Member Article

Article 55 of Supreme Decree No. 21060 of August 29, 1985, established that both private and public entities could freely enter into or terminate labor agreements subject to the General Labor Law and its Regulatory Decree. Also, under article 39 of Supreme Decree No. 22407 of January 11, 1990, the voluntary hiring and termination of employees was established. According to the current government, these regulations did not protect the common worker and also, breached the Protective Principle established by the Political Constitution of the State. Accordingly, the government felt that the existing legislation allowed employment obligations to be avoided, since labour contracts were regarded as civil or of a fixed term, when they should be for an indefinite term so as to guarantee continuity and stability. However, according to the Constitutional Comptroller, regulations foreseen by art. 55 were not unconstitutional. This was expressly stated, based on the fact that labour termination was established within the framework of the General Labour Law, assuming its validity because its regulations adjust to the Constitution. The new enacted Supreme Decrees No. 28699 of May 1st, 2006 and No. 286700 of the same date, identify the essential characteristics of an employer/employee relationship such as exclusive labour dependency, subordination of the employee to the employer, the provision of services on an independent basis and the existence of a compensation or salary in any manner or form. Also, the mentioned norms establish that any individual providing intellectual or material services through a relationship that has the essential characteristics of an employment relationship, is protected by the General Labour Law, therefore entitled to all rights established therein, regardless of the field or activity being performed or of the express form of the contract even under a verbal agreement. Furthermore, the full validity of following principles are ratified: the Protective Principle, the Principle of Labour Continuity, the Interventionist Principle of the State which exercises tuition for the compliance of social rights of employees and employers by means of special and competent entities and courts, the Principle of Reality where the veracity of the facts (in a labour relationship) prevails, and the Principle of Non-Discrimination. Article 5 of SD 28699 establishes that any kind of contract, whether civil or commercial, intending to conceal an employment relationship is null, with the Principle of Reality prevailing over the apparent relationship. In practice, the inclusion of this article eliminates the evasion of social duties and obligations by employers. The seventh article of said Decree, requires that any dismissal be subject only to specific causes established by the General Labor Law and its Regulatory Decree. Also, in the event of dismissal, the employer must pay, within the following fifteen days, the corresponding severance and social benefits plus any consequences that may derive from not complying with timely payments. The last articles of said Decree allow workers to opt between receiving social benefits or being re-hired, when their dismissal was not based on one of the specific causes identified by article 16 of the General Labour Law. To this effect, the employer must justify termination grounds and as a result of this should also amend and present the Internal Labour Regulations of the company along with the labour contracts before the Ministry of Labour and also, register before such public entity each fault committed by the employee that could justify dismissal.