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Volume XI, Number 168

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Global Employment Law Update - Part 2: Colombia to El Salvador

Introduction

Welcome to the latest edition of the McDermott Will & Emery Global Employment Law Update. The purpose of this publication is to provide you with concise summaries of many of the laws and court decisions from 2020 that significantly affect employers and employees all over the world. No publication has ever captured all new employment law developments from every single country. However, our effort to create the most comprehensive global employment update ever assembled has resulted in updates from 53 countries.

Many of the updates presented in this publication describe changes in the law that are well known to lawyers and human resources professionals from those countries, but are lesser known in other parts of the world. Our aim is to provide you and your colleagues with a useful reference guide to significant changes in employment law all across the globe. Furthermore, we hope this guide—and other specially designed products we create for our clients—will serve as a tool to assist multi-national businesses in their ongoing struggle to maintain a consistent global corporate culture amidst an ever-changing landscape of local employment laws.

Local employment lawyers from each country, who are either McDermott lawyers or part of McDermott's Global Employment Law Network, prepared these updates. We select each law firm participating in our network based on their outstanding local reputation and, in most cases, our prior experiences in working with them. Participants in the network work closely with McDermott lawyers on client projects, article writing, seminar and webinar presentations as well as signature client events.

Colombia

MINIMUM WAGE AND MANDATORY TRANSPORT ALLOWANCE

In Colombia, the minimum wage is determined annually by the Colombian Government. Through Decree No. 1785 dated December 29, 2020, the minimum monthly salary for 2021 is $ 267 USD, which represents an increase of 3.5% from the prior year. Additionally, by means of Decree 1786 dated December 29, 2020, the mandatory monthly transport allowance for 2021 is $31 USD, which also represents an increase of 3.5% from the prior year.

CONNECTIVITY ALLOWANCE

Because of the COVID-19 pandemic, the Colombian government temporarily ordered employers to recognize an internet connectivity allowance at the same value of the mandatory transport allowance. This benefit is only for employees who earn less than the equivalent of two minimum monthly wages and are rendering their services from home.

FORMAL EMPLOYMENT SUPPORT PROGRAM

The Formal Employment Support Program (PAEF) was structured by the Colombian government to aid all employers for keeping their employment contracts by means of a monthly payment given directly to employers, who can receive up to 40% of the minimum legal wage for each employee formally retained or hired. [check this with local counsel]

SOCIAL PROTECTION FLOOR

As of February 1, 2021, employers and contracting parties with part-time employees or contractors that earn less than one minimum monthly legal wage (MMLW) must register these personnel before the Social Protection Floor. This is a special social security system, divided in the following subsystems:  a) Subsidized Health Regime; b) Inclusive Insurance; and c) Economic Periodical Benefits (EPB). The contribution is paid exclusively by the employer or the contracting party, it is paid to the EPB subsystem, and it is equal to 15% of the employee’s or contractor’s monthly income. The 1% of this contribution goes to the Inclusive Insurance.

BIOSAFETY MANDATORY PROTOCOL

Because of the COVID-19 pandemic, the Colombian government, the Colombian Ministry of Labor and the Colombian Ministry of Health and Social Protection have taken different measures throughout 2020 to protect the health and safety of employees. Under Resolution 666 of 2020, which remains in force, all employers and contractor parties are to undertake biosafety protocols to mitigate, control and execute proper management of the COVID-19 pandemic in the workplace, in addition to the obligations set forth in the Occupational Health and Safety Management System (SG-SST).

Costa Rica

REDUCTION OF WORKING HOURS

Law 9832 was published on March 23, 2020, in the Official Gazette, authorizing employers to unilaterally reduce the number of hours of the ordinary working day agreed in the work contract, when the employer's income is affected by the declaration of a national emergency, such as the COVID-19 pandemic.

The percentage of working-hours reduction will be authorized taking into account the drop in the employer's gross income with respect to the same month of the previous year. (More information available here.)

SUSPENSION OF EMPLOYMENT CONTRACTS

Executive Decree No. 42248 – MTSS, which was issued on March 19, 2020, regulates the procedure for temporarily suspending  work contracts in cases of force majeure and fortuitous events to apply to the COVID-19 context. Employers whose economic activity is temporarily prevented by the partial or total closure of establishments because of COVID-19 health and safety measures, as required by the government to contain the spread of the virus, may request the suspension of employment contracts by clearly and specifically stating the reasons for the request via affidavit. (More information available here and here.)

TRANSFER OF HOLIDAYS

To promote the reactivation of small and medium tourism businesses, as they have experienced some of the greatest negative impact from COVID-19, Law No. 9875 was published on July 18, 2020, transferring official holidays to Mondays for the years 2020 through 2024, to promote domestic visitation and tourism. Accordingly, in 2021, the holidays are moved as follows:

  • May 1 will be moved to Monday, May 3.

  • July 25 will be moved to Monday, July 26.

  • September 15 will be moved to Monday, September 13.

  • December 1 will be moved to Monday,
    November 29.

(More information available here.)

MORAL DAMAGES IN CASES OF SEXUAL HARASSMENT

The Second Chamber of the Court issued Resolution 00768 - 2020 on April 30, 2020, establishing that the recognition and estimate of moral damages in cases of sexual harassment in the workplace does not require direct proof. Rather, for compensation purposes, the calculation of moral damages is subject to the prudent appreciation of the decision-making authority. In other words, the calculation of such damages does not require the analysis of particular evidence, since it is a matter of logical deduction and of the judge's own experience. Any such court determinations will serve as a jurisprudential reference for future cases. (More information available here.)

Croatia

Legislation

Act on Posting of Workers to the Republic of Croatia and Cross-Border Enforcement of Decisions on Fines

The Act, which went into effect on January 1, 2021, regulates the working conditions and rights of a worker who is sent to work for a limited time or for a short-term assignment in Croatia from the European Union, another state party to the European Union Economic Area, the Swiss Confederation or a third country, regardless of the law applicable to their employment. Where there is a conflict, the law that is more favorable to the employee applies. Short-term assignment is defined as an assignment that lasts up to 18 months. The Act also sets forth the obligations of employers and the rules and procedure for mutual assistance and cooperation between the competent authorities of the Member States in qualified cross-border enforcement of fines issued due to violations of the rights of short-term assignment workers. (More information available here.) 

Foreigners Act

The New Foreigners Act, which also went into effect on January 1, 2021, implements a number of changes to employment law. Firstly, under the Act, the government will no longer make a decision on determining the annual quota of employment permits for foreigners. Employers will have to request from the Croatian Employment Service the relevant labor market standard before applying for residency and a work permit for foreigners. If it is determined that there are no unemployed persons in Croatia who meet the employer’s job requirements, employers may then apply for residency and a work permit with the Ministry of the Interior, which will request the Croatian Employment Service issue an opinion on hiring a specific foreigner with a Croatian employer. The procedure for issuing residency and work permits, including the implementation of the labor market standard before the competent authorities, should take a maximum of 30 days. The Act also provides for exceptions to the implementation of the relevant labor market standard related to occupations where availability is scarce such as seasonal agricultural work of less than 90 days, forestry, catering and tourism.

Amendments to the Labour Market Act

The Amendments to the Labour Market Act went into effect March 2020. The changes were minimal and focused on the right of seasonal workers for prolonged monetary aid and pension insurance in case of special circumstances that endanger the life and health of citizens, endanger property of great value or risk significant damage to the environment or economy.

Regulation Regarding the Preservation of Jobs during the COVID-19 Pandemic

The COVID-19 pandemic forced the Croatian government to close numerous business activities in two waves, the first in March and the second in November. As a result, numerous jobs were endangered, and the impact to the economy was devastating. Thus, to preserve jobs, multiple governmental measures were taken to subsidize the employment of all affected workers. The Croatian Employment Service was charged with coordinating and implementing these measures. Some of the measures include subsidizing up to 50% of workers’ salaries and 100% of workers’ education costs.

Act on the Amendments of the Income Tax Act

The Croatian Parliament enacted the Act on the Amendments of the Income Tax Act, which went effect on January 1, 2021, and lowered the income tax rates by 6%, 4 % and 2%. Now, the income tax rates are 30%, 20%, and 10%, respectively, depending on the amount and type of income a person earns.

Court Decisions

Judgment on the Validity of Extraordinary Termination of Employment Contract (Supreme Court of the Republic of Croatia, Revr 152/2017-2, January 8, 2020)

Pursuant to the first paragraph of Article 116 of the Employment Act, the termination of an employment contract because of extraordinary circumstances is permitted and does not constitute discrimination toward an employee even if a comparable contractual breach did not result in the termination of another worker’s employment contract because of extraordinary circumstances. The basis for termination of an employment contract because of extraordinary circumstances is the employer’s assessment of the specific employment relationship and the possibility for continuation of said relationship. Thus, in comparable situations an employer can decide which contract to terminate and which to uphold.

Judgment on the Validity of Termination of Employment Contract in Situations Where the Employee Claims He Has Been the Victim of Harassment in the Workplace and Thus Is Not Performing His Contractual Obligations (Supreme Court of the Republic of Croatia, Revr 2184/2019-3, September
22, 2020)

If an employee claims the existence of harassment and/or sexual harassment and refrains from work because they believe the employer has not executed measures that would stop the harassment (as is their right in accordance with article 134 paragraph 4 of the Employment Act), this cessation of work does not prevent the employer from terminating the employee’s contract if another valid reason exists for the termination. (More information available here.)

CZECH REPUBLIC

EQUAL PAY FOR EQUAL WORK APPLIES ACROSS THE COUNTRY

In a groundbreaking decision, the Supreme Court held that employees performing the same work must receive the same salary even if they are working in different regions of the country. Although the Supreme Court acknowledged that higher supply in the labour market, especially in larger cities, increases employee salary, the principle of equal pay for equal work does not permit employers to take into consideration social and economic conditions of particular regions in which the employee performs work. (More information available here.)

FIRING AN EMPLOYEE BEFORE RETIREMENT FOUND UNACCEPTABLE

The Constitutional Court held that firing an employee near retirement age is against good morals (contra bonos mores) and, therefore, the notice of termination of the employment relationship is void. In this particular case, the employee had been dismissed for not meeting the legal requirements to be a teacher. At the time of the termination the employee would have become eligible to receive a retirement pension in 17 months. (More information available here.)

EMPLOYEES CAN BREACH THEIR OBLIGATIONS EVEN IF THEY ARE SICK

The Supreme Court held that although the employee is not obliged to work if on sick leave, if they voluntarily work despite being sick, they must abide by all of their employment obligations. Therefore, even if the employee is sick, they can still breach their obligations to their employer, which might result in termination of the employment relationship. (More information available here.)

NEW RULES FOR THE TRANSFER OF UNDERTAKINGS

The Czech Labour Code has been significantly amended, effective July 30, 2020. The amendment brings, inter alia, a change in the legal regulation of the transfer of rights and obligations from labor law relationships (transfer of undertakings). Employers may no longer transfer employees’ rights and obligations to another employer simply by transferring activities (tasks) performed by the original employer to another employer. Rather, a successful transfer will require that the employer meet the following criteria: (a) the activity is carried out after the transfer in the same or similar manner and scope as was originally carried out; (b)  the activity does not consist entirely or largely of the delivery of goods; (c)  immediately before the transfer, a group of employees has been identified to carry out the activity; and (d) assets or the right to use the assets is transferred, where such assets are essential for the performance of the activity, having regard to the character of the activity; or a majority of the employees the current employer used to perform the activity are transferred, if this activity largely relies only on the employees and not the assets. There are limits to the applicability of this amendment. It will not apply where a special law already provides for the transfer of employee rights and obligations (e.g., in the case of a merger or the sale of an enterprise).

NEW CONCEPT OF HOLIDAY ENTITLEMENT

As of January 1, 2021, new rules for calculation of holiday entitlement have been adopted. Holiday entitlement is newly calculated on the basis of working hours worked in the relevant period. The minimum holiday entitlement for employees in private sectors remains four weeks; extension to five weeks is however discussed by the Parliament. When an employee has worked for less than the whole year but at least four times their weekly working hours, they shall be entitled to a proportion of the holiday.

Denmark

AMENDMENT TO THE DANISH ACT ON POSTED WORKERS

The amended European Union (EU) directive for posted workers entered into force on July 30, 2020. The directive introduced a set of new requirements for employment terms and conditions for employers who send their employees to work temporarily in another EU member state. On January 1, 2021, a number of amendments to the Danish Act on Posted Workers entered into force to implement this EU Directive. The amendments aim to improve conditions for posted workers and ensure equal treatment with national employees in terms of pay and working conditions. As an example, the list of mandatory Danish working conditions applicable to posted workers, regardless of which country's law otherwise applies to worker, has been expanded to include accommodation and allowances or reimbursement of expenses to cover travel and meals. Furthermore, the amendments make changes to long-term postings with a duration of more than 12 months, employment of temporary agency workers, and remuneration of workers posted to Denmark.

SALARY COMPENSATION SCHEME TO AID BUSINESSES DURING THE COVID-19 PANDEMIC

Throughout 2020, the Danish government introduced several initiatives granting salary compensation to employers financially affected by COVID-19. The current salary compensation scheme is applicable to companies that expect to dismiss at least 30% or more of their total workforce or more than 50 employees because of restrictions implemented by the Danish government. The scheme is applicable while COVID-19-related restrictions are in force.

SUPREME COURT RULING ON MATERNITY LEAVE

According to the Danish Act on Equal Treatment of Men and Women, an employer dismissing a pregnant employee is required to prove that the dismissal is not wholly or in part based on the employee’s pregnancy. On August 31, 2020, the Supreme Court lifted this heavy burden of proof on an employer, a clinic,that had suffered a decrease in patients and, consequently, needed to reduce staff. Apart from recognizing the employer’s economic difficulties, the Supreme Court found that the dismissed employee's work experience was significantly different from the employees who had not been dismissed.

RULING ON THE VALIDITY OF RESTRICTIVE COVENANTS IN SHAREHOLDERS' AGREEMENT

The Eastern High Court ruled in a case concerning a noncompetition clause agreed upon in a shareholders' agreement between two shareholders holding 50/50 ownership, who were also employed by the company. In connection with one of the shareholders' withdrawal as owner, the shareholder entered into a settlement agreement providing that the shareholders' agreement remained valid between the parties. However, the former shareholder began operating a competing business. His former co-owner sought an injunction. Both the District Court and the Eastern High Court found that the noncompetition clause was valid and not covered by employee-protective statutory legislation. According to the Eastern High Court, its assessment of the validity of the noncompetition clause was not affected by the fact that the former owner continued as an employee after the withdrawal and was subsequently dismissed summarily. The ruling has been appealed to the Supreme Court.

EASTERN HIGH COURT RULING ON EMPLOYEES' ENTITLEMENT TO BREAKS DURING WORK

In November 2020, the Eastern High Court ruled in a case concerning employees' entitlement to breaks during work. The case concerned an employee who was obliged to answer phone calls during her lunch breaks. According to the Danish Act on Implementation of Parts of the Working Time Directive, employees whose daily working time exceeds six hours are entitled to a daily break during which an employee does not perform any work. The employee claimed that she was entitled to compensation because she was answering phone calls during her lunch break. The Eastern High Court ruled that the employee's obligation to answer phone calls during her lunch breaks did not constitute a violation of the Act because (i) the Act does not fix the duration of the break; and (ii) the employee had not proved that she was not able to take breaks in accordance with the Act.

Egypt

Since late March/early April 2020, COVID-19 cast a shadow on civil and commercial transactions and contractual obligations thereunder, thus disrupting the global economy and, thereby, Egyptian businesses. 

The decrease in business resulted in a decline in profits and prompted some companies in Egypt to: (i) force workers to use annual leave during the COVID-19 pandemic; (ii) reduce employee wages by a percentage based on the wage value of the employee; and (iii) shut down the business altogether or terminate some employees, a severe legal violation.

In Egypt, the legal implications of COVID-19 on the employment relationships include:

  • Can employers force employees to use their annual leave during a pandemic-caused lockdown? Employers must grant the employee their annual leave in accordance with employer policy but may compel the employee to use any remaining annual leave or leave that has accumulated from previous years during the pandemic to reduce the costs and financial burdens as a result of the economic recession caused by the COVID-19 pandemic. Such conduct is inconsistent with ethical work codes, as the dire economic situation requires greater employer support of employees, who may have no other financial resources but their salary.

  • Can employers reduce worker pay? The Labour Law grants the employer the right to "temporarily" reduce worker salaries by up to 50% in cases where workers are unable to carry out their duties during exceptional or force majeure events. The COVID-19 pandemic is such an event and can result in a temporary salary reduction unless otherwise agreed in the employment contract or the company’s policies. It should nonetheless be noted that employers may not implement the terms of an employment contract in cases of exceptional or force majeure unless implementation is done temporarily and does not diminish or eliminate employee rights.

  • Can employers require employees work from home? According to Labour Law, employers must take all necessary measures to protect workers from the risk of infection. Employers in the private sector are may adopt any one or a combination of measures designed to protect employees, including: (i) providing employees and their families with medical supplies, (ii) implementing reduced flexible working hours; (iii) adopting a work-from-home policy; (iv) adopting work schedules to rotate workers; (v) paying for employee transportation to and from the workplace or allocating special transportation means for employees to avoid public transport. This does not apply to any new worker who has been employed for less than six months.

  • Can employers partially or completely close the workplace as a result of the outbreak or as a precautionary measure to prevent COVID-19’s spread? The employer is legally entitled to do so if the crisis leads to business disruption for a long time, or leads to the loss of the project for its economic viability, but if the crisis continues for months or years, the responsibility of the employer with regard to termination is greatly mitigated. 

Notwithstanding the foregoing, however, the question of whether the COVID-19 pandemic qualifies as a force majeure event – and thus allows employers to take actions it may otherwise not have been able to for the viability of its business and the safety of its employees – must be analyzed on an industry-by-industry, case-by-case basis. Whether the COVID-19 pandemic is a force majeure event will depend on how much a particular business sector’s performance has been affected (i.e., the performance is impossible or excessively onerous but yet still possible). The burden to show that the pandemic constitutes a force majeure event is on the debtor (i.e., the business unable to perform)

El Salvador

TELEWORKING REGULATION LAW

This law took effect on June 24, 2020, through Legislative Decree No. 600. It was the first regulation governing telework, mobile work, remote jobs and flexible workplaces.

This law requires a written agreement between the parties that: (a) specifies the equipment and software provided to the employee; (b) establishes methods for evaluating job performance and employee productivity; (c) requires compliance with work schedules, goals and performance efficiency; (d) details information security matters, including data protection and confidentiality requirements, that the teleworker must explicitly accept in the written agreement; (e)  ensures that the physical space for teleworking complies with Occupational Safety and Health regulations; and (f) requires the employer to assume the cost  of operating the technological equipment and to subsidize the payment of
electricity and internet services  in a manner proportional to the amount required for the employee’s work. This law also emphasizes that teleworkers have the same individual and collective rights as face-to-face workers.

PROTECTION FOR VULNERABLE WORKERS

Several temporary decrees were issued in response to the COVID-19 pandemic to protect vulnerable workers. Decree No. 774, which took effect in October 2020 and lasts for 180 days, considers vulnerable those over 60 years with chronic pathology, pregnant women and people with chronic illnesses, as well as COVID‐19 convalescent patients in their first month of recovery. It regulates within its main protection measures: (a) voluntary shelter in place, protecting vulnerable workers who choose to shelter in place from negative employment action; (b) mandatory payment of the equivalent of the employee’s salary and social security subsidy in case of medical disability; and (c) a guarantee of labor stability that prohibits employment dismissal so long as the decree is in force.

SPECIAL LAW OF INCLUSION FOR PEOPLE WITH DISABILITIES

This law repealed a law effective since 2000, and aims to recognize, protect and guarantee the full and equal exercise of rights by people with disabilities. It was published in the Official Gazette No. 178 Volume 428 of September 3, 2020, and took effect on January 1, 2021; however, the Chapter related to Sanctioning Court, Infractions, Sanctions and Procedures will become effective on January 1, 2022. Primary requirements for employers include: (a) guaranteeing compliance with current accessibility regulations so that all new construction work, extensions or remodeling are in accordance with designs that adapt to people with disabilities; (b) hiring at least one person with a disability for every 20 workers employed by that employer; (c) if it is not possible to hire the required number of people with disabilities, the employer will have to pay an amount equivalent to the current monthly minimum wage of the number of employees that the employer should have hired according to this law; (d) the work carried out by the person(s) with disabilities must be compatible with their capacities and abilities to ensure their maximum personal and professional development and safeguarding their dignity; and (e) if a person with disabilities is dismissed,  the employer must prove that it is not because of their disability.

PREVENTION OF BIOLOGICAL RISKS BECAUSE OF COVID-19

The Department of Labor and Department of Health have issued joint guidelines and protocols to improve employees’ health and well-being. These regulations govern safety measures when entering the workplace, workplace occupancy restrictions, public transportation and other areas of public accommodation, measures to reinforce the occupational safety management program, applying working methods to prevent the spread of COVID-19 and actions to be taken in response to cases of infection.

TEMPORARY REGULATIONS THAT REGULATED LABOR ASPECTS DURING THE STATE OF EMERGENCY BECAUSE OF COVID-19

A number of decrees were established in 2020 in response to the COVID-19 State of Emergency that  had labor implications, including: (a) a guarantee of protection against dismissal for all workers who have been quarantined because of COVID-19; (b) restrictions placed on the operations of many business activities; (c) suspension of all terms of judicial and administrative processes, including labor, for about four months; (d) development of exceptional and temporary measures to safeguard the labor stability of workers, such as advancement of vacation time by mutual agreement, subsidies to micro and small businesses and granting credits to certain businesses. Although these decrees are no longer valid, either due to the passage of time or as a result of having been declared unconstitutional, some business benefits are still in effect.

RESOLUTIONS THAT HAVE DECLARED UNCONSTITUTIONAL SOME REGULATIONS PASSED DURING THE PANDEMIC THAT HAD LABOR IMPLICATIONS

  • Resolution of Unconstitutionality 63-2020 of the Supreme Court on May 2020: This provisionally suspended Executive Decree 19, which said that the executive branch cannot usurp the power of another State body, even during a state of emergency.

  • Resolution of Unconstitutionality 21-2020 of the Supreme Court on June 8, 2020: Decree No. 29 (and several other decrees, by association) was declared unconstitutional because the shelter-in-place decree and the measures to restrict citizens’ rights were extended by the executive branch.

  • Resolution of Unconstitutionality 21-2020 of the Supreme Court on August 7, 2020: This declared unconstitutional Executive Decree No. 32, which governed the economy’s reopening.
    It also declared that limitations on
    constitutional rights must be done through secondary regulations. 

  • Controversy No. 8-2020. The resolution of the Supreme Court on August 13, 2020, resolved the controversy between the Legislative Assembly (Congress) and the Executive Branch (Supreme Court). Legislative Decree No. 661 was declared constitutional. Months later, because the previous decree was already out of date, a new Decree 757 (special transitory law to contain the pandemic because of the COVID-19 disease) was promulgated, which will remain in effect until 2021.

Each of these resolutions influenced companies to restart operations, in different productive sectors, following the health guidelines and protocols previously dictated, as well as the recommended work modalities such as teleworking, rotating shifts and reduced hours.

© 2021 McDermott Will & EmeryNational Law Review, Volume XI, Number 159
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