• May 15, 2019

Commemorating Labor Day, on May 1 Supreme Decree 3888 was issued, which regulates the salary increase and the minimum wage for the private sector. This supreme decree establishes that the salary increase will be agreed upon between workers and employers with a minimum increase of 4% and that the new national minimum wage will be equivalent to Bs 2,122.00 (an increase of 3% in relation to the previous year). According to this Supreme Decree, these determinations should be regulated by the Ministry of Labor, Employment and Social Welfare, which issued this regulation in the form of Ministerial Resolution No. 425/19, a regulation published just a couple of days ago (precisely on May 13).

This Ministerial Resolution establishes a series of important details concerning the salary increase, such as:

- A “Collective Agreement of Salary Increase” must be executed to formalize the salary increase, signed by the employer and the representatives of the workers (representatives of the union). If these representatives do not exist, a majority of the workers and the employer must execute it.

- The increase is not mandatory for people in certain executive positions (presidents, vice-presidents, board members, managers, etc.) who have a salary level consistent with that position.

- If, even with a salary increase, the national minimum wage is not reached, employees must be paid the minimum wage. On the other hand, if the salary increase grants an amount higher than the minimum wage, this higher amount must be paid (i.e. employers cannot increase salaries by less than 4% in order to pay only minimum wage). In addition, wage increases of less than 4% that were made before the existence of the Supreme Decree must be leveled; however, salary increases greater than 4% that were made before the issuance of the Supreme Decree must continue to apply.

The Collective Agreement must be submitted until June 28, 2019 (July 30 for the mining sector) through the Virtual Office of Procedures of the Ministry of Labor, Employment and Social Welfare, attaching: i) a Sworn Statement Form of Salary Increase containing the data of the deposit that must be made by concept of "Retroactive Salary Increase Form"; ii) Retroactive Salary Increase Form in the form set forth in the Virtual Procedures Office, retroactive to January 1, 2019; and iii) the Collective Salary Increase Agreement scanned in PDF format (containing the signatures of the workers).

Although the deadline to carry out this procedure is June 28, the Ministerial Resolution establishes a deadline until May 31 to sign the Collective Agreement and perform the retroactive payment of the salary increase for the year 2019. It also warns that the presentation of the Agreement does not exempt the employer from the monthly presentation of the Salaries, Wages and Work Accidents Form.

 

Marcel Rivera

Guevara & Gutiérrez

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