I INTRODUCTION

Employment and labour relationships in Venezuela are governed by the Constitution of the Bolivarian Republic of Venezuela (the Constitution),2 which establishes the fundamental rights applicable. These rights include the following:

  1. the right to work;
  2. the freedom to work in a job chosen by the employee;
  3. the right to be part of an union; and
  4. the right of employees to negotiate collective bargaining agreements (CBAs) with their employers.

These rights are encompassed in the Organic Labour Law for Male and Female Workers (the Labour Law),3 which introduced important changes on relevant matters such as the following:

  1. retroactivity of seniority benefit;
  2. reduction of the workday;
  3. extension of the statute of limitations period;
  4. determination of illegal outsourcing and its prohibition;
  5. reinforcement of job stability;
  6. extension of the list of workers protected against dismissal;
  7. increase in the days of salary granted as a holiday bonus and profit sharing;
  8. extension of maternity and paternity leave; and
  9. changes to the penalty system.

The Labour Law is currently the main legislative source of employment regulation in Venezuela. It expressly recognises the right of all persons to employment.4 The freedom of each person to pursue their preferred activity is guaranteed, as long as the activity is not otherwise prohibited by law. It is prohibited to impede the work of others or compel them to work against their will.5

Under the Labour Law, employment is not only a right but also a duty. All capable persons are charged with a duty to work in order to maintain themselves,6 and the Law reiterates and explains the constitutional duty of the state to maintain high levels of employment.7

Moreover, the Labour Law recognises that treaties, pacts and conventions, including but not limited to those related to human rights, executed and ratified by Venezuela, have a constitutional rank, and prevail over local legislation if considered more favourable. Venezuela is a member of the International Labour Organization (ILO).8 The ILO establishes minimum labour standards for its members through the adoption of conventions and recommendations. Venezuela has adopted ILO conventions regarding maternity rights, union rights, free association rights, wages and profit-sharing.

The judicial branch is governed by the Supreme Tribunal of Justice (STJ) and other lower courts. There are two types of first instance courts, each with one judge: the courts of substantiation, mediation and enforcement; and the trial courts. Matters may be appealed to the courts of appeal, which may have one or three judges.9 Cassation (certiorari) of the latter decisions are pleaded before the Social Cassation Chamber (SCC) of the STJ, which is the final court of appeal. The STJ also functions as a constitutional tribunal through its Constitutional Chamber, which has the power to declare null and void any laws, regulations or other acts of the executive or legislative branch that conflict with the Constitution.

Labour proceedings must be uniform, brief, oral, free, public and contended. Judges should adjudicate with immediacy, personally presiding over the most important phases of the trial. Generally speaking, the labour trial procedure is comprised of the following phases: the filing of the claim, the preliminary hearing where evidence is to be presented, the trial hearing where evidence is substantiated, the trial court decision, the appeal, the hearing of the appeal, and the appellate decision.

At present, there are two types of procedure in Venezuela for labour claims, depending on the worker's labour stability. Labour stability encompasses the worker's right to request reinstatement if he or she is unjustifiably dismissed. There are two types of stability: relative stability, which is generally known as job stability; and absolute and clear stability, known as a bar against dismissals. Claims related to the former are heard before the labour courts, while claims related to the latter are heard before the labour inspector office. Workers with clear and absolute stability must make their claims through an administrative procedure defined under the Labour Law. These workers are protected against unfair dismissal for union activities, prevention delegates' activities,10 maternity or situations where the labour relationship is temporarily suspended (e.g., sick leave, military service, permission to study). Workers who do not enjoy clear and absolute stability must make their claims using a judicial procedure that has been set out in the Organic Law on Labour Courts and Procedure.11

The main administrative entities are the labour inspector offices, which are responsible for inspection and enforcement of compliance with the labour legislation; the Social Security Institute, which handles security and pension matters; and the National Institute for Prevention, Conditions and Health and Safety at the Workplace, which focuses on the regulation of health and safety conditions. These agencies, among others, are under the supervision of the Ministry of the People's Power of Labour and Employment (the Ministry of Labour).

II YEAR IN REVIEW

As a result of exacerbated hyperinflation and devaluation of the local currency (bolivar), the minimum wage and the food benefit were reviewed and increased by the President almost on a bimonthly basis in 2018. The effects of the economic downturn have had a significant impact on the employment and labour environment, resulting in restructuring, downsizing, closures and employee cost reductions. Unfortunately, there are no official unemployment rates or statistics in Venezuela.

However, employers have been making important efforts to retain key personnel and talent by granting payments in foreign currencies, and providing a diversity of compensation alternatives to support employment and business, for example, payment of retention bonuses, granting of a contractual seniority benefit and nutrition benefit, and payment of education and insurance for the employee and his or her family.

III SIGNIFICANT CASES

i Decision No. 756 of the SCC (17 October 2018) in the case A Irani v. Sherkate

This case concerned payment of labour benefits in a foreign currency, taking into account the exchange rate of the date of payment. The plaintiff stated that the payment of labour benefits was established in foreign currency (Brazilian real) by the parties and pursuant to Venezuelan legislation, payment should be ordered at the exchange rate of the time of actual payment.

During the past 20 years of case law, when there has been a case in which the plaintiff received her or his remuneration in foreign currency, the STJ has ordered payment in bolivars at the historic exchange rate at the time the specific labour benefit would actually have to be paid to the worker.

In this case, the STJ ordered payment of labour benefits and seniority benefit in bolivars at the exchange rate in force at the time of actual payment, as requested by the plaintiff, because Article 128 of the Law of the Central Bank of Venezuela states that payments established in a foreign currency can be completed by granting the equivalent amount in bolivars calculated at the exchange rate at the time of payment.

ii Decision No. 658 of the SCC (18 October 2018) in the case Alimentación Balanceada Alibal CA

This case concerned the reinstatement procedure and evidentiary stage. The SCC ordered all the labour inspector offices in the country to guarantee due procedure when enforcing reinstatement orders and payment of unpaid salaries pursuant to Article 425 of the Labour Law. Officers must obey the constitutional warranties of the right to defence and due process, and the minutes recorded during the reinstatement decision must establish all the arguments for defence, and be signed by the parties and the officer. The labour inspector offices must also only open the evidentiary stage when it is useful and necessary to understand (and potentially solve) the case, and not just when the employment relationship cannot be evidenced.

iii Decision No. 787 of the SCC (29 October 2018) in the case G López and others v. Purina

This case concerned clauses of CBAs regulating the granting and sale of the employer's products to the workers. The plaintiffs argued that the employer had not complied with Clause 39 of the CBA, which required it to sell 50 bags of pet food to each worker employed since January 2014, and had therefore discriminated them.

The defendant argued that it had been fulfilling its obligation considering that it has to comply with rules on specific portion sizes; the price of the sale must be distributor price; the amount of product cannot be accumulated monthly; and the worker cannot resell the product.

The company had the workers registered with the Integral System of Food Processing Control (the System), although the System does not issue a mobilisation product guide for each worker. The System registers the workers, but it does not approve the granting of the product.

The STJ ruled that the employer was compliant with the CBA, and could not issue the mobilisation guide, which has to be issued by the System, otherwise the employer would be subject to sanctions by the government.

The STJ requested that the government review the contractual clauses in CBAs regarding sale of products to the workers, the purpose of which is to resell the product, in order to protect national security and sovereignty.

iv Decision No. 1,112 of the Administrative-Political Chamber of the STJ (1 November 2018) in the case M Matos v. INIA

This case concerned the payment of moral damages in petros (a cryptocurrency launched by the government). The plaintiff requested payment of moral damages for suffering from an occupational disease resulting from a toxic chemical leak at the workplace (which had been certified by the National Institute of Prevention Condition and Safety and Health at the Work Place).

Pursuant to Article 1,196 of the Civil Code, a judge can order a monetary remedy for a victim without having to take into account the plaintiff's suggested amount.

The STJ, in order to promote the petro and protect the value of the remedy, ordered payment for moral damages in 266 petros, which have to be paid in bolivars at the value of the petro at the time of actual payment.

IV BASICS OF ENTERING AN EMPLOYMENT RELATIONSHIP

i Employment relationship

The Labour Law does not provide the obligation to enter into written employment agreements. However, it states that employment agreements shall be 'preferably made in writing', without prejudice of evidencing an employment relationship if the contract is verbal.

When the employment relationship has been evidenced and there is no written contract, all the statements made by the employee regarding the contents thereof are presumed to be true, unless evidence is produced to the contrary.

Where an employment agreement is in writing, it must contain the following:

  1. full name, identity card, nationality, age, marital status, domicile and address of the parties;
  2. regarding legal entities, the registration data, address and identification of the individual that represents the company;
  3. work position or title, with a description of the services to be rendered, determined as precisely as possible;
  4. starting date of the employment relationship;
  5. express indication of whether the contract is for an indefinite term, for a fixed term or for specific work;
  6. indication of the term, regarding contracts for fixed terms;
  7. work or tasks to be performed, regarding contracts for specific work;
  8. length of the workday;
  9. salary stipulated or the manner for calculating it, and the form and place of payment, as well as the other benefits to be received;
  10. the place where the services are to be rendered;
  11. reference to any applicable CBAs;
  12. place of execution of the work contract;
  13. any other lawful stipulations agreed among the parties; and
  14. other specifications set forth in the Regulations to the repealed Organic Labour Law.12

If there is a written work contract, the employer must record the date and time it delivered a copy to the employee, and obtain acknowledgment of receipt duly signed by the employee in a book kept for this purpose.

The general rule under the Labour Law is that employment agreements must be of an undefined or open-ended term. Fixed-term employment agreements are the exception and are only deemed valid if they are executed based on the strict grounds set forth in the Labour Law. It is only possible to execute employment agreements for a fixed term when it is required by the nature of the service; when it is required provisionally and legally to substitute one employee for another; when it is required for Venezuelan workers rendering services abroad; and whenever the employee has not finished the task for which he or she was hired and the services are still needed. Therefore, fixed-term employment agreements must establish the specific cause for entering into the agreement.

The Labour Law limits the term of a fixed-term employment agreement to one year and states that it will be deemed an undefined term employment agreement when two or more extensions are executed within three months of its expiration, unless there are special reasons that justify the extensions, excluding the intent of continuing the labour relationship.13 A special reason is defined as the continuation of the circumstance that justified the original fixed-term agreement.14

The Labour Law also allows for the execution of employment agreements that relate to specific types of work, usually used within the construction industry.

ii Probationary periods

There is no specific regulation of a probationary period. However, pursuant to the Labour Law, a worker's job stability is established after one month of service. Therefore, the first 30 days of the employment relationship are deemed as a probation period. During that time, either party may terminate the employment relationship. The STJ has held that probation periods cannot be included in fixed-term employment agreements.

iii Establishing a presence

Venezuelan labour legislation is based on public policy and the general rule is that it applies to employment services rendered in the territory of Venezuela (territoriality of law doctrine), regardless of the employees' nationality.15 This statute also applies to those services rendered outside Venezuela under a contract entered into in Venezuela.16 Additionally, in the event of rendering services in Venezuela, employees have the right to receive all the statutory labour benefits established in the Labour Law.

In principle, foreign companies can hire employees to render their services in Venezuela without being officially registered to carry on business in the country. However, it is mandatory for any employer, regardless of its nationality, to register its employees with the Social Security Institute and other labour agencies.17 Therefore, in practice, employers must be domiciled in Venezuela and establish either a branch or a subsidiary in Venezuela, and then register this entity with the relevant labour authorities in order to register their employees, and withhold and pay the relevant tax payroll contributions and special contributions to the proper authorities. Registration allows the company to obtain a labour identification number and a tax identification number.

Once the registration is complete, the branch or subsidiary is entitled to hire employees, who must be registered in full compliance with Venezuelan labour, social security and tax regulations. Pursuant to Venezuelan social security laws, both employers and employees have certain obligations to make social security contributions.

The employer will also be required to withhold amounts of income tax payable by the employee. Withholdings and contributions are amounts calculated as a percentage of the employee's salary, which must be paid to the relevant agency.

Contribution Employer's rate Employee's rate Cap on minimum wage* Salary basis
Social security (health and pension) 9% to 11% 4% 5 x minimum monthly wage Normal salary
Unemployment insurance 2% 0.5% 10 x minimum monthly wage Normal salary
Housing policy 2% 1% None Broad salary
National Institute of Training and Socialist Education (INCES) 2% 0.5% None Employer:
normal salary
Employee:
profit sharing
* As of 1 December 2018, the minimum wage is 1,800 bolivars.

Moreover, foreign companies may maintain relationships with different providers of services, consultants or independent contractors. However, the Labour Law provides that an employment relationship will be presumed to exist between whoever renders a personal service and whoever receives it. Labour courts have sustained that some relationships arising from services agreements are of a labour nature, rather than of a commercial or any other nature. The courts have relied on three principles: (1) non-waivability of the provisions of labour legislation as they are considered public policy; (2) presumption of the existence of a labour relationship; and (3) prevalence of substance over form.

In addition, the Labour Law prohibits outsourcing, which is understood to be simulation or fraud committed by employers in order to distort, ignore or obstruct the application of the labour legislation.18 The contracting of personnel through third parties should not be deemed outsourcing, however, as long as the contracting has not been made with the intention of simulating or defrauding the labour legislation. On the other hand, the concept of a contractor (defined as an entity that acts on its own behalf and executes work and services with its own elements, even though the work or services are rendered for the benefit of another company) is an institution legally established pursuant to the Labour Law.19

Moreover, foreign employers who hire employees rendering services in Venezuela could fall under the permanent establishment (PE) concept for tax purposes, which means that the activities performed by the hired employee or independent contractor in Venezuela could be deemed to be part of a PE of the foreign company. Under the basic principles of the Income Tax Law (the Tax Law),20 foreign entities are subject to Venezuelan income tax with respect to Venezuelan-sourced income regardless of whether the foreign entity has a PE in Venezuela.

The Tax Law provides that a taxpayer carries on business operations in Venezuela through a PE when:

  1. either directly or through an agent, employee or representative, the taxpayer has in Venezuelan territory: any location or fixed place of business, or any centre of activity, where it fully or partially carries on its activity; a seat of management, branch, office, factory, workshop, facility, warehouse, store or other establishment; or construction, installation or assembly projects, lasting for more than six months; or agencies or representatives authorised to contract on its behalf;
  2. the taxpayer performs activities in Venezuela related to mining or hydrocarbon exploration, or agrarian, agricultural, forestry or livestock exploitation, or any other extraction of natural resources; performs professional or artistic activities; or owns other places of work where it wholly or partially carries out its activities, whether by itself or through its employees, agents, representatives or other personnel hired for such purposes;
  3. the taxpayer's facilities are exploited permanently by an entrepreneur or professional, as well as centres for the purchase of goods or services and those immovable goods used under a lease or other title; or
  4. the taxpayer establishes a fixed base in the country through which individuals who are foreign residents render independent professional services.21

Pursuant to the Tax Law, income paid in consideration for services that are executed, used or benefited from in Venezuela is regarded as Venezuelan-sourced income.

V RESTRICTIVE COVENANTS

During the employment relationship, employees must abstain from any negotiation on their own or on behalf of third parties, that may damage the interests of the employer, unless the employer has expressly or tacitly authorised it.

Regulations to the Labour Law state that an employer may restrict an employee's post-employment competition for up to six months,22 provided that:

  1. it is for justified reasons, based on the employee's relationship with customers, whether he or she is an upper-management employee, his or her knowledge of industrial or commercial secrets of the employer, and any other circumstance of a similar nature;
  2. there is a written agreement at the beginning of the employment relationship that warrants the unfair competition; and
  3. there is an agreement to compensate the employee for the duration of the prohibition.23

Among other requirements, the Regulations establish that a restrictive covenant must be agreed to at the beginning of the employment relationship.24

In practice, employers usually include non-compete clauses in the settlement agreements of key employees at the end of the employment relationship, provided that the labour authorities have not denied the execution of the documents based on this type of clause.

VI WAGES

i Working time

The ordinary work period may not exceed five days a week. Consequently, workers are entitled to two continuous paid days of rest per week, except in the case of continuous work schedules.25

The duration of the work period is 40 daytime hours per week, and in the event of a mixed day, which includes at least four hours of night shift, the period is shortened to 37.5 hours per week. The weekly limit of night time is 35 hours. Any extension of the night shift in daytime hours shall be deemed as night-time hours.26

In addition, the Labour Law provides that the following will not be subject to the limits established for daily and weekly hours: upper-management employees; inspection or surveillance workers, carrying out tasks that do not require a continuous effort; workers who perform work that merely requires their presence, or discontinuous or intermittent work requiring long periods of inaction; and schedules set by CBAs between employers and workers.27

In the aforementioned cases, the following rules shall apply: the working day must not exceed 11 hours; the total number of hours worked in eight weeks must not exceed, on average, 40 hours per week; and the worker must enjoy two consecutive paid days of rest every week.28

In addition, work schedule limits may be exceeded where the continuous work takes place in shifts, provided that: on average, the limit of 42 hours per week is not exceeded over eight weeks; and for a six-day working week, the worker is granted an additional day of holiday in that year, with payment of salary but without having an impact on the holiday bonus.29

Rest periods taken during the workday cannot exceed one hour, and employees are prohibited from working for more than five continuous hours.30 The workers' right to leave the place where their services are provided during the rest and meal periods is established. If workers cannot leave because their presence is required on the job site to attend orders from the employer, in the event of emergencies, or because they work rotating shifts, the length of rest and meal times may not be less than half an hour and will be imputed as effective service time.31

ii Overtime

The daily workday is limited to 10 hours, including overtime. No employee can work more than 10 hours of overtime weekly, or more than 100 hours in a year. In unforeseeable and urgent circumstances, overtime may be worked without the permission of the labour inspector office, provided that a notice explaining the reasons for the overtime hours is given to the labour inspector during the following working days.32

Overtime work must be compensated with a 50 per cent surcharge on the employee's salary.33

If the employer does not seek permission from the labour inspector office for overtime, the overtime work must be compensated with a 100 per cent surcharge on the employee's salary, without prejudice to penalties that may apply.34

VII FOREIGN WORKERS

In order to legally render services as an employee in Venezuela, a foreign citizen must obtain a non-resident work visa (TR-L). The TR-L is a temporary visa based on an employment agreement for non-Venezuelans who are employed directly by a company domiciled in Venezuela. The visa will be granted for up to one year or for the duration of the employment agreement if less than one year. This visa may be extended. Only companies domiciled in Venezuela can request a TR-L.

Before requesting the TR-L, a work permit must be requested from the Ministry of Labour by a Venezuelan-based company.

According to the Labour Law, at least 90 per cent of the workers (including management staff, employees and labourers) at the service of an employer must be Venezuelan. Further, the compensation of foreign workers cannot exceed 20 per cent of the total payroll compensation.35

As previously stated, foreign employees who render their services within Venezuela have the right to receive statutory Venezuelan labour benefits.

VIII GLOBAL POLICIES

Internal discipline rules are not required by the Labour Law. However, they can be, and usually are, approved by employers, indicating that any breach of the obligations set forth in the internal policies are deemed a serious violation of the obligations imposed by the labour relationship, which is a justified cause for dismissal under the Labour Law.

There are no specific formalities for the internal policies to be mandatory for the employees, except that they have to be in Spanish. The employer must be able to prove that employees were informed of the obligations set forth in the internal policies for the latter to prevail.

IX TRANSLATION

The Constitution clearly provides that Spanish is Venezuela's official language. In addition, the Labour Law establishes that the official language in Venezuela is Spanish, and when, by reasons of technology, it is necessary to use a different language, it must also include a Spanish translation.36

Therefore, policies, agreements and instructions not only have to appear in Spanish for employees rendering services in Venezuela, but the Spanish version of the documents will prevail in the event of a conflict involving a Venezuelan employee in Venezuela. Hence, at least with regard to Venezuelan and Spanish-speaking employees, documents must be distributed in Spanish.

X EMPLOYEE REPRESENTATION

Labour unions37 are organised in the following ways, based on a common employer, occupation, industry or economic sector:

  1. Company unions are composed of the workers of a single enterprise, including operations located in different towns and regions.38 Twenty or more workers are required to form a company union.39
  2. Trade unions are composed of workers in the same profession or trade, or who have similar or related professions or skills, regardless of whether they are employed by one or several companies.40 Forty or more workers are required to form a trade union.41
  3. Industrial unions are composed of workers who are employed by several employers in the same industrial field, even though they work in different professions or trades.42 Forty or more workers are required to form an industrial union.43
  4. Sectoral unions are composed of the workers of several employers in the same commercial, agricultural, production or service branch, even though their professions and trades differ.44 Forty or more workers are required to form a sectoral union.45

Unions also may be organised by independent workers, that is, workers who are not bound to any employer by an individual employment agreement or relationship. Formation of these unions requires 40 or more workers.46

Labour unions may be local, state, regional or national in their geographic scope.47 If they are regional or national, 150 or more workers are required to form the union.48

Once a union has been registered before the labour inspector office, it gains legal recognition.

The board of directors must be appointed in accordance with the procedure set forth in the union's by-laws.49 The board performs its duties for the period of time set forth in the by-laws, which cannot exceed three years.50

In order to negotiate a CBA or request bargaining on the application of better working conditions or the elimination of certain working measures adopted by the employer, the union must file a collective claim with the labour inspector.

Where workers are not represented by a labour union, a group of workers could attempt to negotiate collectively by delivering a proposed collective agreement to the labour inspector office of the corresponding jurisdiction.51

Members of a union's board of directors are protected against dismissal from the date on which they are elected until three months after their term ends.52 This prohibition is limited to protecting directors in the following proportions:

  1. up to seven directors when the company employs fewer than 150 workers;
  2. up to nine directors when the company employs between 150 and 1,000 workers; and
  3. up to 12 directors when the company employs more than 1,000 workers.

When a national union has local branches corresponding to the states of Venezuela, up to five members of the local branch's board of directors in each state can benefit from the prohibition against dismissal, from the date of their election until three months after the expiration of their term.53

The Labour Law contains provisions concerning the representation of workers in company management (co-management) in the form of councils of workers. The Constitutional Law of the Productive Councils of Female and Male Workers (the Workers' Councils Act)54 regulates the establishment, organisation and functioning of the productive councils of female and male workers (workers' councils), to promote the central role of the working class and other expressions of popular power in managing the productive activity and distribution of goods and services in public, private, mixed and communal work entities, in order to guarantee the productive development of the nation.

The purpose of the Workers' Councils Act is to:

  1. guarantee timely access to goods and services, especially food, medicines, personal hygiene items, and all necessary input and services linked or related to the productive processes in general, for the people;
  2. contribute to the construction of the socialist economic model, of the system of production, supply, marketing and distribution of goods and services to satisfy the needs of the people;
  3. protect and safeguard productive activities from public, private, mixed and communal work entities, to guarantee timely access to goods and services; and
  4. strengthen the central role of the working class by promoting its participation in economic activity.55

Each entity must have at least one workers' council. The workers' councils will be made up of three, five or seven elected workers, of which at least one must be a woman, one must be aged between 15 and 35 years, and one who is a member of the militia. One person can fulfil these three criteria.56 The elected members of the workers' council shall enjoy a bar against dismissal57 from the moment of their election, up to six months after the expiration of their two-year term, and they may be re-elected.58

Workers' councils and trade unions, as expressions of the organised working class, develop initiatives to support, coordinate, complement and express solidarity with the social labour process, with the aim of strengthening their awareness and unity. Workers' councils will have powers of their own, different from those of trade unions, and will be ruled by special laws to be enacted.59

XI DATA PROTECTION

i Requirements for registration

There is no data protection agency or similar body in Venezuela. In fact, there is scarce regulation on data privacy in the country.

Venezuelan law is unclear as to what constitutes private life or privacy. There is the right to private life and privacy stated in the Constitution, which affords every person the right to protect his or her own private life from others.60

The Constitution protects personal information through habeas data61 in the following ways: every person has the right to access information and data on personal matters or those regarding personal goods, located on public or private registries, notwithstanding the exceptions set forth by law; every person has the right to be informed of the purpose for data collection and use; and every person has the right to request the competent courts to update, rectify or destroy the data, if they are erroneous or could affect in an illegitimate manner the person's rights.

A decision of 14 March 200162 of the Constitutional Chamber of the STJ stated that the guarantee of habeas data established in the Constitution is not applicable to employment files; unreliable information obtained from another person; or notes in diaries, or domestic or commercial documents. However, some local labour commentators disagree with this statement.

Although it is advisable, it is not legally required to obtain consent from employees to collect and share their data in Venezuela, unless such data relates to the worker's medical records. The Law on Prevention, Conditions, and Health and Safety at the Workplace63 establishes the employer's obligation to keep employees' health information confidential, and restricted to medical personnel and the corresponding health authorities, except when employees give their authorisation.64 In fact, it establishes serious sanctions for breach of confidentiality or privacy of the employees' health information, in the form of a fine of between 76 and 100 tax units,65 or shutdown of the entity for up to 48 hours.66 Therefore, data or information regarding an employee's medical records should not be shared with third parties unless the employee gives consent.

ii Cross-border data transfers

Owing to the fact that there is scarce regulation on data protection in Venezuela, in principle and except for cases where the workers' medical records are involved, employers do not have to request the workers' consent to transfer their data or register the transfer with a data protection authority. In fact, there is no data protection agency in Venezuela.

Based on constitutional principles, however, it is advisable to obtain the workers' consent to transfer their data.

iii Sensitive data

Based on the opinion of local commentators, it is understood that a third party violates the right to privacy when it gains unauthorised access to information related to a person's private life, which includes a person's financial situation, correspondence, customs, way of life or personal mishaps.

Venezuelan legislation considers workers' medical information sensitive and, therefore, it establishes the employers' obligation to keep this information confidential (see subsection i, above).

Moreover, the Law on Prevention, Conditions, and Health and Safety at the Workplace establishes the employer's obligation to take all appropriate measures to guarantee the privacy of the employees' correspondence and communications, and provide free access to all data and information referring to them. We consider that this obligation is related to the employees' health information, pursuant to the purpose of the Law, since it regulates matters concerning the conditions of health, safety and well-being in the workplace, even though the wording is very generic.

iv Background checks

It is not legally possible to investigate the criminal background of a candidate for employment or a current employee. There are provisions that protect employees and candidates from this kind of investigation. The Labour Law expressly provides that nobody can be subject to discrimination with regard to the right to work based on a criminal background.67 Additionally, there is an implicit prohibition to pursue investigation into the criminal background of employees, as the Law on the Registration of Criminal Records establishes that it is only possible to issue simple copies or certified copies of the registration of a criminal background to public authorities, in order to collaborate with a criminal procedure, for reasons of security and social interest, in the cases established by law.

Although there is no specific prohibition against conducting credit checks on potential employees or current employees, the Credit Card Law68 prohibits financial institutions from disclosing credit or debit card holders' personal financial information to any company or institution, unless such persons authorise them to do so.69 This authorisation is revocable.

There is no specific prohibition against verifying educational degrees or conducting background checks by calling previous employers. Further, there is no obligation to inform a candidate of the reason for not hiring him or her, which reduces the risk of being accused of discrimination.

XII DISCONTINUING EMPLOYMENT

i Dismissal

Pursuant to the Bar Against Dismissal Law,70 no worker can be dismissed without just cause previously authorised by the labour inspector office.

In fact, the Labour Law has been structured to guarantee the source of employment, and prevent a lockout or reduction of personnel. The Ministry of Labour is able to intervene in a company's operations to guarantee its activity whenever there is a risk that: a source of employment will be closed; there will be a reduction of personnel; or there will be changes in labour conditions. Moreover, if an employer illegally closes the company or starts a lockout, and fails to comply with the Ministry of Labour's order to resume operations, the Ministry may take over the company's operations so as to protect the rights of the workers. Failure to resume operations may also result in imprisonment of up to 15 months.

In principle, and except for upper-management employees and those hired for an undefined term with less than one month of services, no worker may be dismissed without there being just cause for doing so.71

In order to justifiably dismiss workers covered by the Bar Against Dismissal Law, the employer must obtain authorisation from the competent labour inspector office, through a dismissal qualifying procedure, which must be initiated before the labour inspector in the terms provided in the Labour Law.72 The dismissal must be based on the reasons for justified dismissal set forth in the Labour Law,73 which include:

  1. dishonest or immoral behaviour while on the job;
  2. violence, except in legitimate defence;
  3. causing injury to or demonstrating a serious lack of respect towards and consideration of the employer, its representatives or family members;
  4. an intentional or seriously negligent act that affects health and safety at the workplace;
  5. omissions or imprudent acts seriously affecting health and safety at the workplace;
  6. unjustified absence from work for three working days in one month;
  7. material damage intentionally caused by or because of serious neglect to the employer's machinery, work tools and utensils, furniture, raw materials, finished products or those in preparation, or to plantations or other properties;
  8. revealing of employer's secrets of manufacture, fabrication or procedure;
  9. serious violations of the obligations imposed by the labour relationship;
  10. abandonment of work; and
  11. bullying or sexual harassment.

If the worker is unjustifiably dismissed by the employer, he or she has one month to request reinstatement and payment of unpaid salary and labour benefits before the labour inspector office.

The employer's failure to comply with the prior request to dismiss the workers will give the latter the right to request their reinstatement, unpaid salaries and labour benefits.74 Failure to comply with a reinstatement order may trigger six to 15 months of imprisonment when breaching an order to reinstate a worker protected by the Bar Against Dismissal Law or trade union rights.

ii Redundancies

The general rule under the Labour Law is that no worker can be dismissed without just cause unless he or she is offered an indemnity for dismissal equal to the amount of his or her seniority benefit and he or she accepts it (job stability – see Section I). However, since 2002, workers are protected with a special bar against dismissal that has been extended to 28 December 2020.75 As long as the special bar against dismissal is in force, employers cannot freely dismiss workers without just cause and without previously obtaining authorisation from the labour inspector office.

When an employer wishes to lay off a substantial number of workers, the matter must be treated as a collective dispute76 even if the employer cites technical or economic reasons to support the decision.77 The existence of a collective dispute means that the employer can apply the procedures established for the resolution of disputes that arise between employers and workers.78 Notice of the employer's request for such a procedure must be provided to the respective labour union, or in the absence of a union, to the workers themselves. If the parties do not reach an agreement through the collective dispute procedure, the matter will be submitted for arbitration.79

As with any other collective dispute, workers are protected by the Bar Against Dismissal.80 Also, a request to reduce personnel will not be allowed while the workers are exercising their rights to organise and negotiate collectively.

In the case of a mass lay-off, the Ministry of Labour is authorised to stop or suspend the action by means of a special resolution in order to uphold the principle of freedom of work. A mass lay-off is one that, within three months (or longer, if circumstances indicate a critical situation), affects a number of workers equal to or greater than the following:81

  1. 10 per cent of the workers of a company that employs more than 100 persons;
  2. 20 per cent of the workers of a company that employs more than 50 persons; or
  3. 10 workers of a company that employs fewer than 50 persons.

The Labour Law provides that the study is to be made over three months, or longer if the circumstances so warrant. In fact, as indicated below, the labour inspector must take into account a period of at least six months to conduct his or her study.

A mass dismissal does not take place because of a request made to the labour inspector to authorise it. Rather, it is a declaration made by the Ministry of Labour based on reasons of social interest82 when it becomes aware of a dismissal that, by virtue of its size, falls within the aforementioned limits provided under Article 95 of the Labour Law.

In fact, the Regulations to the repealed Labour Law regulate the procedure for the suspension of mass lay-offs.83 It establishes that if the labour inspector of the jurisdiction becomes aware of a mass lay-off either ex officio or through an application by an interested party, he or she will initiate a procedure through a notice ordering the employer to appear for questioning in order to determine: the number of workers added to the payroll over the previous six months; and the number of dismissals during the same period, identifying the workers dismissed.

The procedure stated in the Labour Law is followed and after conclusion of the evidentiary stage, the labour inspector must prepare a report for the Ministry of Labour, which specifies: (1) the number of workers on the employer's payroll; and (2) the number of workers dismissed and the time taken to do so. If a mass lay-off is determined, the Ministry of Labour can order the reinstatement of the ex-workers and payment of lapsed salaries and other corresponding benefits, within 20 days of receipt of the report.

If an employer has to proceed with a mass lay-off to reduce personnel, it could choose to request authorisation from the Ministry of Labour to do so. This must be initiated before the labour inspector office in the respective location and the procedure for the resolution of collective disputes arising between unions and employers must be followed. According to the Regulations to the repealed Labour Law, the employer can request a reduction of personnel based on ongoing economic circumstances or technological advances or modifications.84 The recommended circumstances for requesting reduction of personnel would be the real existence of economic circumstances that endanger the activities or existence of the company.

The disadvantage of the procedure for the resolution of collective disputes arising between unions and employers is that, for its duration, the workers are protected by the bar against dismissals; the union to which the affected workers belong must be notified, where applicable; and if no agreement is reached between the employer and its workers, the matter may be referred to arbitration.

The labour inspector office can also require any supporting documents and information it deems appropriate, conduct inspections and supervisions, and order expert opinions.

A conciliation board made up of two representatives and one substitute for each delegation is appointed to process the dismissal procedure. The conciliation board's purpose is to achieve unanimous agreement in regard to: the workers that will be affected by the reduction of personnel; the term within which the reduction of personnel will be accomplished; and the indemnities that could correspond to the affected workers. The recommendation of the conciliation board may contain specific agreements on settlements or that the dispute is submitted to arbitration. The conciliation board may agree to one of the following solutions:85

  1. amendment of the job conditions contained in the applicable CBA;
  2. collective suspension of work for no more than 60 days, during which time the workers will be exonerated from rendering their services and the employer from paying them for their services, with a view to overcoming the alleged economic crisis; or
  3. the initiation of a recapitalising and reactivation process for the company, with the participation of the workers, under the concept of co-management. To encourage this, the state will help with: (1) obtaining credits under preferential or government-subsidised conditions; (2) renegotiating agreements for payment of debt owed to the national treasury or for social security contributions; or (3) tax or financial preferences or other incentives.

According to the provisions of the Labour Law, the only way to fully and finally terminate the relationship between an employee and his or her employer is through a written settlement agreement containing a detailed report of the events that caused the termination and the employee's rights comprised therein. The settlement executed before the competent authority has the legal effect of res judicata, precluding an employee from bringing any further claim against the employer.86

XIII TRANSFER OF BUSINESS

Under Venezuelan law, a transfer of undertaking is referred to as an employer successorship.

The Labour Law defines an employer successorship as the transfer of the property, ownership or business of an establishment from one person to another for any reason, with the continued operation of the business.87 An employer successorship is considered to have occurred even though ownership of the company is not transferred. The rule is that if a new employer continues to carry out the activities of a prior entity with the same personnel and facilities, there is an employer successorship regardless of whether ownership of the company has changed.88

An employer successorship does not alter existing employment relationships. The new employer must recognise the seniority, as well as other benefits and terms of employment, of all workers who continue to work in the company.89

In addition, for up to five years, the former employer will be jointly liable with the new employer for all the labour obligations that arose before the employer successorship.90 In the event that there are pending labour actions at the moment of employer successorship, the former employer's responsibility for those cases will continue for a period of five years from the date of a final decision on the labour action.91

In order for an employer successorship to be valid, written notification must be given to the workers. Written notice of the employer successorship should also be provided to the labour inspector and the union to which the workers belong.92

If a worker does not accept the employer successorship because it conflicts with his or her interests, the employment relationship may be terminated at the worker's request, and the worker will be entitled to worker benefits and indemnities as if it were a case of unjustified dismissal.93

If, with the purpose of employer successorship, an employer pays termination benefits and indemnities to a worker who nevertheless continues performing services for the company, the payment is considered an advance on the amount that would be owed to the worker on termination of the employment relationship.94

XIV OUTLOOK

The current economic, financial and political situation in Venezuela has resulted in several changes to the organic relationships between employers and employees, and to the dynamic of commercial deals. The minimum wage has increased several times as a result of hyperinflation.

Significant reforms to the labour law are not currently expected.


Footnotes

1 Juan Carlos Pró-Rísquez is a managing partner and Yanet C Aguiar is a partner at Despacho de Abogados Miembros de Dentons, SC.

2 Published (along with its Amendment No. 1) in Special Official Gazette No. 5,908 of 19 February 2009.

3 Published in Special Official Gazette No. 6,076 of 7 May 2012.

4 Labour Law, Article 26.

5 id., Articles 30 and 31.

6 id., Article 26.

7 id.

8 For additional information, see the chapter on the International Labour Organization, in Volume IB, Part 5.

9 Pursuant to Article 29 of the Organic Law on Labour Courts and Procedure (published in Official Gazette No. 37,504 of 13 August 2002), labour courts have jurisdiction to deal and decide on: (1) any contentious labour matter other than conciliation an arbitration; (2) requests for reinstatement owing to job stability; (3) constitutional injunctions; (4) any contentious matter resulting from a labour relationship, an employment agreement and social security; and (5) contentious matters related to collective and individual rights and interests.

10 Prevention delegates are workers elected as workers' representatives to deal with safety and health matters at the workplace. The prevention delegates together with the company's representatives manage the Safety and Health Committee.

11 Published in Official Gazette No. 37,504 of 13 August 2002.

12 Published in Official Gazette No. ۳۸,۴۲۶ of ۲۸ April ۲۰۰۶.

13 id.

14 Regulations to the repealed Organic Labour Law, Article 26.

15 Labour Law, Article 3.

16 id., Articles 3 and 65.

17 Depending on the expatriate employee's nationality, he or she may be exempted from social security payments, provided that there is a bilateral treaty in force.

18 Labour Law, Article 47.

19 id., 49.

20 Published in Official Gazette No. 6,210 of 30 December 2015.

21 Income Tax Law, Article 7, third paragraph.

22 Regulations to the repealed Organic Labour Law, Article 26.

23 id., 168.

24 id., 26.

25 Labour Law, Article 173.

26 id.

27 id., 175.

28 id.

29 id., 176.

30 id., 176.

31 id., 169.

32 id., 178.

33 id., 118.

34 id., 182.

35 id., 27.

36 id., 14.

37 See id., Article 371.

38 id.

39 id., Article 376.

40 id., Article 371.

41 id., Article 377.

42 id., Article 371.

43 id., Article 378.

44 id., Article 371.

45 id., Article 378.

46 id., Article 418.

47 id., Article 379.

48 id.

49 Labour Law, Articles 399–410.

50 id., Article 401.

51 See Labour Law Regulations, Article 140.

52 id., Article 419. See also I.F.1.b., above.

53 Labour Law, Article 419.

54 Published in Official Gazette No. 41.336 of 6 February 2018.

55 id., Article 3.

56 id., 7.

57 id., 15.

58 id., 9.

59 See id., Article 498.

60 Constitution Article 60.

61 id., Article 28. This Article is not applicable to the confidentiality of journalistic information's sources and other professions determined by law.

62 Constitutional injunction filed by Insaca v. Director de Drogas y Cosméticos del Ministerio de Sanidad y Asistencia Social.

63 Published in Official Gazette No. 38,236 of 26 July 2005.

64 Law on Prevention Conditions and Health and Safety at the Workplace, Article 53(11).

65 As of 11 September 2018, the value of the tax unit is 17 bolivars (Official Gazette No. 41,479).

66 id., Article 120(14).

67 Labour Law, Article 21.

68 Published in Official Gazette No. 39,021 of 22 September 2008.

69 Credit Card Law, Article 62.

70 Published in Special Official Gazette No. 6,207 of 28 December 2015.

71 Bar against Dismissal Law, Article 3.

72 Labour Law, Article 422.

73 id., Article 79.

74 id., Article 425.

75 Presidential Decree on Special Bar Against Dismissals No. 3,708 published in Special Official Gazette
No. 6,419 of 28 December 2018.

76 Labour Law, Article 95.

77 id.

78 id., Articles 472–485.

79 id., Articles 492–496.

80 id., Article 419.

81 id., Article 95.

82 See Ruling No. 85 of the Constitutional Chamber of the STJ of 24 January 2002, according to which: 'Social interest has been defined: d) Social interest – This is a notion associated with the State protection of determined groups of the country's population, who are recognized as not being in the same conditions as other people with whom they are related in a specific activity, and who the State therefore defends in order to avoid such condition of inequality in which they find themselves working against them and causing them patrimonial damage, or leading them to an inferior or dangerous quality of life that would create social tensions.' (See Cabrera Romero, Jesús Eduardo. Las Iniciativas Probatorias del Juez en el Proceso Civil Regido por el Principio Dispositivo, Edifove, Caracas 1989 p. 262).

83 Labour Law, Article 40-45.

84 Regulations to the repealed Labour Law, Article 46.

85 Regulations to the repealed Labour Law, Article 46.

86 Labour Law, Article 19.

87 id., Article 66.

88 id.

89 id.

90 id., Article 68.

91 id.

92 id., Article 69.

93 id.

94 id., Article 70.