Forums For Adjudicating Employment Disputes
All lawsuits arising from a labour relationship dispute may be brought before the labour courts. At first instance the claim is heard by a professional Judge. Appeals are heard before a Tribunal comprising of three professional Judges. When the amount of the claim is less than Uruguayan pesos 168,000 (approximately USD $3,800), there is only one instance. Uruguayan labour law and also labour courts are influenced by the principle of “in dubio pro operario”, which means that generally speaking the law and the jurisprudence aims to protect the employee. The Labour Ministry acts as a mediator between the unions and the enterprises but its decisions are not binding of the parties. Its function is to help the parties resolve the conflict.
The Main Sources Of Employment Law
In Uruguay there is not a labour contract law (act) or a labour code. The rules that govern employment are scattered in different texts of various weights. There are constitutional rules, rules that are applicable to employment law that are from other legal sources, provisions passed via decrees of the Executive Power and, finally, conventional rules. The principle is that labour rules are public policy thus the flexibility scheme provided by the texts is very limited. Labour relations are also ruled by Collective Agreements entered into by unions and employers. It must be pointed out that collective agreements apply to all employees even those that are not members of the union.
National Law And Employees Working For Foreign Companies
National law applies to every person working in Uruguay regardless of their nationality and regardless of whether the employer is a national or a foreign company.
National Law And Employees Of National Companies Working In Another Jurisdiction
The principle is that national law only applies to people who work in Uruguay. Uruguayan nationals working in another jurisdiction will be subject to that jurisdiction’s law.
The right to the protection of personal data is expressly regulated by law. The employee has the right to access the companies' databases and request that their data to be deleted, replaced or supplemented by accurate, truthful and updated information.
Legal Requirements As To The Form Of Agreement
The agreement between the employer and the employee is generally verbal in Uruguay therefore there is no need to have a written contract. There is no obligation on the employer to register the employment relationship with the Labour Ministry. Although there is no legal requirement for the employment agreement to be in writing, contracts for a specified term should be executed in writing. When hiring an employee for a specified term, a justifiable reason should be given for employing the employee for such a fixed period. The law does not regulate a probation period, nevertheless the Judiciary in its totality admits the existence of a test period at the beginning of the labour contract. The period by which the worker is on a trial basis must bear relation to the total duration of the contract, being the allowed maximum of three months.
The Judiciary provide that trial periods are allowed in Uruguay but they are not mandatory. Because trial periods are not mandatory, they should be agreed in writing. A trial period should not exceed three months, or ninety days.
Hours Of Work
Employees in the commercial sector are not allowed to work more than 44 hours per week and a maximum of eight hours per day. In the industrial sector, employees cannot work more than 48 hours per week with a daily limit of eight hours. Commercial employees are entitled to a weekly rest of 36 hours. Generally speaking, this rest period is taken from 1:00 p.m. on Saturday and continues all through Sunday. It is possible to agree other rest days provided that the duration of such a rest period is 36 consecutive hours. The weekly rest entitlement of employees in the industrial sector is 24 hours and is taken on Sunday. In both sectors there should be a rest period of between thirty minutes and two hours and a half in between working hours. Commercial employees should take their rest period between the fourth and the fifth hour of work. Industrial employees should take their rest period on the fifth hour of work. The thirty-minute rest period is paid as it is considered as working time. A one-hour rest period might be paid, but this would have to be agreed upon by the parties. A two-hour or a two-and-a-half-hour break are never paid.
All working time that exceeds the maximum daily working time limit is regarded as overtime. Where an employee works overtime during a working day, he/she is entitled to double pay for those extra hours. Where an employee works overtime on a holiday he/she is entitled to be paid three and a half times more for those additional hours. The amounts paid as overtime are intrinsically considered salary, thus they should be taken into account for the calculation of the remaining labour credits, including dismissal compensation. The exceptions to the above are, among others, higher company personnel, e.g. those who hold a higher position to the Chief of Department, professionals, highly specialized experts and commercial travelers.
Special Rules For Part-time Work
Part-time work is generally valid and is not subject to special rules. Minimum wage should be prorated to the applicable time schedule.
Minimum salaries and work conditions are determined by Council of Wages, which are tripartite organizations integrated by representatives of the employers, employees and the government. Salaries are also determined by collective agreements between unions and employers. In addition, employees are entitled to an annual bonus which is supplementary to the employee’s salaries. This is a special bonus which is equivalent to one twelfth of the total salary paid by the employer in the period 1 December to 30 November.
The bonus is paid in two instalments. The first instalment is paid in June and corresponds to what was earned from 1 December until 30 May. The second instalment is paid between 14 December and 20 December.
Every employee who completes one year of employment is entitled to take 20 days paid holiday. In cases where the employee does not achieve one full year of employment during the holiday year (1 January to 31 December), he/she will have the right to take a holiday proportional to the worked period. Every four years, as from the fifth year, one extra day of holiday is accrued. Additionally, employees can earn a holiday salary, which is an amount of money given to the employee before going on holiday. This holiday salary is intended to enable employees to enjoy their holidays. This benefit is equivalent to a net day’s wage.
The minimum age to work is 15 years. There are no maximum age limits. 60 years is considered retirement age, but it is not mandatory.
The social security system covers health insurance and sick pay. The system is compulsory. The employer must also pay to the State Insurance Bank (Banco de Seguros del Estado) an insurance for work related accidents and occupational diseases. Allowances for illness pay and disability pay during the labour relationship are covered by the social security system.
Location Of Work/Mobility
The employer has the authority to make changes relating to the employees work location. This right is limited by the principle of reasonableness. Mobility clauses can be included in the contract of employment, but they cannot be operated unreasonably. Where the job requires travel to other temporary locations, it is normal for the employer to reimburse the employee for all reasonable travel expenses.
Current social security system is mix. This implies that employees pay social security contributions both to a public solidary system and to personal and individual accounts known as Pension Funds Administrators (Administradoras de Fondos de Ahorro Previsional) system. Once the employee retires, he/she will receive a pension paid by the public system and another paid by the Pension Fund Administrator. There is also a possibility, within certain conditions to access to a partial retirement compatible with the performance of services.
Parental Rights (Pregnancy/ Maternity/ Paternity/ Adoption)
Parental rights do exist and include paid maternity leave, paternity leave, adoption leave, time off for dependants and part-time working. An employee is entitled to three days paternity leave and to additional leave paid by the social security system, which currently extends to 10 days as well. A pregnant employee is entitled to fourteen weeks leave. During maternity leave the employee receives her wages from the social security system. Parents are entitled to a reduction of their working schedule by half, until child turns 6 months old. The benefit shall not be used by both parents at once. The cost of the reduction is paid by the social security system. An employee is entitled to 6 weeks’ adoption leave. During adoption leave the employee’s salary is paid by the social security system. If the adopted person is severally disabled, the employee is entitled to request an additional 6 months leave (without payment).
As there is no requirement for there to be a written contract, there are no compulsory terms to be included.
Parties are free to agree whatever they want in their contract, taking in account that these provisions cannot be less favorable to the employee than those of the law or those of a collective agreement.
Types Of Agreement
There are two types of labour agreements: Agreements with a fixed term and agreements with no fixed term. Both types of labour contracts are entered into within a private level between the employee and the employer, with no obligation whatsoever as to the registration or entry before the Ministry of Labour. The default position is the agreement with no fixed term, without time limit. Contracts for a specified term must have a justifiable ground. Said ground lies on the actual duration of the specific work to be done (i.e. temporary work; replacement workers.) There is no regulation regarding the maximum duration of the contract for a specified term. Judicial decision states that the maximum term should be that of the duration of the hired work. Consequently, the term should be fixed for each specific case.
There are rules relating to secrecy and confidentiality. During the employment relationship the employee is under an implied obligation to maintain secrecy and confidentiality with regards to employer information. Even after the termination of the contract, and even if there is no express clause in the contract, the employee must keep information which he/she has acquired during the labour relationship confidential. Breach of confidentiality can be a criminal offence in some cases (e.g. within the financial sector).
Ownership of Inventions/Other Intellectual Property (IP) Rights
There is a specific law which determines ownership of Intellectual Property rights. If the employee is employed to invent, then the employer owns the rights to the invention. In cases where the employee makes an invention using the employer’s knowledge and instruments, the ownership rights are shared between the employee and the employer, in case the employer is interest in this right. If the employee creates an invention based on his knowledge and personal skills the right of ownership belongs to him.
During the pre-employment period the employer may be liable for damages if it does not act in good faith. Information requested to the applicant, must be justified based on the position to be filled. The requirement of a pregnancy test is prohibited, and except for certain positions, it is not possible to request criminal background checks.
Uruguayan law does not make any distinction between employment agreements of national workers and those of non-national workers. In principle there are no restrictions on non-nationals working in Uruguay. Nevertheless, any foreigner wishing to work in Uruguay must obtain a legal residence or a Provisional Identity Sheet ( “PIS”) in order to perform any activity. The chosen option will depend on the time that the foreigner will work in Uruguay and his/her “will to reside” here. People entering the country that will perform an activity for less than six months must apply for a PIS permit. Foreigners planning to work in Uruguay for more than six months shall apply for either a Temporary Residence or a Permanent Residence. Unlike the Permanent Residence that is granted permanently, the temporary residence is issued for two years, extendable for another two years.
After the two years elapse, the interested party will have to request an extension for two more years or change to the Permanent Legal Residence within the 90 days prior to the expiration of the Temporary residence. Throughout their residence period, temporary residents may leave the country and re-enter as many times as may be necessary.
Hiring Specified Categories Of Individuals
In general there are no specific rules about hiring different categories of individuals aside from special protection for children and female employees. Nevertheless, there is a gradual obligation to hire disabled people applicable to companies with more than 25 employees.
Outsourcing And/Or Sub-Contracting/Temporary Agency Work
There are specific rules relating to outsourcing, sub-contracting and temporary agency work. In cases of outsourcing, sub-contracting of services and temporary agency work associated with the company’s principal activity or associated with some specific accessory activities (like cleaning, maintenance, security and surveillance) the national law establishes joint liability of both companies involved for the payment of labour credits as social security contributions. If the company which hires the services controls the fulfilment of labour and security obligations of the outsourcing company, the law establishes a secondary liability of the company which hires the services. Employees of temporary agency work, must receive the same benefits and salaries as the employees of the client company.