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Reduction of work schedule

Last Saturday, the President of the Republic signed a new law which allows employers to reduce the work schedule up to a 75% during the State of Emergency Declaration caused by the COVID-19 crisis. This bill has been in effect since last Monday, March 23rd, recorded as law No. 9832.

The aim behind this initiative is to help reducing costs to the private sector as a measure to help them get through the health crisis, avoiding closure of businesses and massive layoffs of workers.

The plan establishes that employers can modify the work contracts to reduce the number of hours on the “ordinary schedule” (48 hours) per the following:

  • 50% work schedule reduction: revenue decreases up to 20% in relation with same month of previous year.
  • 75% work schedule reduction: revenue decreases up to 60% in relation with same month of previous year.

 

To do this, the employer will need to prove the crisis has negatively impacted the revenue in relation with the same month of the previous year with:

  1. Authenticated sworn statement from the legal representative of the corporation.
  2. Revenue certification by a Public Accountant.

 

If the company has been recently incorporated, they will need to prove such decrease of revenue from an average of the previous three months from the date the State of Emergency was declared.

Work benefits and compensations apply using the original wages received before any deduction.

This measure is temporary in nature (up to three months) and could be extended depending on the development of the State of Emergency.

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The Author

Sebastian Alvarado

Sebastian Alvarado

Senior manager with broad experience in corporate environment. Proven results in successfully leading teams in three different countries through the Latin America Region.
Approximate 10 years’ experience with global immigration and corporate environment.

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