Introduction
The Bolivarian Republic of Venezuela, also known as Venezuela, has put in place labor laws to safeguard employees’ rights and govern working conditions.
Venezuela provides numerous incentives and advantages to foreign investors who are keen on investing in the country. These include natural resources, a skilled workforce, foreign investment protection, and government programs like free trade zones and tax breaks.
To further explore the employment law in Venezuela guide, it is essential to delve into topics such as paid leave schemes, statutory payroll benefits, minimum wage compliance, working hour restrictions, overtime compensation, legal requirements for dismissal, and employee privacy regulations.
Who is Covered by the Employment Act?
Venezuela is a member state of the International Labour Organization (ILO), which sets out basic labor standards for its members by accepting conventions and recommendations.
Venezuela has ratified ILO conventions on maternity entitlements, labor union freedoms, freedom of association, payment, and profit-sharing.
The Constitution of the Bolivarian Republic of Venezuela governs the employment and labor code in Venezuela. It outlines the applicable fundamental rights and includes the following:
- The entitlement to work
- Freedom to pursue a career of the employee’s choice
- Entitlement to union membership
- The right of employees to engage in collective bargaining with their employers to negotiate agreements.
The Organic Labor Law for male and female employees (the Labor Law) made significant changes to several relevant matters, including:
- The application of seniority benefits to past periods
- A reduction in the duration of the workday
- An extension of the period in which employees can take legal action
- Identification and prohibition of illegal outsourcing practices
- Strengthening of job security
- Expansion of the list of employees safeguarded against termination
- Augmentation of the number of days of salary awarded for holiday bonuses and profit-sharing
- Prolongation of maternity and paternity leave
- Modifications to the system of penalties
The Venezuelan labor law is currently the primary legislative source of employment regulation in Venezuela. It recognizes the right of all persons to employment.
According to the labor regulations in Venezuela, employment is a right and a duty. It reiterates and emphasizes the constitutional state’s obligation to ensure enough employment opportunities and tasks for all capable people responsible for working to support themselves.
Also, the Venezuela labor law acknowledges that agreements, pacts, and conventions that Venezuela has signed and approved and they take legal status and priority over local legislation when deemed more helpful.
As per the Venezuela employment law, a minimum of 90% of an employer’s workforce, including management, employees, and laborers, must be Venezuelan. Additionally, payment for non-Venezuelan employees can be at most 20% of the payroll.
Foreign employees in Venezuela are entitled to get the mandated labor benefits applicable to Venezuelan employees.
Employment Contract
It’s recommended to have a written employment contract in Venezuela as verbal agreements are assumed to be as alleged by the employee under the law, even though it is not mandatory.
The contract should include the following:
- The job responsibilities and work location, the commencement date of employment, and the type of employment agreement.
- The name of the legal entity, the address of its headquarters, and the name of its representative.
- Employee name, nationality, address, place of residence, marital status, and their Venezuelan Identification number..
- The length of the workday, the distribution of the hours within the day, and the agreed-upon remuneration.
- Collective bargaining agreements (if relevant).
- Contract duration.
- A signed copy of the contract by the employee.
Employers use probationary periods of up to one month may for indefinite-term contracts.
Key Provisions of the Act
The labor code in Venezuela is the foundation for governing employment interactions and contains several essential provisions that both employees and employers must abide by.
Important policies established by Venezuela’s labor code include:
Minimum wage
The minimum wage employers must pay their employees is regulated by legislation. Based on the official currency rate as of March 2023, Venezuela’s minimum monthly wage is VES 130.
Working hours
The Venezuela working hours law lays down restrictions on the hours an employee can work per day and week.
According to the act, an employee’s regular work hours should be at most 8 hours per day or 40 hours per week for the daytime shift, defined as the time between 5 am and 7 pm. Moreover, the workweek must extend up to five days.
Overtime pay
According to the labor regulations in Venezuela, any work beyond the typical workweek is categorized as overtime and governed by the rules outlined in the employment contract.
The amount employers are required to pay their employees for overtime labor is 150% of their usual compensation for each hour worked.
An employee is only allowed to put in 10 overtime hours per week and 100 hours annually. The employee has the right to overtime pay equal to 100% of their usual salary without regard to any penalties.
Compensatory leave
The Venezuela labor law states that an employee who works for at least 4 hours on Sunday or the mandatory weekly rest day is entitled to an extra day’s salary and compensatory rest.
If an employee works less than 4 hours on their mandatory weekly rest day, they have the right to receive compensatory rest as well as an additional payment equal to half a day’s salary.
The employer must provide the compensatory rest the following week after the employee’s Sunday or mandatory rest day.
Sick leave
Venezuela labor laws permit employees to take sick leave for a maximum of 1 year. During the first three days of sick leave, the employer covers the costs, while Social Security takes over from the fourth day onwards. Employees must submit a medical certificate within 48 hours of becoming ill or injured.
Maternity leave
Pregnant employees have the right to be compensated for six weeks of prenatal leave and 20 weeks of postnatal leave. However, compared to other countries, there is no concept of shared paternity leave in Venezuela.
Employees can extend the prenatal leave beyond six weeks for medical complications. Employers will add the unused prenatal week to the postnatal leave period.
Social Security provides payment for maternity leave, and breastfeeding employees are entitled to breaks for breastfeeding. These breaks are compensated for 30 minutes each or 1.5 hours if a lactation room is unavailable.
The maternity leave in Venezuela for foreigners is the same for Venezuelan residents.
Vacation time
For their yearly vacation, employees collect their regular salary, a special bonus of at least 15 days’ worth of regular pay, plus an extra day for each year of service up to 30 days.
The employee’s regular wage earned in the month before the vacation period determines the employee’s vacation payment. Employers must pay before the beginning of the vacation.
Social security contributions
The Venezuela employment rules state that employers must contribute between 9% to 11% to the social security system on behalf of their workers. Social security contributions cover retirement, disability, and healthcare benefits.
Collective bargaining
The labor act rules in Venezuela allow unions to be formed based on joint employer, occupation, industry, or economic sector. Unions must be registered and have a board of directors appointed for up to three years.
Discrimination and harassment
It is prohibited for employers to engage in discrimination against job applicants and employees based on various factors, which may include religion, race, gender, marital status, political beliefs, social class, union affiliation, physical disabilities, and criminal records.
Termination and severance
Employees are protected by either job stability or the bar against dismissal, both of which limit termination. Job stability mandates that employers justify dismissal in court with legal reasons, such as misconduct or harassment.
Only upper-management employees are not covered by this protection. The bar against dismissal requires Labor Inspector authorization and allows dismissed employees to claim reinstatement and back pay.
If termination is not due to employee fault, an indemnity equal to seniority payments is due. Additionally, there is no statutory notice period in Venezuela.
Penalties
In Venezuela, labor regulations have penalties and fines for different workplace violations.
- Employers who fail to pay their employees on time, pay in an unauthorized location, exceed maximum working hours, or harass employees will receive a penalty of at least 30 and up to 60 tax units (UT).
- Employers who pay their employees’ benefits and bonuses, falsely terminate an employee, or disregard a labor ministry directive will be fined 60-120 UT.
- Employers paying less than the minimum wage or delaying salaries and vacation payments will be fined 120-360 UT.
- Violations of maternity and paternity rights, disguising the nature of the workplace to deceive employees, and preventing union freedom or collective bargaining will result in a fine of 120-360 UT.
- Some violations may lead to imprisonment, including employers who refuse to follow a worker’s rehiring order and violate the right to strike or close a workplace without justification (6-15 months of imprisonment).
Compliance Strategies for Employers
Specify your objectives
Identifying your preferred result before developing a useful adherence plan is essential.
Regarding compliance issues, the goal is to decrease or stop the penalty for non-compliance.
The focus could be on improving employees’ grasp of regulations or spending resources to adhere to a specific rule or law that has previously caused problems.
Check the rules and regulations that apply to the business
To ensure compliance, companies must identify all applicable regulations, which can be daunting for small legal teams. Thorough analysis, organization of critical rules, and delegating tracking responsibilities to a lawyer can help companies stay informed and adapt to any changes.
Make clear standards and guidelines
Effective compliance strategies need well-crafted policies and procedures that provide clear rules for employees and departments.
Given that not all employees may be able to comprehend the law or the required compliance measures, it is crucial to seek input from other units to assess how the suggested measures would impact the company and its workforce in practice.
Although the legal department should create policies and procedures, collaboration with other departments ensures their practicality and effectiveness.
Train employees
A successful compliance plan requires the creation of standards and guidelines, as well as an employee training program. Employee training should be designed and matched to each department’s or individual’s needs.
Although it may appear time-consuming, practical training is critical because regulatory non-compliance can impact the firm.
A comprehensive training plan containing hypothetical scenarios and hands-on activities is recommended to ensure staff recall the material. To enhance training effectiveness, avoid rushing through it all at once.
Organize internal audits and keep track of breaches
Routine internal audits are crucial for identifying weaknesses in your compliance strategy before you face penalties. These audits should cover compliance goals, policies, and departmental performance.
You can prevent future violations and penalties by addressing any flaws in your audit, such as inadequate training or ineffective policies. It’s also important to track the details of any past violations to identify patterns and the associated costs.
You can avoid regulatory fines and safeguard your company’s reputation by implementing regular internal audits and using past violation details to fine-tune your compliance strategy.
How Can Multiplier Help?
Partnering with Multiplier can help employers follow all relevant laws and acts in their country. Features such as contract drafting and management, mandatory benefits, and salary payment can help streamline the process and ensure adherence to all legal requirements.
The process can save employers time and money and provide peace of mind knowing they are following all necessary regulations.