Regulations on the administrative visto bueno process

On March 21, 2024, the Ministry of Labor issued Ministerial Agreement No. MDT-2024-041, published in Official Registry No. 526 of March 26, 2024, which regulates the administrative visto bueno process, of which we highlight the following:

– The parties may appear personally, or through their representative or procurator, accompanied by their legal counsel.

– The work suspension must be justified by the employer and approved by the labor inspector. If the suspension is granted, the employer will have a 48-hour period to consign.

– If the inspector denies the suspension, the employer must grant the employee a paid leave to exercise the right of defense.

– The labor inspector may request clarification of the notification place in person up to 2 times. With the notification, the defendant has 2 days to reply.

– If it is not possible to notify the employee in person, the employer must notify via a single press publication including an extract of the visto bueno that must be posted in several places in the workplace.

– Within 3 days of the visto bueno hearing, the inspector in charge will issue a duly reasoned decision.

– Provided that one of the parties is affected, they could appeal the decision within 3 days before the labor inspector. Once the appeal is lodged, the regional director of labor and public services must resolve the appeal within 10 days.

– The action to request a visto bueno by the employer against the employee is time-barred within 1 month.

– The procedure expires in 30 days, if it has not been resolved in the first instance, counted from the notification of the request for the visto bueno.

– Regarding cases of lack of probity and immoral conduct of the employee, as well as harassment at work, the period is calculated from the date on which the employer or his representative became aware of the facts that gave rise to the visto bueno.

– The lodging of a complaint or labor lawsuit, before or after the visto bueno has been submitted, is not a reason for the labor inspector to refrain from processing the visto bueno.

Edmundo Ramos

Edmundo Ramos, partner at CorralRosales
eramos@corralrosales.com
+593 2 2544144

 

María Victoria Beltrán, associate at CorralRosales
mbeltran@corralrosales.com
+593 2 2544144

DISCLAIMER: The previous text has been prepared for informational purposes. CorralRosales is not responsible for any loss or damage caused as a result of having acted or stopped acting based on the information contained in this document. Any additional determined situation requires the specific opinion and concept of the firm.

 

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Reduction of working hours in the turism sector

On February 29, 2024, the Ministry of Labor, through Ministerial Agreement No. MDT-2024-030 published in the Official Gazette of March 14, 2024, issued the guidelines for the application of Article 47.1 of the Labor Code, regarding the reduction of working hours in the tourism sector:

  •  Decrease in working hours:

Employers in the tourism sector; register as such; prior agreement between employer and worker, may request authorization to decrease the working hours, for a period that may not exceed 6 months, whether this is consecutive or up to two separate periods.

Authorization will be granted in in the following cases:

  1. Force majeure.
  2. Reduction of income.
  3. Verification of losses.
  • Procedure:

To obtain approval on the reduction of working hours, the following documents must be submitted:

  1. Petition, addressed to the regional director of labor and public service, including the reasons justifying the reduction.
  2. Working day reduction agreement signed with the employees.
  3. Austerity plan.
  4. List of the employees and their salaries.
  5. Copies of the RUC and certificate of compliance of social security obligations.
  6. Certificate of tourism registration.
  • Remuneration and registration:

Employees’ wages will be calculated in proportion to the effective working hours. Dividends may only be distributed to the shareholders if the employees are previously paid for the reduced hours.

Social security contributions will be paid on the full 8-hour workday.

The employer shall be responsible for registering in the SUT within 15 days, the reduction in working hours and the period of application.

  • Termination of the labor relationship and indemnities:

If the employer terminates the relationship, prior to the expiration of the term agreed in the contract, unilaterally, during the period of suspension of the working day, the employee will be entitled to the payment of the indemnity provided in art. 188 of the Labor Code. The bonuses and indemnities shall be calculated on the last remuneration received by the employee prior to the reduction of the working day.

 

DISCLAIMER: The previous text has been prepared for informational purposes. CorralRosales is not responsible for any loss or damage caused as a result of having acted or stopped acting based on the information contained in this document. Any additional determined situation requires the specific opinion and concept of the firm.

 

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Guidelines for the Registration of Equity Plans

By Ministerial Agreement No. MDT-2024-013 subscribed on January 19, 2024, the Ministry of Labor issued the following guidelines for the registration of Equity Plans:

  • The Ministry of Labor will provide a certificate of registration of the Equity Plan, hereby the “Plan”.
  • The employer has the obligation to disseminate and socialize the Plan with its employees for its effective compliance.
  • If the Plan should be renewed due to one of the causes established for its mandatory renewal, it must include the reason for the review and update.
  • Failure to register the Plan may be reported to the Regional Directorate of Labor and Public Service.
  • The “Equity Plan” will be valid for 4 years from the date of registration before the Ministry of Labor. Once the registration period has expired, the employer must carry out a new diagnosis of the situation.
  • Failure to comply with the obligation to register the Plan will result in a sanction.
  • The registration of Plans must be made from January 20, 2024, to July 31, 2024.

The Agreement is in force since its signing date regardless of its publication in the Official Gazette.

 

DISCLAIMER: The previous text has been prepared for informational purposes. CorralRosales is not responsible for any loss or damage caused as a result of having acted or stopped acting based on the information contained in this document. Any additional determined situation requires the specific opinion and concept of the firm.

 

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Law to promote the violet economy

Boletín laboral de CorralRosales - Foto edificio con cristalera

Below, a summary of the most important matters regulated in the Law to Promote the Violet Economy enacted by the Official Gazette Supplement 234 dated January 20, 2023.

1.    LABOR Aspects:

–    The working week for women may be freely distributed in 5 days, without exceeding 40 hours a week or more than 10 hours a day.

–    Companies with 25 or more employees must promote plans and working conditions that prevent sexual harassment in the workplace.

–    Companies with 50 or more employees must prepare and implement a plan for equal treatment, equal opportunities, and non-discrimination in the workplace. This equality plan must be registered with the Ministry of Labor. Equality plans must be submitted to the Ministry of Labor after 1 year, i.e., January 20, 2024.

–    The Ministry of Labor will award a badge to the companies that demonstrate:

i.    Balance in all jobs between women and men.
ii.    Adoption of the equality plan.
iii.    Issuance of non-sexist advertising of the company’s products or services.
iv.    Other measures aimed at achieving gender equality.

–    The breastfeeding period was modified and will last 12 months from the delivery date.

–    The working day of the nursing mother will last 6 hours according to the worker’s needs.

–    The 12 weeks paid maternity leave may be used exclusively by the mother, or shared with the father, up to 75% of the period. The modality will be determined by mutual agreement between the father and the mother, must be notified to the employer prior to the beginning of the leave and cannot be modified.

–    The percentage of insertion of interns will include students in dual training. If female individuals are included in this modality, the percentage of inclusion of interns may be increased by an additional 0.5 percentage points.

2.    TAX Aspects:

As a tax benefit, the taxpayers will be able to deduct up to an additional 140% of the remunerations and social benefits paid for the creation of new jobs for female workers, according to their time of permanence:


If the employment relationship is terminated, the benefit may continue to apply if the job vacancy is filled by another female worker under the same salary and contractual conditions.

The benefit may be applied up to 3 fiscal years if the number of new job openings for women exceeds the following percentages:

The benefit may not be accumulated with other additional deductions granted for the increase of employment contemplated in article 10 numeral 9 of the Internal Tax Regime Law.
3.    CORPORATE Aspects:

It is established that all entities subject to the Companies Law must integrate to their boards at least one woman for every three members of such corporate bodies.

Edmundo Ramos

Specialist in Labor Law
Edmundo Ramos, partner at CorralRosales
eramos@corralrosales.com
+593 2 2544144

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NOTE: The above text has been prepared for informational purposes. CorralRosales is not liable for any loss or damage incurred as a result of acting or failing to act on the basis of the information contained in this document. Any additional determined situation requires the specific opinion and concept of the firm in Quito / Guayaquil, Ecuador.

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Suspension of workday on November 3rd

Suspensión de la jornada de trabajo el 03 de noviembre - CorralRosales - Abogados Ecuador

On October 15th, 2021, the President of the Republic issued the Executive Decree 222, by which the following was established:

1.    To suspend of working day corresponding to November 03, 2021.

2.    The recovery of the working day for the private sector will be made by mutual agreement between employers and workers.

3.    During November 01, 02 and 03, 2021, the entities and agencies of the public sector shall guarantee the provision of public services.

Edmundo Ramos

Specialist in Labor Law
Edmundo Ramos, socio de CorralRosales
eramos@corralrosales.com
+593 2 2544144

Marta Villagómez

Specialist in Labor Law

Marta Villagómez, asociada de CorralRosales
mvillagomez@corralrosales.com
+593 2 2544144

New regulations for employment termination with cause procedures known as “visto bueno”

New regulations for employment termination with cause procedures known as "visto bueno" - CorralRosales - Lawyers Ecuador - Latam

On August 13th, 2021, the Ministry of Employment, through Ministerial Agreement MDT-2021-219, issued new regulations governing the procedure to be followed for the approval of Employment Termination with Cause (known as and hereinafter, “Visto Bueno”). The new process will be effective as of September 24, 2021.

The main features of the new procedure are as follows:

1.    Jurisdiction: The competent employment inspector to handle requests for Visto Bueno is that of the territorial circumscriptions of the place where the employment agreement was executed or that of the place of the employees’ domicile.

2.    Appearance: The parties may appear in person or by proxy, accompanied by a defense attorney, who may act by legal proxy or by simple written authorization.

3.    Notifications:  The Visto Bueno request must be notified to the employee by ballot delivered to his/her workplace or domicile. The latter may be received by an employee’s relative or be posted on the door of the domicile in case there is no one to receive it, or if the employee refuses to do so.

If it is impossible to locate the employee, he/she may be notified by e-mail, provided that there is a document whereby the employee states its clear and express acceptance to be notified by such mean.

Notification by the press: If it is not possible to notify the employee by any of the means described above, it may be done through a single publication in one of the newspapers with the largest circulation in the place where the Visto Bueno process is carried out. For this purpose, the employer must carry out a statement before a Public Notary that he/she does not know the employee’s domicile. After 20 days since the publication, the employment inspector shall set a date and time for an investigation hearing.

4.    Suspension of the employment relationship: Before or after  filing  the Visto Bueno the employer may request the suspension of the employment relationship. To this end, a certified copy of the employee’s payroll corresponding to the last full monthly remuneration must be attached and the relevant amount must be deposited in the account designated by the Ministry of Employment to this effect.

5.    Response to the Visto Bueno request: The employee shall answer to the Visto Bueno request within 2 working days of being notified with the procedure. Failure to do so will result in the inspector continuing with the proceedings in absentia.

6.    Investigation hearing: Once the term to submit the response to the Visto Bueno´s request has lapsed, the inspector shall, within the following 3 working days, set a date and time for the investigation hearing.

The investigation hearing may be held at the inspector’s office or, if necessary, at the place where the facts leading to the Visto Bueno occurred.

The inspector may, exceptionally, and for the purpose of clarifying the facts of the dispute, suspend the investigation for up to 3 days. The inspector may not formally require public or private entities in order to obtain evidence.

Once the investigation hearing has concluded, the inspector will have 3 working days to issue a resolution.

Specialist in Labor Law

Marta Villagómez, associate at CorralRosales
mvillagomez@corralrosales.com
+593 2 2544144

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Living wage 2020

living-wage-2020-labor-bulletin-corralrosales-lawyer-ecuador
On March 18th, the Labor Ministry -by Ministerial Agreement MDT-2021-087- set the living wage for 2020 on US$447,41 monthly and stablished the payment procedure.

On those cases, that living wage compensation is applicable, employer shall pay it to employees no later than March 31st, 2021.

For living wage payment, “profit” shall be understood as the value declared by the employer as accounting profit deducting: (i) employees profit  sharing, (ii) tax  or advance payment fixed for the fiscal year declared, and (iii) statutory reserve.

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Reform to General Guidelines for Internships

reform-to-general-guidelines-for-interships-lawyers-ecuador-corralrosales

Labor Ministry through Ministerial Agreement MDT-2021-042, reformed the “General Guidelines for Internships”.

The Agreement establishes that students under a dual training modality may be considered for the mandatory percentage of interns.

Students under dual training are those whose professional training process occurs in educational environments and production or real services environments.

According to the Internship Law, for every 100 regular employees, employers are ordered to hire interns in a number equal to 4% of their employees who hold a professional degree. Consequently, the obligation to hire interns is subject to 2 conditions: (i) company has 100 or more employees; and (ii) at least 4% of such employees hold a professional degree.

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Special labor regime for private higher education institutions academic staff

regimen-especial-de-trabajo-personal-academico-instituciones-educacion-superior-particulares-abogados-ecuador-corralrosales

The Labor Ministry by Ministerial Agreement MDT-2020-286 regulated the special labor agreement for private Higher Education Institutions academic staff:

– Scope: Mandatory implementation to hire academic staff on private Higher Education Institutions.

– Term for Regular Staff:  Up to 1 year (continuous or discontinuously) renewable up to 2 years. A 90-day trial period may be agreed.

– Term for Non-Regular Staff: Up to 1 year (continuous or discontinuously). The agreement may be renewed as many times as necessary. A 90-day trial period may be agreed.

– Weekly working day: Up to 40 hours per week, that may be distributed in no more than 6 days a week. A noninterrupted rest of 24 hours per week is guaranteed.

– Special leave regime: The Higher Education Institutions may grant, at the employee´s request, a special leave with or without payment.

If the leave is without payment, the employee is not entitled to labor and social benefits. The employment relationship is suspended; therefore, no seniority will be generated during it.

– Termination of the agreement: The employment relationship ends once the term has concluded, without any other formality.

– Termination for cause: Under Labor Code provisions to terminate an employment relationship with cause, prior Labor Ministry authorization (“Visto Bueno”), the following definitions shall be included:

  • Indiscipline: Breach of terms to return in cases of licenses or mobility.
  • Ineptitude: If employee obtains results below the minimum for 2 consecutive times or 3 times throughout his/her career. The term for request the Labor Ministry authorization will run from the date on the employer’s decision to separate the employee.

– SUT´s registration: Within a period of 15 days upon its execution.

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Unified basic salary and minimum wages for economic sectors 2021

unified-basic-salary-and-minimum-wages-for-economic-sectors-2021-lawyers-ecuador
The Ministry of Labor by Ministerial Agreements: MDT-2020-249 of November 30, 2020 and MDT-2020-282 of December 22, 2020, resolved to maintain for 2021, the same values of the unified basic salary (“SBU”) and the minimum wages for economic sectors of the year 2020.

The Authority underpins its decision considering that the registered inflation at the end of 2020 was negative (-0.73%), therefore, an increase in minimum wages for 2021 is not justified.

In this regard, the SBU for 2021 is $400.00.

Current regulations provide that in no case will a SBU be set lower than that of the previous year.

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