This post was contributed by Valentina Albarrán, Associate, Norton Rose Fulbright Caracas

On Christmas time Venezuelans have become accustomed to certain holiday traditions, receiving presents, spending more money that they have, and for the last years Venezuelans have also grown accustomed to the fact that December is the month for the extension of the Special Bar against Dismissals.

The situation had a bit more expectation last year, a new Organic Labor Law (“OLL”) was sanctioned on May 7, 2012 and it conditioned the termination of the working relationship to the worker’s will. December 2012 came, and people were expectant, the need for a Bar against Dismissals seemed to no longer exist, but in what looked like a populist move on December 27, 2012 the now president, vice president at the time, issued the extension of the Bar against Dismissals in the same terms set by the previous ones.

Since that time of the year has come again, it is the occasion to speculate about the extension of the Bar and, for us, to put our imagination to work and visualize as to what would happen if the Government decides not to extend the Bar.

We want to execute this exercise from 3 aspects: legal, economic and political.

Legal:

The Bar against Dismissals has made any kind of dismissal of an employee, justified or not, illegal, if it is not accompanied by an order of the Labor Inspector allowing the termination. Sadly those requests are rarely granted, and that makes extremely difficult to end a working relationship with and employee even if that employee is performing poorly or not at all; and even if it is the employees will to end it.

With renunciation of the extension of the Bar against Dismissals, the Government would give a step forward to fully implement the OLL, given that, right now, the articles regarding dismissals are not applicable since the Bar is currently in force, and would relax the extreme conditions of employers regarding the dismissing of its employees.

Economic:

Nowadays, the legal costs of worker’s on a Company’s books are greater than ever, due to the increasing labor benefits granted by Law, and the fact that after hiring an employee, dismissing said employee is virtually impossible so the Company will need to go to great lengths to end a working relationship. The elimination of the special Bar against Dismissals may have a domino effect in the creation of new job posts and increase productivity.

Political:

Here we find the batch in the road in our imagining exercise; the Government may find backlash from its followers if it resolves to not extend the Bar against Dismissals because they may feel like their President is leaving them unprotected against the capitalist power which goes against the Government´s political speech.

Sadly, once again the populist choice mattered the most to the Government, and on December 6, 2013 Venezuelans received a new extension of the Bar against Dismissals for Christmas.

 

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