Law No. 157 of 2020 dictates temporary employment-protection measures

Karina Castillo, Associate

On July 31st, 2020, one more month of quarantine was completed, while the mobility restriction is kept and many companies are still not operating.

In the third debate, the National Assembly approved Bill No. 354 that establishes temporary measures for the protection of employment in companies that have been affected by COVID-19; and it was sanctioned by the President of the Republic despite the multiple positions found between the business sector and the workers.

In this sense, it is imperative to highlight the most important points contemplated by Law 157 of August 3rd, 2020:

  • It exclusively applies to companies that totally and partially closed their operations.
  • These measures are extensive from March 13th, 2020, the date on which the State of Emergency was declared (through Cabinet Resolution No. 11) until December 31st, 2020.
  • It includes workers whose contracts are suspended.
  • The employers may restart their economic activities progressively, in accordance with the provisions of the Special Committee on Health and Hygiene of the competent authorities; which is, the opening of blocks.
  • In the same way, they may gradually reintegrate workers with suspended contracts, but the hiring of new workers, of the same or similar position to the suspended ones, is prohibited.
  • Companies may only hire new workers if they require new positions, with prior written notification to the union organization – or the workers, when there is no union.
  • The suspension of employment contracts lasts until December 31st, 2020, and will be requested in a monthly basis, according to the established procedures; and will require a pronouncement from the Ministry of Labor and Taskforce Development (administrative silence will not apply).
  • The gradual reinstatement of workers cannot be used as a discriminatory measure of any kind to the detriment of workers. If such a discriminatory act is proven, the fine ranges between US$500.00 and US$1,000.00
  • The companies contemplated in this Law may establish working schedules different to those in force before, with a notification of at least 48 hours to the workers.
  • Workers who, due to the suspension of the effects of their employment contracts, do not receive the second payment of the “thirteenth-month”, will be entitled to receive a bonus which amount will be determined by the Executive and paid through the Ministry of Economy and Finance.
  • For mutual-agreement terminations, the employer will deliver the written proposal to the worker so that they can respond within a term of no less than two (2) business days; and in the event that they do not respond, the proposal will be deemed rejected.
  • If the mutual-agreement termination is signed without the expiration of the established term of two business days, the worker may demand the nullity so that his/her reinstatement is ordered, presuming as true the affirmation of the worker that the aforementioned term was not granted.
  • The termination of the employment relationship by mutual consent, dismissal or unilateral decision of the employer within the three months following the reinstatement of the suspended worker, obliges the employer to immediately cancel the total of his/her benefits in a single payment.
  • The calculation of the seniority and compensation premium for workers will be calculated considering the salaries received during the previous six months, or with the last monthly salary, before the emergency declaration.
  • An article is added to the Labor Code (116-A), which establishes that the calculation the maternity leave period will be suspended during the suspension of the effects of the contract, when this is due to force majeure, unforeseeable circumstances or financial incapacity.
  • The remaining time of the maternity leave will be reactivated as soon as the worker is reinstated.

To conclude, it is important to mention that the provisions contemplated in this Law are transitory until December 31st, 2020, except for the addition of Article 116-A to the Labor Code.