This amount will have to be calculated along with accumulated holiday pay.
How TMF Group can help
Firing an under or poor performing employee in Bolivia is not easy but having a comprehensive employment contract prior to employment can help with the process. The experts at TMF Bolivia know how to draft the labor contract correctly so that performance can be properly justified and the correct severance payments are outlined to help an agreement be reached by all parties involved. Dismissing an employee can be very challenging but working with a local trusted partner for your business' HR needs is essential. Talk to us.
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.