Employees’ rights on redundancy in Venezuela

The general rule under the Venezuelan Labor Law is that, no worker can be dismissed without just cause unless she/he is offered an indemnity for dismissal equal to the amount of her/his seniority benefit and she/he accepts it – Job Stability -. However, since 2002, workers are protected with a Special Bar against Dismissal (inamovilidad) which has been extended every year up to December 31, 2014 by Presidential Decree. As long as the Special Bar against Dismissal is in force, employers cannot freely dismiss workers without just cause and previously obtaining authorization from the Labor Inspector Office.

I.          Job Stability

In the event that an employer wishes to dismiss a worker with Job Stability for just cause, it must inform the Substantiation, Mediation and Enforcement Judge (the SME Judge) of its reasons for the dismissal within five working days of its occurrence.

1.     Scope and excluded workers

Workers with Job Stability are those hired: (a) for an undefined term, as of the first month of service; (b) for a defined term, for the duration of the contract; and (c) for a particular task or project, until the completion of all of the tasks for which she/he was specifically hired. Upper-management employees and those hired under an undefined term with less than one month of service are excluded.

2.     Procedure

If a worker does not agree with the alleged cause for dismissal, within 10 working days of its occurrence the worker may apply to the SME Judge for reinstatement and payment of unpaid wages. However, if a worker who considers she/he has been dismissed without just cause is paid her/his seniority payment, plus a severance, that is, an additional amount by way of indemnity equal to her/his seniority benefit, the worker will not be entitled to apply to the SME Judge for reinstatement. Employers have no obligation to give advance notice.

3.     Workers’ economic rights

3.1.   Severance: Upon termination, workers who accept termination of the employment relationship without cause are entitled to receive a severance equal to their seniority benefit.

3.2.   Seniority benefit is calculated and paid in one of two ways, whichever results in the higher payment:

3.2.1.  From the beginning of the employment relationship, the employer must deposit, as a guarantee of the seniority benefit, the equivalent of 15 days’ salary per quarter, calculated based on the employee’s last accrued salary.  Employees may choose whether the seniority benefit, while it accrues, is deposited in a trust fund or whether such payment is credited to their account on the employer’s books.   

3.2.2.  In addition and after the first year of service, the employer must deposit or credit (as explained above) two cumulative days of salary for each year worked beyond the first year of service, up to a maximum of 30 days of salary.

3.2.3.  Upon termination of employment, employees are entitled to receive the funds accrued under (a) and (b) combined.  Alternatively, if the following calculation amounts to a greater sum than (a) and (b) combined, the worker’s seniority benefit is equivalent to 30 days’ salary for each year of service or fraction of a year greater than six months, calculated at the rate of the most recent salary, as of June 1997 or the worker’s starting date.

3.3.   Workers who accept termination of the employment relationship or resign under any circumstances, are also entitled to a number of termination benefits, established in the Labor Law, from their employer. These termination benefits may include, inter alia 

3.3.1.  Seniority benefit and its interests, as explained in 3.1.2;

3.3.2.  Pro rata payment of statutory profit-sharing

3.3.3.  Pro rata payment of vacation bonus, and

3.3.4.  Pro rata payment of vacation. 

II. Special Bar against Dismissal

Workers who are protected by the Special Bar against Dismissal can only be dismissed for just cause and with authorisation from the Labour Inspector through a dismissal qualifying procedure. Except for upper-management employees, casual workers and employees with less than one month’s service, all workers are protected by the Special Bar against Dismissal up to December 31, 2014.

An employer’s failure to obtain authorisation from the Labour Inspector entitles the worker to request reinstatement, unpaid salaries and labour benefits.

In addition, the General Bar against Dismissals also protects employees under the following circumstances: (i) maternity, paternity  and adoption; (ii) workers with a child with disabilities; (iii) workers in case of suspension of their employment relationship; (iv) prevention delegates; (v) workers protected by the Special Bar against Dismissals; (v) workers under trade union protection, such as, organisers for registration of a union,  members of a union’s board of directors, workers during a strike or industrial conflict or negotiation of collective bargaining agreement, among others; for the time established in the Labor Law for each case. In those cases, the employer must follow as well the dismissal qualifying procedure.

Under Venezuelan Labor Law, grounds for dismissal for just cause include dishonesty, violence, serious negligence affecting health and safety and other serious violations.

 

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