The Employment Law Review: Dominican Republic
The legal framework that governs employment in the Dominican Republic is comprised of the Dominican Labour Code, which is enacted through the following:
- Law 16-92 dated 29 May 1992, as amended (the Labour Code);
- Regulation for the Implementation of the Labour Code No. 258-93;
- Law No. 87-01, which institutes the Social Security System of the Dominican Republic, as amended;
- all International Labour Organization agreements ratified by the Dominican Republic; and
- regulations issued by the Ministry of Labour of the Dominican Republic.
Labour laws have a territorial effect,2 therefore any company that employs personnel in the Dominican Republic, or whose personnel provide services in the country, shall be subject to the Labour Code and implementing regulations, which govern labour contracts, labour conditions, unions, economic conflicts, strikes, work stoppages, salaries and benefits, among others. For foreign employees, or employment agreements with international elements or of an international nature, the Private International Law No. 544-14 admits the possibility of another substantive law applying to an employment agreement when the services provided by the employee have more ties with the jurisdiction of another country.
Labour laws are very protective of employees' rights, which are well defined and widely enforced. Employees' rights are inalienable, meaning that courts will deem any formal waiver of rights by employees as void and unenforceable.3
Labour courts have exclusive jurisdiction to solve disputes that arise between employers and employees, or solely between employees, in connection or related to the application of the labour laws, enforcement of contractual provisions or provisions of collective bargaining agreements. Labour courts also have jurisdiction to solve disputes between unions, between employees, between employees affiliated to the same union, or between employees and members of the union. Public opinion tends to sympathise with employees and courts are required to interpret the labour laws in a way that is more favourable to employees.
The Ministry of Labour is the main government agency responsible for all labour issues, supervising the relationship between employers and employees, and verifying compliance with the current labour regulation.4 This institution is in charge of creating all national labour policies. Within the Ministry of Labour, there are several departments with important roles, such as the National Salaries Committee, which sets the minimum wage,5 and the Agency for Industrial Safety and Hygiene, which is responsible for the approval of workplace hygiene and safety guidelines and the supervision of their enforcement.
Other relevant government authorities are the Institute for Professional Technical Training (INFOTEP), an autonomous not-for-profit agency in charge of overseeing the system for the training and qualification of employees, and the Treasury of Social Security, responsible for collecting, distributing and paying the monies of the social security system, and administering the central information system.
Year in review
The application of the Domestic Workers Convention (No. 189), ratified on 15 May 2015, continues to be a topic of discussion. There is still no up-to-date consensus on the extent of the obligations on the government to ratify the Convention, and the internal proceedings that should be carried out, if any, to render those obligations enforceable for the general population.
The average open unemployment rate for 2018 was 5.9 per cent, according to the results of the Continuous National Survey of the Workforce. The average open unemployment rate for the period from January to June 2019 was 6.3 per cent.6
On 3 December 2019, the Constitutional Court rendered a judgment confirming the constitutionality of Article 715 of the Labour Code, which governs the applicability of criminal penalties for the violation of labour laws, and the officials in charge of representing the state in criminal labour proceedings. The basis of the constitutional challenge was the lack of independence and impartiality of the officials representing the state; however, the Constitutional Court reasoned that the representation of the state relies on district attorneys and not on employees of the Ministry of Labour.7
On 15 August 2019, the Constitutional Court reaffirmed the criteria of the Supreme Court of Justice regarding the scope of Article 86 of the Labour Code, which provides that, in cases of termination without cause exercised by an employer, advance notice and severance must be paid to the employee within 10 days of the termination date, and if the employer fails to do so, it must pay compensation equal to one day's pay for each day of delay until the final payment is made. The Supreme Court of Justice stated that the employee cannot bring a claim for payment of severance prior to the expiry of the 10-day term established in Article 86, because it is untimely and renders the penalty of Article 86 inapplicable to that particular case; in such cases, the employee is only entitled to payment of severance and not to one day's pay for each day of delay.8
Basics of entering into an employment relationship
i Employment relationship
According to the Labour Code, a labour contract is formed when one party undertakes to provide personal services to another in exchange for compensation, under the supervision and immediate or delegated guidance of the latter. There is a presumption that a labour contract exists whenever a person renders a personal service to another, even if the terms of this relationship are not recorded in writing.9 An agreement must be in writing in three exceptional cases: apprenticeship contracts; contracts for a fixed term; and contracts with foreign employees.
When the agreement is in writing, the following terms must be included:
- the names, credentials and addresses of the employer and employee;
- the work to be performed by the employee, and the salary and benefits that the employee will receive for the work;
- the place and hours of work; and
- the term of employment if it is for a fixed term, or an indication that it is for an indefinite period.10
Some terms will apply by law even if not provided in the employment agreement, such as vacation leave, Christmas bonus and compensation for profit sharing.
The parties are free to agree to additional terms provided that they are not less favourable than the rights afforded by law. Under the principle of inalienability of rights established in the Labour Code, labour regulations are binding on the employer and employee even if the parties decide to amend the provisions. The employee may claim at all times the rights granted by the law, despite any attempted limitation, termination, loss or waiver, even by a judicial act. Any agreement or document that attempts to limit, or contains a waiver of, the employee's rights is void.
When an employment agreement is entered in writing, any amendment to its terms must also be in writing.11
Employment agreements can be for a fixed term or an indefinite period. The latter is defined as a contract for the services provided by the employee on a permanent and uninterrupted basis (i.e., it goes towards satisfying the normal, constant and uniform needs of a company).
A fixed-term agreement is a contract in which the parties set a date for the expiry of their labour relationship. Only the complete execution of the work or providing services as promised will extinguish the contractual relationship; once the term is expired, the contract ceases to exist without any liability. The Labour Code establishes that this type of agreement can be entered into if (1) it is in accordance with the nature of the service to be provided, (2) its objective is to provisionally substitute an employee who is absent because of permitted leave, vacation, or another temporary impediment, and (3) it is agreed to be in the interests of the employee.
Under Dominican law, an employment agreement is presumed to be for an indefinite period, until proven otherwise.12
Changes to an employment agreement can result as a consequence of the provisions in the Labour Code and subsequent labour laws, collective bargaining agreements or mutual consent. Also, the employer is allowed to enforce necessary changes to the employment agreement, as long as they do not imply an unreasonable exercise of this power, alter the essential conditions of the contract, or cause material or moral damage to the employee.13 The right awarded to the employer to enforce unilateral amendments to the employment agreement is known as jus variandi. This right is limited, and mutual agreement is sometimes required. Abusive use of jus variandi can be a just cause for the resignation of an employee.
ii Probationary periods
There is no express probationary period established in the Labour Code. However, according to Article 88(2) of the Labour Code, the employer may dismiss the employee with cause for 'performing the job in a manner that shows his incapacity and inefficiency. This cause ceases to have effect after the employee has provided services for 3 months'. The three months is considered a trial period during which the employer has the opportunity to decide whether the employee is capable of providing the services in the required manner.
Termination of a labour contract during the first three months is not subject to any severance or indemnity payment.
iii Establishing a presence
Every employer must register at the National Labour Registry of the Ministry of Labour or the competent local labour authority, if the employer is located outside the National District. Each employer is assigned a registration number that will be used as a reference for any filed documents or communications (i.e., dismissal letters and admonitions to employees).
Currently, an employer can file various records electronically through the Integrated System for Labour Registration.14 By acquiring an access code from the Ministry of Labour for 150 pesos for every 25 employees, the company can file all the registers regarding the salaries of permanent personnel,15 records of overtime hours, and changes to the salaries of permanent or temporary personnel, among others.
The employer is also subject to payment of a monthly quota to INFOTEP. This contribution is equivalent to 1 per cent of the total payroll and 0.5 per cent of the annual bonuses paid to the employees, if any.
In addition, every employer must register with the Treasury of Social Security and register its list of personnel. Employers and employees contribute to coverage for labour risk insurance, family health insurance, and old age, disability and survival insurance (pension funds). The three regimes are administered with separate funds and independent accounts. Specifically, employers contributes 70 per cent of the costs for financing family health insurance and old age, disability and survival insurance, and pays 100 per cent of the cost of labour risk insurance.
In terms of the amount apportioned each month to the social security system, the employee contributes 5.91 per cent of his or her quotable salary. The remainder is directly assumed by the employer and distributed between the different types of insurance, as follows:
|Labour risk insurance||1.30%|
|Family health insurance||10.13%|
|Old age, disability and survival||9.97%|
Family health insurance and administration of pension funds are provided by private institutions, which employees can choose at will.
Additionally, employers must file with the General Agency for Internal Revenues the monthly declaration and payment of the withholdings made to employees, since the employer acts as a withholding agent of individual income tax.16 The income tax rate for individuals is up to 25 per cent of his or her taxable income.
The Labour Code does not contain a provision referring to the right of an employer to restrict future activities of employees. However, a non-compete clause included in the employment agreement can be enforceable as long as it is reasonable and expressly indicates the covered business area and time frame.
i Working time
An employee's daily shift cannot exceed eight hours and the working week cannot be more than 44 hours.17 In companies with around-the-clock operations, the work period can be extended by an additional hour, but the weekly average may not exceed 50 hours, and any hours worked in excess of 44 hours per week must be compensated as overtime.18 In the event of the extension of the work period to face an extraordinary increase in work, the number of extra hours cannot exceed 80 hours every three weeks. Article 150 of the Labour Code provides for some exceptions to the work shift duration requirements when employees (1) serve as representatives of the employer, (2) serve in management or supervisory positions, or (3) are employed by small businesses, usually by family members.
These provisions apply in the same manner for night work. Article 149 of the Labour Code establishes that a daytime working day may run between 7am and 9pm and a nocturnal working day between 9pm and 7am. A mixed working day includes both daytime and nocturnal working, if the night work is less than three hours. If the night work exceeds three hours, the entire working day will be deemed nocturnal.
Hours worked during a night shift must be compensated to employees at no less than a 15 per cent increase of the value of normal hours.19
Overtime hours must be compensated in accordance with the amount of overtime work done by an employee in a given week. If the amount of overtime worked is less than 68 hours in a week, each extra hour must be paid at a rate of at least 35 per cent more than the normal hourly rate. However, if overtime exceeds 68 hours, each hour that exceeds this threshold must be paid at a rate of 100 per cent more than the normal hourly rate.20 According to the Labour Code, overtime work cannot exceed 80 hours every three weeks.
The employment agreements of foreign workers have to be formalised in writing and registered with the Ministry of Labour. The Ministry must verify that the employee holds a valid work visa or is a legal resident allowed to work in the Dominican Republic. If the employer retains foreign employees who are not authorised to work in the Dominican Republic, the employer can be subject to a fine and the employee can be deported to his or her country of origin.
Foreign employees should be registered with the Social Security Treasury and the employer must pay all social security contributions for foreign employees. If an employee is still contributing to the social security scheme in his or her home country, then the employer does not need to pay contributions to the local entities for social security (according to the last paragraph of Article 5, Law No. 87-01, which creates the Dominican Social Security System).
In regard to the nationality of an employer's workers, the Labour Code establishes that at least 80 per cent of the workforce should be Dominican citizens. While there are no restrictions at the management level, the employees should preferably be Dominican.
Employers can adopt internal labour regulations to organise the manner in which the service is provided.21 Once the regulations have been filed with the Ministry of Labour, they are mandatory for all employees.
The internal regulations may refer to general conditions of work, the rules under which the work must be done, work schedule, days and place of payment, and disciplinary action.22 These rules must be displayed in the most visible places within the establishment.23 If the internal regulations are accessible through the company intranet, the employer must secure evidence that the employee has accessed the regulations and has knowledge of their content.
The employer can modify or amend the internal labour regulations. However, in any case, the regulations cannot be contrary to the labour laws and provisions of any collective bargaining agreements.24
Employers must grant a pregnant employee mandatory paid maternity leave of 14 weeks (seven weeks of prenatal leave and seven weeks postnatal leave).25 When a pregnant employee does not use all her prenatal leave, the unused time is added to her postnatal leave. The statutory maternity protection applies regardless of the employee's length of service.
According to Article 239 of the Labour Code, maternity leave is paid with the ordinary salary earned by the employee.
Law 87-01, which created the Social Security System, provides that a female employee registered with the social security system has the right to a maternity benefit equal to 14 weeks of quotable salary. To receive the benefit, the employee must have been contributing to the social security system for at least eight of the 12 months prior to the date of birth or the beginning of maternity leave. Also, to receive the benefit, the employee must obtain a maternity report, completed by her doctor, which must certify the number of weeks of pregnancy to date, the expected date of birth, personal information about the patient, and the credentials of the doctor and medical centre. The report must also specify the beneficiary of the maternity benefit in the event of the death of the employee. This report must be handed to the employer, who files it with the Social Security Treasury as part of the process for requesting the payment.
The salary is paid by the employer directly to the employee. In turn, the employer receives the amount of the maternity benefit as a credit, which is put towards the next payment request from the Social Security Treasury.
There is a cap on maternity benefit equal to 10 minimum salaries (established and adjusted by the National Council for Social Security). If the ordinary salary of the employee exceeds this statutory limit, the employer is bound to pay the full amount to the employee as per Article 239 of the Labour Code, regardless of whether the credit to be received from the social security system is less.
When the employee requests authorisation to take vacation after maternity leave, the employer is bound to grant the request (provided the employee is entitled to vacation rights).26
Also, when an employee is breastfeeding, she is entitled to three paid 20-minute breaks each day to breastfeed her baby. Further, during the baby's first year, the employee is entitled to one half-day each month to take the baby to any doctor's appointment.
Female employees who benefit from maternity protection can nevertheless be dismissed, provided the employer obtains authorisation from the Department of Labour or the local authority. An employer who dismisses a female employee without this authorisation must pay an indemnity equivalent to five months of ordinary salary, in addition to all other benefits and severance.27
A dismissal without cause of employees during pregnancy and up to three months after giving birth is void.28
A male employee is entitled to two days of paid leave following the birth of his wife's or partner's child.29
There is no express provision in the Labour Code regarding the language that should govern communications between employers and employees. However, the official language of the Dominican Republic is Spanish, and any document that is to be filed with the local authorities (e.g., employment agreements with foreign employees) must be in Spanish or duly translated by an authorised judicial interpreter. Documents to be filed include offer letters, employment contracts, agreements, compensation plans or bonus agreements and the policies of the enterprise.
There are no criminal penalties for the lack of translation, but it will be practically impossible to comply with the local rules regarding registration of documents if they are not submitted in Spanish to the Labour Department of the Ministry of Labour or the local authority, or there is a risk that an employee intends to disregard a certain policy or regulation in a foreign language, because of a lack of knowledge of the language, assuming it was not a requirement to apply for or be accepted for the job.
Freedom to join a union is one of the basic rights of an employee. Employers are prohibited from using influence to restrict the right of employees to join a union, or firing them for belonging to or remaining in one.
The approval of the employer is not required to form an employees' union. The employees have to comply with the requirements set by law regarding formal documents, capacity and the number of members organising the union, and register before the Ministry of Labour. If the incorporation documents are not in compliance with the law, the Ministry of Labour can reject the registration or return the files for their correction. Once the union is registered with the Ministry of Labour, it has legal capacity as a juridical person.
A union representative's rights cease upon a violation of certain duties or by committing harmful conduct. The term for which he or she is elected depends on the statutes of the union, and his or her privileges are maintained up to eight months after he or she ceases to be a representative of the union. Any other specification as to the frequency of meetings and other tasks will be determined by the statute of the union.
Employee representation (protected concerted activity)
i Requirements for registration
Companies are allowed to maintain a data protection service for the control of the quality, goods and other information regarding the work being done by their employees. In accordance with Article 43 of the Labour Code, a company must always maintain this system of protection while not infringing the dignity of the employee, using these systems with discretion and subject to objective criteria. The implementation of the system, according to the provisions of Article 44 of the Labour Code, must be notified to the Ministry of Labour within 30 days of the start of the implementation of the system.
The creation of databases of personal information in the Dominican Republic is subject to compliance with the provisions contained in both the Constitution and Data Protection Law No. 172-13, regarding the conditions for the collection of data and the rights of the data subjects regarding the information kept on databases, as well as the handling of the data. However, Article 41 of Law No. 172-13 provides that 'individuals that create files, records or databases of personal data that are not intended for their exclusive personal use should comply with the requirements established by this law'. Hence, if the creation of the database is for the exclusive use of the employer, there is no need to comply with registration requirements established by the law.
Article 27(4) of Law No. 172-13 includes as an exception to the requirement of consent of the data subject to access, process and transfer personal data, any information 'arising from a business, employment or contractual, scientific, or professional relationship with the individual, and necessary for the development or performance of the relationship'.
The Supreme Court of Justice acknowledged that employers are entitled to search and revise all emails issued by members of its personnel subject to the fact that the email is sent from a company-owned email account (institutional email account) and kept on a server owned or controlled by the company. The Supreme Court of Justice established that the institutional email account is a tool provided by the employer to the employee for the performance of his or her work and, therefore, the property of the employer, which entitles the employer to have access to all emails issued regardless of the addressee.30 The Constitutional Court reaffirmed the criteria set by the Supreme Court of Justice in this judgment, through a decision issued on 8 August 2019.
ii Cross-border data transfers
As previously established, if the use and handling of data is exclusively for private purposes, the provisions of Data Protection Law No. 172-13 do not apply. In any case, Article 28 of Law No. 172-13 provides that the transfer of personal data contained in any file, record or database shall be expressly consented to by at least one of the data subjects whose information is contained therein. However, according to the provisions of Article 27.1 of this Law, information from publicly available sources does not require the consent of the data subject for it being processed or transferred to third parties.
iii Sensitive data
Maintaining databases of sensitive data is strictly prohibited. This type of data consists of, in general, political opinions, religious beliefs, philosophical or moral convictions, union work affiliation and medical information.
iv Background checks
Background checks are not expressly prohibited under Dominican law if they refer or are limited to publicly available information. Consent of the employee is required to access information from credit bureaus.
Employment may be terminated for dismissal with cause when the employer attributes to the employee one or more of the serious infractions listed in Article 88 of the Labour Code as cause of termination of the contract. It is the employer's right to terminate the employment agreement when an employee has committed a serious or inexcusable fault. The causes listed in Article 88 refer to contractual or legal faults that, because of their nature, make it impossible for the employment agreement to remain in effect.
It suffices that the fault committed by the employee must correspond with any of the causes listed in Article 88 of the Labour Code for the termination to occur; it is irrelevant and not required that the employer suffers any damage as a result of an employee's actions, except in the circumstances expressly provided by the law.
The employer has a limit of 15 days in which to proceed with the termination of an employment agreement for any cause, as indicated above. The term starts to accrue as of the date of the event that caused the breach of the contract, or as of the date on which the employer was informed or aware of the event taking place.
The employer obliged to communicate in writing to the employee its decision to unilaterally terminate the employment agreement within that term; otherwise the termination could be declared as time-barred. As of that moment, the employer has 48 hours to inform (in writing) the Labour Department of the Ministry of Labour, or the local authority acting as such, of the termination of the employment, with an express indication of the fault or faults committed by the employee.
The burden of proof of the just cause for termination lies with the employer. If the employer provides evidence of the legal cause, it is not required to pay any severance to the employee (except for the acquired rights, such as unused vacation time, Christmas bonus and profit share, which are due to the employee regardless of the cause or mode of termination of the employment agreement). However, when the employer fails to demonstrate just cause for unilateral termination, it is obliged to pay severance and compensation of up to six months of ordinary salary.
Transfer of business
A change in the ownership of a business, or the transfer of employees to any other company, passes on to the acquirer of the business all the prerogatives and obligations arising from the employment agreements corresponding to the transferring establishment, or relating to the transferred worker, including whatever may have been the cause of a suit, a pending sentence or execution of a decision. In any event, it does not terminate the rights acquired by the worker, without prejudice to the provisions of the third and fourth paragraphs of Article 69 of the Labour Code.
The new employer is jointly liable with the substituted employer for the obligations arising from the employment agreements or the law, before the date of the substitution, up to the statutory limit of any corresponding action.
Although labour laws tend to protect employees, they are not considered a barrier for investing or establishing a business in the Dominican Republic. The provisions are clear as to the rights to which employees are entitled, as well as the implications for employers who do not comply. Moreover, the Supreme Court of Justice has been consistent in the interpretation of the law, setting criteria commonly followed by the lower courts.
There are new demands from both employees and employers regarding labour conditions that are not expressly established under the law. Concepts such as availability and flexibility have evolved, and the international reach of work results in new conditions. This will require the active participation of the labour authorities in the discussion.