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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.

Data privacy

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.

Mandatory Requirements
  • Trial Period
  • 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.

  • Earnings
  • 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.

  • Holidays/Rest Periods
  • 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.

  • Minimum/Maximum Age
  • 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.

  • Illness/Disability
  • 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.

  • Pension Plans
  • 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).

  • Compulsory Terms
  • As there is no requirement for there to be a written contract, there are no compulsory terms to be included.

  • Non-Compulsory Terms
  • 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.

Pre-Employment Considerations

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.

Hiring Non-Nationals

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.

Changes To The Contract

The employer has the authority to make certain changes to the employment contract. This authority to make changes in the employment contract is known as “ius variandi” and is commonly used to change working hours and the location of work. There are restrictions placed on the use of “ius variandi”. “Ius variandi” or the authority to change certain aspects of the employment contract is not unlimited. “Ius variandi” is limited by the principle of reasonableness and changes cannot be used to reduce the salary or the labour category of the employee nor can such changes be detrimental to the employee. Any changes to the contract which do not respect the limitations of the employers’ powers would result in a breach of contract and consequently the employee would be entitled to treat the contract as being terminated. The employee may claim that he has been constructively dismissed and claim severance pay. However, if the change in question has not exceed the imposed limits, the employer may have a defence to a breach of contract or constructive dismissal claim.

Change In Ownership Of The Business

In principle under the labour contract the employee cannot be substituted by the employer, but the employer can be. When there is a change in ownership of a business (except a change merely in the shareholding ownership), all employees are automatically transferred to the new employer on the same terms and conditions. According to labour principles, the new employer assumes all the benefits that the employees enjoy and has to recognise the seniority of the employees that are transferred. Employees should be notified if the employer is changing. Employees can refuse to the change of the employer. If the employee refuses to transfer to the new employer, but has no good reason for the refusal, then he/she is deemed to have their contract of employment terminated. However, if it is reasonable for the employee to refuse to the change of employer (e.g. the new employer has previously unfulfilled labour credits) then he/she can consider themselves dismissed and claim severance pay.

Social Security Contributions

Both employers and employees are required to make social security contributions. The amount that each is to contribute is established by law. Social security contributions cover benefits of retirement, disability, health, death, unemployment and employer insolvency. Illness pay and maternity pay during the labour relationship are covered by the social security system. Consequently the employers contribute towards such allowances payable to employees during their employment by their social security contributions. Some collective agreements provide for greater contributions from the employer.

Accidents At Work

Accidents at work are regulated by a specific law which establishes a compulsory insurance to cover labour accidents. This insurance must be taken out with the State Insurance Bank. The insurance provides employees with cover from the first day of employment, even if the employer has not implemented the insurance. The premiums charged to the employer are fixed according to tables prepared by the State Insurance Bank taking into account the type of activity performed by the insured individual. The employee cannot claim damages from an accident at work directly from his employer, but the State Insurance Bank must pay all medical expenses. However, the employee could claim extra damages from his employer in cases of fault or gross negligence on the part of the employer regarding labour security regulations.

Discipline And Grievance

There are no specific rules regarding discipline and grievance. It is understood that the employer has disciplinary powers as part of his power to organize work.

Harassment/Discrimination/Equal pay

Harassment and discrimination are contrary to constitutional and legal principles. Courts have understood that in cases of harassment or discrimination of any kind, an employer is in breach of constitutional human rights which deserves the protection of the Magistracy. Sexual harassment is specifically regulated. Sexual harassment Law defines the concept of sexual harassment as unwanted conduct of a sexual nature which, if refused, may harm his/her employment relationship or could create a hostile or humiliating work environment. The purpose of the Act is to prevent sexual harassment and requires employers to implement aimed at preventing it. The law establishes under what circumstances the employer can be held liable for harassment. When an employee of the employer commits the offence of harassment and the employer is aware of the situation and does not take any action to prevent such actions of the employee, the employer will be liable. If the employer is found liable then the employer is ordered to pay the harassed employee compensation of six months’ salary.

Compulsory Training Obligations

In Uruguay there are no training obligations established by law, except for previous training that may be necessary depending on the job, for safe work; as well as for certain health requirements (e.g. the obligation to train 50% of employees in basic cardiac resuscitation).

Offsetting Earnings

According to regulation it is possible for employers to offset earnings against employee’s debts if there is a law or a bargaining agreement that allows it. Offsetting of earnings is subject to a maximum of 65% of the employee’s wage.

Payments For Maternity And Disability Leave

The law establishes maternity and illness pay for employees during the labour relationship. Those allowances are covered by the social security system.

Compulsory Insurance

The above mentioned law N° 16.074 establishes a compulsory insurance against labour accidents. This insurance must be procured with the State Insurance Bank. This insurance is automatic, as explained above.

Absence For Military Or Public Service Duties

In Uruguay enforced military or public service duties do not exist. Employees are not allowed time off work to serve in the army.

Works Councils or Trade Unions

The employees have a constitutional right to establish a union and are free to join them. Moreover, constitutional principles and law protects employees affiliated to a union against any act of discrimination related with such membership.

Employees’ Right To Strike

The Constitution (section 57) recognizes the right of employees to go on strike. However, the law does not establish clear regulations as to this right. Due to lack of clarity in the regulations, the unions can go on strike under any circumstances.

Employees On Strike

If an employer fires an employee who is on strike, this may be considered as an unfair dismissal. The employees would claim that they are entitled to be reinstated due to the dismissal not being valid. In this case the employer would have to prove that the dismissal is not related with the union activities.

Employers’ Responsibility For Actions Of Their Employees

Employers are responsible for the actions of their employees by virtue of the Civil Code. The employer, if entitled, may seek recovery of any money paid from the employee.

Procedures For Terminating the Agreement

There is no rule establishing the way in which a labour relationship should be terminated. There are rules which relate to severance payments but not as the procedure to be followed when terminating the employment.

Instant Dismissal

The employer can terminate the relationship by instant dismissal. There is no obligation to give reasons of the dismissal either, in Uruguay the dismissal does not have to be caused. No approval from a court or other regulatory body is required for termination to be effective.

Employee's Resignation

An employee can resign at any moment.

Termination On Notice

Parties may terminate an agreement on notice. No minimum period of notice is required.

Termination By Reason Of The Employee's Age

Employment can be terminated by reason of the employee’s age, but such a dismissal may be considered an unfair dismissal and consequently may give rise to a claim of special compensation.

Automatic Termination In Cases Of Force Majeure

Force majeure in labour relationships is very exceptional. In some cases, the Courts have accepted it as a reason to terminate the labour relationship without paying any compensation.

Collective Dismissals

The company is free to make collective dismissals for restructuring, closure or total or partial closure of the company's activities.

Termination By Parties’ Agreement

Parties are free to agree termination under whatever conditions as far as they respect public policy.

Directors Or Other Senior Officers

The same rules apply to directors (when they are employees) as to other employees.

Special Rules For Categories Of Employee

In general, there are no special rules for categories of employees.

For the hiring of personnel with disabilities (law number 19,961), a series of rights and obligations are stipulated, such as special dismissal, leave without pay and tax benefits.

Whistleblower Laws

In Uruguay there are no whistleblower laws.

Specific Rules For Companies in Financial Difficulties

Employers can only restrict the future activities of employee if this is agreed between the parties.

Special Rules For Garden Leave

In Uruguay there is no garden leave regulation.

Restricting Future Activities

Generally, clauses that attempt to restrict the future activities of an employee are contrary to state policy and, therefore, unenforceable.

Severance Payments

When the employee is dismissed, he/she is entitled to receive compensation except when there has been a dismissal for cause (which implies gross misconduct). In the case of employees paid monthly, compensation is equivalent to one month’s salary for every year or portion worked, with a maximum limit of six months pay. It should be noted that the term monthly payment includes not only the salary but also any salary remuneration earned by the employee (overtime, commissions, portion of holiday salary, accrued leave, 13th salary, etc.). The employees that are paid monthly do not have to work for a certain qualifying period in order to be entitled to compensation for dismissal.

Special Tax Provisions And Severance Payments

Legal severance compensation is not taxable.

Allowances Payable To Employees After Termination

With the contributions paid by employer and employees to the social security system the employee receives an unemployment payment for the six months following termination of the labour relationship.

Time Limits For Claims Following Termination

The statute of limitation rules establish that claims must be filed within one year after the date of termination.

Specific Matters Which Are Important Or Unique To This Jurisdiction

According to Law No. 19.210 and No. 19.889 all monies paid to employees must be paid through a recognized payment institution, by electronic monetary instrument or by a deposit in a bank account. However, the employee has the option of requesting that they be paid in cash.

According to Law No. 19.196, the employer or the person who is responsible for exercising management power is guilty of a criminal offence if they fail to adopt occupational safety measures and thereby cause a serious and concrete threat to life, health or safety of workers.

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Leonardo Slinger
Guyer & Regules

Maria Jose Poey
Guyer & Regules

Santiago Madalena
Guyer & Regules

Daniela Risso
Guyer & Regules


© 2021, Guyer & Regules. All rights reserved by Guyer & Regules as author and the owner of the copyright in this chapter. Guyer & Regules has granted to Multilaw non-exclusive worldwide license to use and include this chapter in this guide and to sublicense Lexis Nexis, a division of RELX Inc. and its affiliates certain rights to use and distribute this Guide.

The information in the How to Hire and Fire Guide provides a general overview at the time of publication and is not intended to be a comprehensive review of all legal developments nor should it be taken as opinion or legal advice on the matters covered. It is for general information purposes only and readers should take legal advice from a Multilaw member firm.

Publication Date: June 2021