Forums For Adjudicating Employment Disputes
For individual employment contracts, the Ministry of Labour handles certain aspects relating to the employer-employee relationship, such as individual hiring and authorization for dismissal with or without cause. Once the individual employment contract is finished, with or without cause, in the first instance, labour courts have jurisdiction over disputes. Appeals are heard in the Superior Court. The Superior Court does have a specialized labour court. For matters related to collective hiring, the Ministry of Labour is the ultimate authority. For collective labour disputes, a special conciliation and arbitration court is formed for each particular case. In accordance with recent administrative amendments, the Ministry of Labour has a Mediation Department (not an arbitration department) for the resolution of labour disputes.
The Main Sources Of Employment Law
The main sources of employment law in Ecuador are the Constitution, the Labour Code, International Treaties duly approved by Ecuador, Ministerial Agreements and Resolutions issued by the Ministry of Labor, and, when applicable, the Civil Code.
National Law And Employees Working For Foreign Companies
National Law, including international treaties duly approved by Ecuador, will apply equally to national and non-national employees working in Ecuador.
National Law And Employees Of National Companies Working In Another Jurisdiction
Labor legislation is territorial and does not apply abroad. Ecuadorian companies operating abroad must comply with the labor regulations of the country in which they operate.
The Constitution recognizes and guarantees individuals the right to the protection of personal data, Collection, filing, processing, distribution or dissemination of this information data shall require the owner's authorization. To date, the Law for the Protection of Personal Data has been approved by the National Assembly and is awaiting the approval or veto of the President.
Legal Requirements As To The Form Of Agreement
Most labor contracts are required to be in writing and registered with the Ministry of Labor. However, contracts can be implied. A contract of employment is understood to exist when a person undertakes with another person to render his lawful and personal services, under his dependence, for a remuneration fixed by agreement, law, collective bargaining agreement or custom.
The law provides for a trial period of 90 days, but the parties may waive the trial period.
Hours Of Work
Unless a special work shift or agreed overtime, employees cannot work more than 40 hours per week. The standard workday is 8 hours a day, Monday through Friday.
Special Rules For Part-time Work
Although there is no provision on part-time work, there are contracts in which part-time work can be applied, among others: agriculture, tourism, cultural sector. In exceptional cases, upon agreement between the parties duly authorized from the Ministry of Labor, for a six months period, renewable for six more months on a single occasion, working hours may be reduced to 30 hours per week.
Minimum wages and salaries are set by the Labour Authority. The National Wage and Labor Council, composed of representatives of workers and employers, must reach an agreement in the last quarter of each year to fix the remuneration for the following year. If there is no agreement, the Ministry of Labor fixes it and the increase is made according to the projected inflation. In addition to normal monthly pay, employees are entitled to the following:
- Christmas Bonus or Thirteenth Salary: This is the equivalent to 1/12 of what the worker earned in the twelve months from December 1 of the previous year until November 30 of the year in which payment is made.
- School bonus or Fourteenth Salary: This is one unified base salary and is paid once a year.
- Also, the employer or company must pay their employees fifteen percent (15%) of the Company’s net profits. Ten percent (10%) is distributed amongst the company’s employees regardless of their salaries for the corresponding year. The remaining five percent (5%) is paid directly to the company’s employees in proportion to their dependants, which are the employee’s spouse, children under eighteen and disabled children regardless of age.
- Reserve Funds: Any worker who has provided services for more than one year is entitled to payment by the employer, either directly or through the Social Security Institute, of a sum equal to one month’s salary or wages for each complete year after the first year of employment. These sums will be paid monthly.
- “A decent salary” is higher than the base salary and must at least cover the basic needs of the individual and his family. It is based on the basket of foods set each year by the appropriate authority and is monetary compensation paid by employers from the year’s profits to their employees, before paying dividends. Although this payment reduces the employer’s profits for the following fiscal year, it is a deductible expense.
Employees are entitled to Saturdays, Sundays and holidays of the country/region off. Employees are also entitled to 15 calendar days annual leave per year; an additional day per year of service if the employee has worked for the same employer for more than five years, up to a maximum of 30 calendar days of vacation in total. Public sector workers are entitled to 30 calendar days annual leave.
With specific exceptions, the minimum age is 16. The minimum age for retirement is 65.
Employees must provide notice to the employer when they miss work because of a just cause. In the case of illness or disability, the employee must submit a doctor’s certificate in which the time of leave is determined and whether or not the leave should be paid.
When the worker satisfies the prescribed minimum requirements, the employer must pay the employee the benefits of general personal and family health insurance from the Ecuadorian Institute of Social Security (IESS). Furthermore, the employer must pay 50 percent of the worker’s salary or wages for the first three days of illness when not work-related.
Location Of Work/Mobility
There is no express provision to cover transportation costs, however, by custom initiated when the Law did provide for this right, whe employee must move outside their usual residence, the employer must provide transportation or pay for transportation.
The employer is obligated to discount from the worker’s salary the amount corresponding to the worker’s personal contributions to the Ecuadorian Institute of Social Security (IESS). This is 9.35% of the worker’s salary in general. The employer’s contribution is 11.15%. In addition, workers employed for at least twenty-five years on a continuous or interrupted basis are entitled to receive an employer-paid pension; this pension is also paid in the case of dismissal without just cause if the employee has worked for the same employer for 20 years or more.
Parental Rights (Pregnancy/ Maternity/ Paternity/ Adoption)
Maternity leave consists of two (2) weeks before giving birth and 10 weeks following birth; recent modifications to the Labour Code grants 10 additional days of maternity leave for multiple births.
There is Paternal leave of ten (10) days with an additional eight (8) days in the case of a Caesarean or complicated birth, and 25 days if the child is born with a severe illness. If the mother dies during labour or while she is on maternity leave, the father is entitled to the total or remaining leave. There is also leave for adoptive parents equal to 15 days from the day the child is given to them. Finally, there is special leave, equivalent to 25 days, for parents with a child that has a degenerative illness; both parents can use this leave simultaneously or individually.
At the end of the above-mentioned paid maternity or paternity leave period, the father or mother may request an optional and voluntary unpaid leave of absence for up to 9 additional months.
Maternity leave and shortened workday for nursing biological mothers is available. Other “family friendly” rights include maternity leave for adoption parents, parental leave for fathers when the baby is born and leave for both parents when the child has a degenerative illness or are caring for children or parents with disabilities
Contracts and the way they are executed must be governed by the law, so there is very little that can be freely agreed between the parties. However, everything that is in favor of the employee and improves what is contemplated by law can be agreed upon.
Non-compulsory terms can be agreed in addition to the minimum rights that are established by the Labour Code.
Types Of Agreement
As a general rule, the employment contract will be indefinite. However, the Law contemplates special employment contracts for certain sectors such as agriculture, livestock, floriculture, tourism, culture, telecommuting, for specific work or service within the line of business, new ventures, and other sectors of the economy.
An employee is under an implied duty of secrecy/confidentiality but these rules can be further expanded in the employment agreement./p>
Ownership of Inventions/Other Intellectual Property (IP) Rights
The rules are contained in Intellectual Property Law as opposed to the Labour Law. It is advisable to include these specific rules in the labour contract, especially if the employer wants to benefit from some of the benefits that according to the mentioned law would correspond to the holder of the intellectual right.
As long as no person is directly or indirectly discriminated against, the company may establish special requirements for hiring. In the law, there are few; among others, minors under 18 years of age cannot perform underground activities, internship contracts must include the time for the intern to continue with the studies, medical examinations.
It is possible to hire non-nationals but non-nationals must obtain a work permit from the Ministry of Labour. As a general rule, a minimum of 80% of employees must be Ecuadorian and therefore only 20% may be foreigners.
Hiring Specified Categories Of Individuals
At least 4% of an employer’s work force should be disabled. Instead of hiring a disabled person, an employer may hire an individual who has a disabled person under his care. In this case, the work shift is reduced to 6 hours and severance pay for dismissal is higher. The number of men and women hired should be equal.
Outsourcing And/Or Sub-Contracting/Temporary Agency Work
Outsourcing for activities related directly to the purpose of the main business of the company is prohibited. The employer can, however, contract specialized services for specific services not related with the business’ main purpose such as security, cleaning and messenger services. Specialized technical services can be sub-contracted under civil contracts if the provider is an independent party and the service is not part of the main purpose of the business.