In order to change the economic conditions, can the salary be lowered and not the working hours?
Yes, the salary can be reduced without changing the working hour. Article 16 of the Ley de Apoyo Humanitario (Law on Humanitarian Support) makes it possible to reach agreements between employers and workers; however, it considers that no one may earn less than the basic salary.
What is the emergency contract? Can existing contracts be changed to that new modality?
This modality is for new hires. It will last one year, with the option of extending it for another year. Current indefinite contracts cannot be changed into this modality. In the emergency contract, work hours will be at least 20 hours a week and a maximum of 40 hours, executable in up to 6 days. The salary will be paid according to the hours worked.
Is the emergency contract only for new companies or for those who are in danger of closing?
It’s for new or existing companies. It will apply in case of increased demand for the production of goods or services, due to changes in the business line, for the sustainability of production and sources of income in emergency situations, new investments, business lines, products or services, extensions.
Do the agreements established in the Ley de Apoyo Humanitario (Law on Humanitarian Support) last the same amount of time as the emergency contract or the reduction of work hours?
While the emergency contract and the reduction of work hours are valid for one year, with the option to renew for another year, agreements to change economic conditions do not have a specific duration. The employer and worker shall define in the agreement the period for the application of the new conditions.
How should agreements be negotiated? What happens if most employees accept, and few do not?
The agreement will be directly between each worker and the employer. The employer must provide support of the company’s financial statement. If there is a company committee, the negotiation should be between the group representative and the employer. If most employees accept the conditions negotiated, the agreement will be mandatory for everyone.
Can work hours and wages be reduced to those who now earn the basic salary or the sectoral minimum wage?
It is possible to do so in accordance with article 20 of the Ley de Apoyo Humanitario (Law on Humanitarian Support), which provides for reduction of wages and work hours. In this part, the law empowers the employer to reduce work hours unilaterally, without the need of reaching agreement with the worker, when there are duly justified force majeure or accidental events. The employer may reduce the hours of just part of the staff, and not necessarily everyone. The salary paid to the worker shall be proportional to the hours worked.
What is the maximum hour reduction that can be made? How much can the salary go down?
According to article 20 of the Ley de Apoyo Humanitario (Law on Humanitarian Support), the employer may reduce work hours to a maximum of 50%. For example, the normal 8 hours a day may be reduced by up to 4. The worker shall earn a salary according to the real hours worked but shall not be less than 55 per cent of the remuneration received before the reduction.
How will the IESS contribution, additional payments and reserve funds be calculated with the work hours decrease?
Whether economic conditions are adjusted, or the work hours are decreased, IESS contributions, the thirteenth and fourteenth salaries and reserve funds must be calculated according to the salary received in each case.
How does the Ley de Apoyo Humanitario (Law on Humanitarian Support) interpret paragraph 6 of article 169 of the Labor Code?
This interpretation deals with dismissals due to unforeseen events or force majeure. The interpretation states that this will be valid in case there’s a total interruption of the employer’s economic activity. This applies to the dismissals that occurred before the Ley de Apoyo Humanitario (Law on Humanitarian Support) entered into force.
What happens if a worker is fired while an agreement is in force, how is he/she compensated?
If an agreement has already been reached and dismissal occurs within the first year of the Humanitarian Law, the compensation shall be calculated on the basis of the last remuneration received by the worker prior to the agreement.
The law increases compensation when there is unjustified use of force majeure. Is this retroactive?
The Ley de Apoyo Humanitario (Law on Humanitarian Support) states that, due to misuse of force majeure, that is, when a company says it has stopped its activities but continues to operate, it must pay the amount for untimely dismissal compensation, multiplied by 1.5. The measure applies to claims filed after the Law entered into force.
Can the employer arrange at his convenience the employee's vacation for the following two years?
The norm allows this to happen. With this, at any time the employer may tell his/her workers that, for example, during this year (2021) they have to take the vacation time corresponding to them for the next the next two years. The employer can even discount the days the worker has been absent, for any reason.