Castellán

Creation of Labor Credit Guarantee Fund and modification of contribution to Labor Reconversion Fund

Law 19,690 established the creation of a \"Guarantee Fund\" administered by the Social Security Bank that aims to satisfy certain labor credits in cases of employer insolvency.

Which workers are covered and what credits are guaranteed? The covered workers will be those in the private sector (subject to certain express exclusions). The guaranteed credits will be those originated by the salaries or wages of the six months prior to the date of payment cessation, leaves, vacation pay, bonuses, dismissal compensations, and the 10% legal fine regarding the previous ones. All up to a maximum amount of IU 105,000 per worker.

For the guarantee to be effective, and the worker to receive payment from the BPS, it is a requirement on one hand the configuration of the employer's insolvency within the framework of the judicial reorganization of the employing company; and on the other hand the lack of payment after verifying their credit within the bankruptcy process, or by having a final judgment obtained through a labor lawsuit.

Finally, it is worth noting that this Fund is financed with a new special contribution created for this purpose, through an employer contribution of 0.025% on the items that constitute taxable matter. On the other hand, the contribution rate to the Labor Reconversion Fund (FRL) has recently been modified starting on January 1, 2019, which is reduced from 0.125% to 0.10% on the items taxed by special social security contributions, compensating in this way the difference caused by the rate increase as a consequence of the new Fund.

Modifications to the Youth Employment regime

On January 1, 2019, Law No. 19,689 came into force. Among other contents, it partially modified Law 19,133 of 2013, known as the \"Youth Employment Law\", whose objective is to promote the work of young people, linking employment with education and vocational training, and for these purposes certain hiring modalities and benefits for employing companies are established, in order to encourage such hirings.

In this sense, although the recent reform maintains the four hiring alternatives (first work experience; work practice for graduates; protected work; and business training practices) some foreseen aspects are modified. Among them, the regime of \"Business Training Practices\", consisting of practices that will be paid 75% of the value of the category and activity that corresponds, with a minimum of a National Minimum Salary, limiting the possibility of agreeing unpaid practices to companies that obtain authorization from the MTSS, after consulting with the INEFOP.

On the other hand, the requirements that the company interested in hiring young people under these modalities must meet are maintained. These are: being in good standing with special social security contributions; not having unilaterally terminated any employment contract, or having made unemployment insurance claims during the ninety days prior to hiring or during the duration of the same, to workers who perform equal or similar tasks or functions to the new hire; that the percentage of people employed through these modalities does not exceed 20% of the permanent staff in the company; etc.; adding the impossibility of hiring young people who are related to the company's owner(s) within the fourth degree of consanguinity and second degree of affinity. In addition, the allowed trial periods are modified, eliminating the 30-day trial period for contracts of less than 6 months, maintaining the trial for contracts between 6 and 11 months, and increasing it to 60 days for contracts of 12 to 18 months, among others.

Likewise, in order to promote the training of young workers, the economic subsidies provided for employers who reduce the working hours of workers who are studying are increased. Companies will receive a subsidy of 80% of the value of each reduced working hour. For these purposes, a maximum of 4 hours of reduced working hours has been established, and a minimum of 4 daily hours of work resulting from the reduced hours. Similarly, those who grant additional study leave (beyond what is legally established or by agreement) will receive a subsidy equivalent to 80% of the salary corresponding to each additional day of leave granted, with a limit of 8 days per year.

New special leaves for private sector workers with dependents with disabilities or terminal illnesses

Published on January 18, 2019, Law 19,729 introduces two new special leaves in addition to those legally established (study leave, marriage, death, paternity, etc.).

The new regulation provides that all private sector workers (regardless of the sector of activity) who have a child with a disability have the right to request up to 10 days of leave per year, with pay to accompany them to medical check-ups or exams. To exercise this right, workers must notify their employers with a minimum of 48 hours in advance, and subsequently provide evidence of the medical exams that gave rise to the request (within the following 48 hours of returning to work).

Similarly, the new law provides for a special leave of 96 hours per year for workers who have other relatives with disabilities or terminal illnesses under their care. The first 64 hours enjoyed in a year under this right must be paid by the employer while the remaining 32 hours can be taken but do not have to be paid.

\"Disability\" is considered for the purposes of the new law, as any person who suffers or presents a permanent or prolonged functional alteration, physical (motor, sensory, organic, visceral) or mental (intellectual and/or psychic) that, in relation to their age and social environment, implies considerable disadvantages for their family, social, educational, or work integration (by reference of Law 19,691 to Law 18,651).

Finally, it is worth noting that these new special leaves are of public order, therefore they are irrevocable by the worker and not compensable with money, with the employer being subject to sanctions by the MTSS in case of non-compliance.

Final reflection

It is essential for companies to be aware of recent changes in the topics covered, in order to implement them and avoid possible claims or sanctions for infractions.

Montevideo, February 18, 2019.