Castellán

Updates in labor matters: getting up to date

During the year 2023, there were significant changes in the labor field of our country, which affected both individual and collective aspects of labor relations as well as administrative and social security issues.

Among the most relevant changes is the modification of our Collective Bargaining System through the approval of Law 20.145; the updating of the competences and powers of the General Labor and Social Security Inspection (IGTSS) in inspection procedures; as well as the approval of the Pension Reform under Law No. 20.130, among other important updates that will impact the world of work.

With the excuse of the new year that is beginning, we propose to review them, including those that may have gone unnoticed:

1. Modification of our Collective Bargaining System

The new regulation introduced significant changes to the Private Sector Collective Bargaining Law, incorporating some of the observations made in 2010 by the International Labour Organization (ILO), based on the complaint timely presented by the Chamber of Industries and the Chamber of Commerce and Services.

Substantially, five modifications were established, some of them with great relevance for collective labor relations (https://bit.ly/3wgffxx). For example, it enables the possibility for workers to negotiate directly with their employer in the company, without the interference of industry branch unions; and eliminates the automatic "ultra-activity" of agreements. Now, the duration or term of future agreements becomes a matter solely within the parties' competence. If a validity period is agreed upon, the agreement will expire at the end of this period, unless the parties expressly agree otherwise. In addition, legal personality is required for the exchange of information during negotiations.

2. Inspection procedure of the IGTSS - MTSS

As of March 1, 2023, administrative procedures initiated before the IGTSS are governed by a specific and faster new procedure (Decree 371/022).

Among the introduced changes, new powers granted to labor inspectors during inspection visits stand out, the regulation of the role of union delegates during the same, and the presentation of labor documentation demanded from companies, electronically. Additionally, the decree defines an inspection and procedural approach for cases of labor and sexual harassment and includes the protection of workers' unspecified personality rights (art. 7 of the Constitution).

Finally, it is worth mentioning as a novelty regarding the sanctions provided for in case of non-compliance with labor standards, that for those infractions classified as "minor," a 30% reduction in fines imposed is established if they are paid within 10 days following notification.

3. Social Security Reform and compatibility between employment and retirement

Law No. 20.130 known as the "Social Security Reform Law," establishes the creation of a new Common Pension System that is already in force and will be gradually implemented through an integration process with existing retirement and pension schemes.

The law maintains the structure of a mixed pension system (composed of contributions for intergenerational solidarity and private individual savings managed by AFAPS), as well as the percentages of pension contributions. However, one of the most important changes is undoubtedly the gradual increase in the retirement age for people born after 1973.

From the business perspective, one of the most relevant aspects of the regulation also focuses on the compatibility between retirement and paid work, allowing older people to continue working, either as dependent or independent employees, full-time or part-time, without affecting their right to receive retirement benefits (Decree No. 231/023).

4. Paid hours for pregnancy check-ups

Through Law No. 20.129, it was established that pregnant workers in both the public and private sectors have the right to be absent for up to four paid hours per month to attend prenatal check-ups.

Subsequently, with effect from January 1, 2024, an extension of this benefit was approved for spouses, partners, or companions of pregnant women, so they can accompany them during check-ups.

These workers now also enjoy four free monthly hours, which must be counted as working time and cannot be deducted from their salary. As a requirement to use the benefit, in both cases, it is necessary to notify the employer at least two days in advance and present a certificate issued by the doctor. The regulation also contemplates the possibility of extending the hours of absence, in case of medical justification.

5. Adjustment to the telework regime in Free Zones

Law of Accountability No. 20.212 (corresponding to the 2022 exercise) incorporated two adjustments in the remote work regime in Free Zones, which came into effect on January 1, 2024.

Through a modification to article 14 of the Free Zones Law No. 15.921, the Executive Branch was granted the power to establish the conditions and limitations for telework. Factors to consider include: the distance between the worker's home and their usual workplace, the number of employees depending on the Free Zone user, the importance of the associated investment, etc.

It is also stipulated that telework cannot be subject to a minimum number of dependent employees by the Free Zone user. This is surely the most important point for companies and implies a future modification to Decree No. 319/022, which indirectly determines a minimum number of employees on the payroll for the use of this modality to be viable.

6. Amendment to Employment Promotion rules

The Accountability Law No. 20.212 also introduced modifications to the provisions of the Employment Promotion Law No. 19.973, particularly regarding youth employment.

The "I Study and Work" Program of the public sector was extended to the private sector, aimed at young people aged 16 to 20 in formal or non-formal education seeking to acquire their first work experience. Companies participating in the program receive a monthly state subsidy for each hired worker, and if they decide to keep the employee on their payroll after the initial hiring period, they access exemptions in employer contributions until the worker reaches 25 years.

Additionally, Law 20.075 modified the "Training Practices in Companies" regime, establishing that minimum wages in the sector must be respected in all hiring modalities (since it allowed hiring for 75% of the category's award).

Despite these changes, the subsidies granted by MTSS to companies to encourage compliance with the regulations and their hiring modalities remain in force.

7. Occupational risk prevention plan - companies with 5 to 50 workers

In 2023, Decree No. 52/023 was approved, which eliminated the obligation to implement Occupational Health and Safety Services (SPST) for companies with between 5 and 50 employees (except in cases where risks requiring special protection for workers are identified and in which the IGTSS may require the implementation of the service).

As a counterpart to this "exemption," the obligation to prepare an Occupational Risk Prevention Plan was established, carried out by an authorized technician (e.g. Prevention Technician). This plan must be updated at least every 6 months, or when there are changes in working conditions, production processes, etc. It must have a clear identification of hazards, risk assessment, proposed corrective measures, compliance schedule, etc.

The display of the plan is required during inspections by the agency or when companies are required to submit it. It is expected that in the coming months, the agency will begin monitoring compliance with this regulation.

8. Tips via electronic means

Law No. 20.243, approved in December 2023, establishes the right of every employee who performs functions in which it is customary to receive tips, to have these transferred through digital payment systems.

For these purposes, the employer will be obliged to facilitate that customers have the option to add tips to the total amount of the transaction, using the same electronic payment method used to purchase the service or product.

The above is, without prejudice to clarifying that the possibility of receiving tips in cash persists, regardless of the payment method chosen by the customer to pay for the product or service. Similarly, financial institutions in the payment system must take the necessary measures to ensure the correct application of the rule, with the charging of commissions, surcharges, or discounts on funds from this concept being prohibited.

Finally, it is important to note that the regulation establishes that the employer cannot dispose of the tips or determine how they are distributed among the staff, leaving this definition exclusively in the hands of the workers.

9. New criteria for salary adjustments in foreign currency

In November 2023, the Ministry of Labor and Social Security established a new criterion for applying adjustments to salaries agreed in foreign currency. This will be applied whenever there is no different solution by Wage Councils.

The new procedure (which replaces the criterion determined in 2009) implies making a comparison, converting the salary in foreign currency to Uruguayan pesos and applying the increase according to the percentage set by Wage Councils of the sector of activity.

The main difference is that now the evolution of the average exchange rate of the months in which the adjustments are made must be considered. After the comparison, if the percentage variation of the salary is less than the adjustment provided by Wage Councils, a complementary percentage adjustment must be applied, until it matches the percentage of the adjustments of salaries agreed in pesos.

Dr. Mariana Casella and Dr. Macarena López.

Montevideo, February 20, 2024.