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Venezuela

January 15, 2021

By John Tucker

Back to International Employment Law

Venezuela

KEY DEVELOPMENTS FOR 2021


 

Challenges relating to remote work

COVID‑19 brought upon many challenges in 2020. One of those challenges was to work remotely. Remote work is not covered in Venezuelan law and this type of work brought new types of challenges and claims to businesses (for example, challenges regarding how to supervise and discipline someone working remotely, what tools the employer would be required to provide to an employee working remotely, how far an employee should go to ensure compliance with occupational health and safety regulations while the employee is working remotely, etc.).

These are all questions that will likely have to be dealt with by employers in Venezuela as the tendency to work remotely continues as a result of the ongoing COVID‑19 pandemic.


 

COVID‑19 occupational safety and health compliance

Occupational safety and health compliance is always something that employers in Venezuela need to take care of. However, as a result of the COVID‑19 pandemic, there are new safety and health regulations that employers need to be compliant with and to ensure that all employees have a secure and safe environment. There are also other safety and health issues mainly related to employees' mental health that employers need to be careful of and monitor continuously. An issue that has been part of the conversation is how to grant vacation leaves during this situation. Can you grant vacation to someone working remotely? Is it truly a vacation if the country is subject to a complete lockdown? These are issues that employers need to resolve, especially considering that the Government institutions have not been helpful on these topics and have provided more questions than answers.


 

Increase of contractors and workers

Delivery apps have increased exponentially in the country as a result of an informal dollarization of the economy. We believe that these new types of contractors or workers will bring new types of employment claims, workers compensation, and indemnity claims, that tied together with the payment mechanisms, will bring interesting cases in our courts.

 

KEY DEVELOPMENTS FOR 2020


 

Payment of wages and benefits in multiple currencies

Inflation continues to be a problem in Venezuela as the value of the local currency, the Bolivar, continues to decrease rapidly, thereby increasing the costs of goods and services. In an attempt to control the rate of inflation, the Venezuelan Government allowed the use of foreign currencies for the payment of goods and services in 2019. As a result, employers are now required to pay their staff using foreign currency and these payments must be made in cash, given that many employees do not have offshore bank accounts. This has also opened the market for offshore pre-paid credit cards, which employers may give to employees for use in the country. The biggest concern with these payments is whether they constitute salary for the purposes of determining the statutory benefits applicable under Venezuelan law.


 

Workforce reductions

As the economic conditions in Venezuela continue to deteriorate, many businesses have resorted to reducing their workforce, even though this is technically prohibited by law and requires prior approval from the Government. However, the Government and Labour Inspector Offices have been more open to receiving and approving requests for workforce reductions and protecting businesses from collective bargaining claims in 2020. These requests allow for the suspension of jobs without pay, as well as the suspension of certain benefits under collective bargaining agreements.


 

Hiring of independent professionals continues to increase

The use of independent professionals continues to increase, and many offshore companies are hiring independent professionals to work remotely and paying them in foreign currency. It is also becoming more common for employers to pay benefits in multiple currencies, as well as with crypto-currencies.

 

KEY DEVELOPMENTS FOR 2019


 

Surge in inflation rates

The International Monetary Fund predicts that inflation in Venezuela could increase by 10 million % in 2019. This will result in frequent changes to the minimum wage and an increase of statutory benefits such as food stamps. As a result of inflation, it is becoming more and more common to purchase goods and services in US Dollars instead of using local currency. The Venezuelan Government still need to issue further regulations and clarifications relating to the payment in US Dollars as it is now necessary for almost every employer to provide some type of remuneration to their employees in US Dollars.


 

Enactment of special bar against dismissals

On 28 December 2018, the Government enacted a Decree on Special Bar Against Dismissals which will remain in place for two years until 28 December 2020. The decree prevents employers from dismissing an employee without just cause and prior authorization from the Office of the Labour Inspector. Failure by an employer to comply with these provisions will give an employee the right to claim reinstatement and payment of unpaid wages.


 

Increase in the independent professionals

Companies use of independent professionals continues to increase as a means to lower their costs. Many offshore companies are hiring independent professionals to work remotely and paying them in foreign currency.

With thanks to John Tucker of LEĜA Abogados for his invaluable collaboration on this update.

Contributors

Image: Suzanne Horne
Suzanne Horne
Partner, Employment Law Department

Image: Kirsty Devine
Kirsty Devine
Associate, Employment Law Department

Image: Aashna Parekh
Aashna Parekh
Associate, Employment Law Department

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