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:

  1. the right to work;
  2. the freedom to work in a job chosen by the employee;
  3. the right to be part of a 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 certain relevant matters, such as:

  1. retroactivity of seniority benefit;
  2. reduction of the working day;
  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 employees 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 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 relating 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), which 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.8 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 procedures in Venezuela for labour claims, depending on the employee's employment stability. Employment stability encompasses the employee's right to request reinstatement if he or she is unjustifiably dismissed. There are two types of stabilities: relative, which is generally known as job stability; and absolute and clear, known as a bar against dismissal. Claims relating to the former are heard before the labour courts, while claims relating to the latter are heard before the labour inspector office. Employees with clear and absolute stability must make their claims through an administrative procedure defined under the Labour Law. These employees are protected against unfair dismissal for union activities, prevention delegates' activities,9 maternity, or situations in which the labour relationship is temporarily suspended (e.g., sick leave, military service, permission to study). Employees 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.10

The main administrative entities are the labour inspector offices, which are responsible for inspection and enforcement of compliance with labour legislation; the Social Security Institute, which handles security and pension matters; and the National Institute for Occupational Health, Safety and Prevention, 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 hyperinflation and devaluation of the local currency (bolivar) continued in 2019, despite not reaching the same levels as in 2018, the minimum wage and the food benefit were reviewed and increased by the President on three occasions, reaching an increase of 8,333.33 per cent. The effects of the continuous economic downturn have had a significant effect on the employment and labour environment, resulting in further restructuring, downsizing, closures and employee cost reductions. Unfortunately, there are no official unemployment rates or statistics in Venezuela.

However, employers continue to make significant 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 A Irani v. Sherkate11

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

During the past 20 years of case law, when there has been a case in which the plaintiff received his or her remuneration in a 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 employee.

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 valid at the time of payment.

ii M Matos v. INIA12

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 for Occupational Health, Safety and Prevention).

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 seeking 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.

iii Decisions of Labour Ministry on procedure under Article 148 of the Labour Law

In three historic decisions in December 2018 by the National Labour Inspector, the Inspectorate approved the reduction of personnel and labour benefits at two companies, following the procedure set forth in Article 148 of the Labour Law. One of the companies was authorised to dismiss 52 employees and reduce the benefits of 85 others. The second company was authorised to reduce CBA benefits and reduce additional benefits to employees only fulfilling the work schedule without rendering services.

Article 148 sets forth the capacity of the Ministry of Labour to authorise employers to reduce personnel or employees' benefits when the employment source is endangered for technical or economic reasons.

iv L Armas v. Supermercados Unicasa13

Similarly to the original case, decided by the Administrative Political Chamber, the plaintiff requested payment of moral damages for suffering occasioned by an occupational accident resulting in a knee injury (which had been certified by the National Institute of Prevention Condition and Safety and Health at the Work Place).

The Chamber had been consistent in ordering the monetary damages in bolivars. However, it considered that, because of hyperinflation, the Chamber should modify its criteria.

In contrast to the Administrative-Political Chamber, the SCC, in seeking to protect the value of the remedy, ordered payment for moral damages in 400 units of the minimum wage, which have to be paid in bolivars at the value of the minimum wage at the time of actual payment.

v O Garcia v. Norton Rose Fulbright (formerly Macleod Dixon)14

In this case, the plaintiff, a former partner of the law firm, claimed to have been an employee and therefore requested the payment of benefits and indemnities set forth in the Labour Law. The SCC ruled that the relationship between the plaintiff and defendants was of dual nature, being both partner and employee. The SCC ordered the payment of labour benefits.

This ruling departs from previous precedent, which considered a partnership as a commercial relationship that could not create a labour one.

Currently, both parties are awaiting a clarification to be issued by the SCC regarding the motivation of the ruling, as well as the proper identification of the defendants and method of calculating the owed amounts.

IV BASICS OF ENTERING INTO 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.

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

  1. full name, identity card number, 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, in the case of contracts for fixed terms;
  7. work or tasks to be performed, in the case of contracts for specific work;
  8. length of the working day;
  9. salary stipulated or the manner of calculating it, and the form and place of payment, as well as any 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 between the parties; and
  14. other specifications set forth in the Regulations to the repealed Organic Labour Law.15

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 an employment agreement for a fixed term when:

  1. it is required by the nature of the service;
  2. it is required provisionally and legally to substitute one employee for another;
  3. it is required for Venezuelan employees rendering services abroad; and
  4. an 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 expiry, unless there are special reasons that justify the extensions, excluding the intent of continuing the labour relationship.16 A special reason is defined as the continuation of the circumstance that justified the original fixed-term agreement.17

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, an employee's job stability is established after one month of service. Therefore, the first 30 days of the employment relationship are deemed a probationary period. During that time, either party may terminate the employment relationship. The STJ has held that probationary 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 an employee's nationality.18 This statute also applies to those services rendered outside Venezuela under a contract entered into in Venezuela.19 Additionally, in the event of rendering services in Venezuela, an employee has 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.20 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 so as to register their employees, and to withhold from payroll and pay the relevant tax 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 October 2019, the minimum wage is 150,000 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 to distort, ignore or obstruct the application of labour legislation.21 However, the contracting of personnel through third parties should not be deemed outsourcing, as long as the contracting has not been made with the intention of simulating or defrauding 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.22

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),23 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 (1) any location or fixed place of business, or any centre of activity, where it fully or partially carries on its activity, (2) a seat of management, branch, office, factory, workshop, facility, warehouse, store or other establishment, (3) construction, installation or assembly projects lasting for more than six months; or (4) agencies or representatives authorised to contract on its behalf;
  2. the taxpayer (1) performs activities in Venezuela relating to mining or hydrocarbon exploration, or agrarian, agricultural, forestry or livestock exploitation, or any other extraction of natural resources, (2) performs professional or artistic activities, or (3) 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.24

Pursuant to the Tax Law, income paid in consideration for services that are executed or used or from which benefit is gained 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,25 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.26

Among other requirements, the Regulations establish that a restrictive covenant must be agreed at the beginning of the employment relationship.27 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 working period may not exceed five days a week. Consequently, employees are entitled to two continuous paid days of rest per week, except in the case of continuous work schedules.28

The duration of the working period is 40 daytime hours per week. In the case of a mixed day, which includes at least four hours of work at night, the period is shortened to 37.5 hours per week. The weekly limit of night-time work is 35 hours. Any extension of the night shift into daytime hours shall be deemed as night-time hours.29

In addition, the Labour Law provides that the following will not be subject to the limits established for daily and weekly hours:

  1. upper management employees;
  2. inspection or surveillance employees, carrying out tasks that do not require a continuous effort;
  3. employees who perform work that merely requires their presence, or discontinuous or intermittent work requiring long periods of inaction; and
  4. schedules set by CBAs between employers and employees.30

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 employee must enjoy two consecutive paid days of rest every week.31

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 during the course of eight weeks, and, for a six-day working week, the employee is granted an additional day of holiday in that year, with payment of salary but without affecting the holiday bonus.32

Employees are prohibited from working for more than five continuous hours, and rest periods taken during the working day cannot exceed one hour.33 The employees' right to leave the place where their services are provided during rest and meal periods is established. If employees 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.34

ii Overtime

The daily working day is limited to 10 hours, including overtime. Further, 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.35

Overtime work must be compensated with a 50 per cent surcharge on the employee's salary.36

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.37

VII FOREIGN WORKERS

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 all staff (i.e., management, employees and labourers) at the service of an employer must be Venezuelan. Further, the compensation for foreign workers cannot exceed 20 per cent of the total payroll compensation.38

As previously stated, foreign workers 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 is deemed a serious violation of 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 have been informed of the obligations set forth in the internal policies for them to prevail.

IX PARENTAL LEAVE

Under Venezuelan law, maternity leave is divided between prenatal leave and postnatal leave. Prenatal leave starts six weeks before the birth of a child and postnatal leave extends to 20 weeks after the birth. The mother has the right to keep her job and receive her full normal salary, in accordance with social security regulations.39 If there is a medical complication that requires an employee to be absent from work, both prenatal and postnatal leave can be extended.40 Further, if the employee does not use her full prenatal leave entitlement, the remaining period can be added to the postnatal leave, as well as any pending vacation allowance. Both prenatal and postnatal leave are not renounceable.41

Paternity leave is 14 continuous days from the child's birth.42

Both maternity and paternity leave are also applicable to parent employees who adopt a child under the age of three.43

Furthermore, the Labour Law sets forth a special bar against dismissal of a female employee from the date of conception up to two years after the birth of the child.44

X TRANSLATION

The Constitution clearly provides that Spanish is Venezuela's official language. The Labour Law also establishes that the official language in Venezuela is Spanish and that when, for reasons of technology, it is necessary to use a different language, there must also be a Spanish translation.45

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-speaking and Spanish-speaking employees, documents must be distributed in Spanish.

XI EMPLOYEE REPRESENTATION

Labour unions46 are organised in the following ways, based on a common employer, occupation, industry or economic sector:

  1. Company unions are composed of the employees of a single enterprise, including operations located in different towns and regions.47 Twenty or more employees are required to form a company union.48
  2. Trade unions are composed of employees 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.49 Forty or more employees are required to form a trade union.50
  3. Industrial unions are composed of employees who are employed by several employers in the same industrial field, even though they work in different professions or trades.51 Forty or more employees are required to form an industrial union.52
  4. Sectoral unions are composed of the employees of several employers in the same commercial, agricultural, production or service branch, even though their professions and trades differ.53 Forty or more employees are required to form a sectoral union.54

Unions also may be organised by independent employees, that is, employees who are not bound to any employer by an individual employment agreement or relationship. Formation of these unions requires 40 or more employees.55

Labour unions may be local, state, regional or national in their geographical scope.56 If they are regional or national, 150 or more employees are required to form the union.57

Once a union has been registered before the appropriate 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.58 The board performs its duties for the period set forth in the by-laws, which cannot exceed three years.59

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.

If employees are not represented by a labour union, a group of employees could attempt to negotiate collectively by delivering a proposed collective agreement to the labour inspector office of the corresponding jurisdiction.60

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 of office ends.61 This prohibition is limited to protecting directors in the following proportions:

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

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 protection against dismissal, from the date of their election until three months after expiry of their term of office.62

The Labour Law contains provisions concerning the representation of employees in company management (co-management) in the form of councils of employees. The Constitutional Law of the Productive Councils of Female and Male Workers (the Workers' Councils Act)63 regulates the establishment, organisation and functioning of the productive councils of female and male employees (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, 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 by 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.64

Each entity must have at least one workers' council. A workers' council shall be made up of three, five or seven elected employees, of which at least one must be a woman, one must be aged between 15 and 35 years, and one must be a member of the militia. One person can fulfil these three criteria.65 The members of the workers' council shall serve for a term of two years, and may be re-elected.66 They shall be eligible to a bar against dismissal67 from the moment of their election, up to six months after the expiry of their two-year term.

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, which differ from those of trade unions, and will be ruled by special laws to be enacted.68

XII 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. The right to private life and privacy is stated in the Constitution, which affords every person the right to protect his or her own private life from others.69

The Constitution protects personal information through habeas data70 in the following ways:

  1. 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;
  2. every person has the right to be informed of the purpose for data collection and use; and
  3. every person has the right to request the competent courts to update, rectify or destroy the data, if they are erroneous or could affect a person's rights in an illegitimate manner.

In a decision of 14 March 2001,71 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, 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 the data relates to an employee's medical records. The Law on Prevention, Conditions, and Health and Safety at the Workplace72 establishes the employer's obligation to keep employees' health information confidential, and to restrict access to medical personnel and the corresponding health authorities only, except when employees give their authorisation.73 In fact, it establishes serious sanctions for breach of confidentiality or privacy of employees' health information, in the form of a fine of between 76 and 100 tax units,74 or a shutdown of the entity for up to 48 hours.75 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 in cases where employees' medical records are involved, employers do not have to request employees' 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 employees' 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 relating to a person's private life, such as a person's financial situation, personal correspondence, customs, way of life or personal mishaps.

Venezuelan legislation considers employees' medical information to be sensitive and, therefore, it establishes the obligation on employers to keep this information confidential (see Section XII.i).

Moreover, the Law on Prevention, Conditions, and Health and Safety at the Workplace establishes the obligation on employers to take all appropriate measures to guarantee the privacy of 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 current employee or a candidate for employment; 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.76 Additionally, there is an implicit prohibition to pursue an 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, when collaborating 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 Law77 prohibits financial institutions from disclosing credit or debit card holders' personal financial information to any company or institution, unless the persons in question authorise them to do so.78 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.

XIII DISCONTINUING EMPLOYMENT

i Dismissal

Pursuant to the Bar Against Dismissal Law,79 no employee can be dismissed without just cause as previously authorised by the labour inspector office.

In fact, the Labour Law has been structured to guarantee a source of employment, and prevent lockouts or reductions in personnel. The Ministry of Labour is able to intervene in a company's operations to guarantee its activity whenever there is a risk that (1) a source of employment will be closed, (2) there will be a reduction in personnel, or (3) there will be changes in labour conditions. Moreover, if an employer illegally closes a company or starts a lockout, and fails to comply with an order from the Ministry of Labour to resume operations, the Ministry may take over the company's operations so as to protect the rights of employees. Failure by company management to resume operations may also result in imprisonment for 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 service, no employee may be dismissed without just cause.80

To justifiably dismiss employees covered by the Bar Against Dismissal Law, the employer must obtain authorisation from the competent labour inspector office by means of a dismissal qualifying procedure, which must be initiated before the labour inspector in accordance with the terms provided in the Labour Law.81 The dismissal must be based on one of the reasons for justified dismissal set forth in the Labour Law,82 which include:

  1. dishonest or immoral behaviour while at work;
  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 the 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 an employee is unjustifiably dismissed by his or her employer, he or she has one month to request reinstatement and payment of unpaid salary and labour benefits before the labour inspector office.

If an employer fails to request authorisation to dismiss from the Labour Inspectorate prior to the dismissal of an employee, that employee has the right to request reinstatement, unpaid salaries and labour benefits.83 Failure to comply with a reinstatement order may trigger six to 15 months of imprisonment as a breach of an order to reinstate an employee who is protected by the Bar Against Dismissal Law or trade union rights.

ii Redundancies

The general rule under the Labour Law is that no employee 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 (i.e., job stability – see Section I). However, since 2002, employees are protected with a special bar against dismissal that has been extended until 28 December 2020.84 As long as the special bar against dismissal is in force, employers cannot freely dismiss employees without just cause and without previously obtaining authorisation from the labour inspector office.

When an employer wishes to lay off a substantial number of employees, the matter must be treated as a collective dispute,85 even if the employer cites technical or economic reasons to support the decision.86 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 employees.87 Notice of an employer's request for such a procedure must be provided to the respective labour union or, in the absence of a union, to the employees themselves. If the parties do not reach an agreement by means of the collective dispute procedure, the matter will be submitted for arbitration.88

As with any other collective dispute, employees are protected by a bar against dismissal.89 Also, a request to reduce personnel will not be allowed while employees are exercising their right to organise and negotiate collectively.

In the case of a mass lay-off, the Ministry of Labour is authorised to stop or suspend that action by means of a special resolution 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 employees equal to or greater than the following:

  1. 10 per cent of the employees of a company that has more than 100 employees;
  2. 20 per cent of the employees of a company that has more than 50 employees; or
  3. 10 employees of a company that has fewer than 50 employees.90

The Labour Law provides that a study is to be made over three months by a labour inspector, or longer if the circumstances so warrant. In fact, as indicated below, the labour inspector set aside 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 interest91 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.92 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, to determine the number of employees added to the payroll during the previous six months, and the number of dismissals during the same period, identifying the employees who have been dismissed.

The procedure stated in the Labour Law must be followed and at the end of the evidentiary stage, the labour inspector must prepare a report for the Ministry of Labour, which specifies the number of employees on the employer's payroll, the number of employees 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-employees 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.93 The recommended circumstances for requesting a 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, (1) the employees are protected by the bar against dismissal, (2) the union to which the affected employees belong must be notified, where applicable, and (3) if no agreement is reached between the employer and its employees, 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 deputy for each delegation is appointed to process the dismissal procedure. The conciliation board's purpose is to achieve unanimous agreement in regard to the employees who will be affected by the reduction in personnel, the term within which the reduction in personnel will be accomplished, and the indemnities for which the affected employees could be eligible. 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:

  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 employees will not be required to render their services and the employer will not be required to pay employees 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 employees, 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.94

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. A settlement executed before the competent authority has the legal effect of res judicata, precluding an employee from bringing any further claim against the employer.95

XIV 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.96 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.97

An employer successorship does not alter existing employment relationships. The new employer must recognise the seniority of all employees who continue to work in the company, and all other benefits and terms of employment.98

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.99 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.100

For an employer successorship to be valid, written notification must be given to the affected employees. Written notice of the employer successorship should also be provided to the labour inspector and the union to which the employees belong.101

If an employee does not accept the employer successorship because it conflicts with his or her interests, the employment relationship may be terminated at the employee's request, and the employee will be entitled to employee benefits and indemnities as if it were a case of unjustified dismissal.102

If, with the purpose of employer successorship, an employer pays termination benefits and indemnities to an employee who nevertheless continues performing services for the company, the payment is considered an advance on the amount that would be owed to the employee on termination of the employment relationship.103

XV 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 managing partner at Dentons, Caracas Venezuela.

2 Published (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., at Articles 30 and 31.

6 id., at Article 26.

7 id.

8 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 relating to collective and individual rights and interests.

9 Prevention delegates are employees elected as employees' representatives to deal with safety and health matters at the workplace. The prevention delegates and the company's representatives jointly manage the safety and health committee.

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

11 Decision No. 756 of the Social Cassation Chamber [SCC] (17 October 2018).

12 Decision No. 1,112 of the Administrative-Political Chamber of the Supreme Tribunal of Justice (1 November 2018).

13 Decision No. 169 of the SCC (26 June 2019).

14 Decision No. 375 of the SCC (21 October 2019).

15 Published in Official Gazette No. 38,426 of 28 April 2006.

16 id.

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

18 Labour Law, Article 3.

19 id., at Articles 3 and 65.

20 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.

21 Labour Law, Article 47.

22 id., at Article 49.

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

24 Income Tax Law, Article 7, third paragraph.

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

26 id., at Article 168.

27 id., at Article 26.

28 Labour Law, Article 173.

29 id.

30 id., at Article 175.

31 id.

32 id., at Article 176.

33 id.

34 id., at Article 169.

35 id., at Article 178.

36 id., at Article 118.

37 id., at Article 182.

38 id., at Article 27.

39 id., at Article 336. Social Security Law, Article 11.

40 Labour Law, Article 337.

41 id., at Article 338.

42 id., at Article 339.

43 id., at Article 340.

44 id., at Article 335.

45 id., at Article 14.

46 id., at Article 371.

47 id.

48 id., at Article 376.

49 id., at Article 371.

50 id., at Article 377.

51 id., at Article 371.

52 id., at Article 378.

53 id., at Article 371.

54 id., at Article 378.

55 id., at Article 418.

56 id., at Article 379.

57 id.

58 id., at Articles 399 to 410.

59 id., at Article 401.

60 See Labour Law Regulations, Article 140.

61 id., at Article 419. See also Section XIII.i, below.

62 Labour Law, Article 419.

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

64 Constitutional Law of the Productive Councils of Female and Male Workers, Article 3.

65 id., at Article 7.

66 id., at Article 9.

67 id., at Article 15.

68 id., at Article 498.

69 Constitution, Article 60.

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

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

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

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

74 As of 10 January 2020, the tax unit applicable to all entities, except the National Tax Administration, is 0.012 bolivars (Special Official Gazette No. 6,383). A subsequent decree increasing the tax unit, currently 50 bolivars, has limited its applicability to the National Tax Administration alone (Official Gazette No. 41,597).

75 Law on Prevention Conditions and Health and Safety at the Workplace, Article 120(14).

76 Labour Law, Article 21.

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

78 Credit Card Law, Article 62.

79 Published in Special Official Gazette No. 6,419 of 28 December 2018.

80 Bar Against Dismissal Law, Article 3.

81 Labour Law, Article 422.

82 id., at Article 79.

83 id., at Article 425.

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

85 Labour Law, Article 95.

86 id.

87 id., at Articles 472 to 485.

88 id., at Articles 492 to 496.

89 id., at Article 419.

90 id., at Article 95.

91 See Ruling No. 85 of the Constitutional Chamber of the Supreme Tribunal of Justice 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).

92 Labour Law, Articles 40 to 45.

93 Regulations to the repealed Labour Law, Article 46.

94 id., at Article 46.

95 Labour Law, Article 19.

96 id., at Article 66.

97 id.

98 id.

99 id., at Article 68.

100 id.

101 id., at Article 69.

102 id.

103 id., at Article 70.