Last 31 October, the Executive announced the general guidelines for the Labor Reform Draft Bill (the Draft) in a press conference.

The Draft will be submitted to Congress for discussion and approval. The key features of the Draft follow:

1. Formalization: a period of one year is established for the formalization of the employment status; the first six months implicate no cost for the employer, and in the remaining period the employer only must pay 30% of the outstanding pension fund and social contributions. Formalized employees may claim up to 60 months of services with contributions estimated over a monthly sum equivalent to the monthly minimum wage.

2. Employer's contributions: A new system would apply depending on the employer’s activity, with a minimum salary amount exempt from employer’s contributions.

3. Joint and several liability, and outsourcing: companies that outsource services will not be held jointly liable with the contractors for the employees hired to perform such services, including the contract termination and social security charges, provided that the principal company performs certain compliance control.

4. Modification of working conditions: the employer may introduce changes to the working conditions and arrangements, as long as those changes cause no material or non-material damage to the employee.

5. Modifications to the employment contract: provided that the minimum standards set forth by the law and the collective bargaining agreement, it is possible to agree with the employee conditions less favorable than those previously in force.

6. Part-time contract: part-time employees shall not work extra or supplementary hours, and their working hours shall not exceed two-thirds of the standard working week. Payment will not be proportionally less than a full-time employee salary established by law or by collective bargaining agreement.

7. "Bank of Hours:" Through collective bargaining agreements it would be possible to create a "bank of hours," which is a compensating hour credit system. This is an alternative to the overtime payment system (50% over the normal salary for week days, and 100% for Sundays, Saturdays and National Holidays after 1 p.m.).

8. Reduced workday: employees in charge of children under the age of 4 can agree with their employer on a temporary reduced workday for child care. In such case, payment will be proportionally adjusted.

9. Leaves: 15 days for parental leave; 10 days for marriage leave; 3 days for spouse's death; 1 day for sibling's death; 2 days with a maximum of 10 days a year for study leave; and 30 calendar days a year for unpaid leave.

10. Termination Fund: Employers organizations and trade unions will be able to establish a Termination Fund by industry under collective bargaining agreements. This fund will cover the cost of the Payment Based on seniority and payment in lieu of prior notice. It will be mainly funded by compulsory monthly contributions made by the employer from the beginning of the labor relation.

11. Severance Pay Based on Seniority: these items are excluded from the salary base used to calculate severance payment for dismissal: supplementary annual salary, overtime, commissions, rewards and/or bonuses, expenses compensation and any item not accrued on a monthly and regular basis. Such salary base will not exceed the amount equal to three times the monthly average salary established on the collective bargaining agreement.

12. Statute of limitations for employment lawsuits: the statute of limitations for employees to file a lawsuit against the employer is reduced from 2 years to 1.

13. New independent worker category: an independent worker who works with up to four independent collaborators can benefit from a special unified legal regime which establishes an individual contribution of a monthly fee for collaborators' social security charges.

14. Training: an ongoing national professional training system will be created, by which all workers will have access to several learning hours.

15. Internships: the Draft proposes a new internship and training practices program dissociated from the obligations of an employment contract, which will be established in each collective bargaining agreement.

16. Non-remunerative sums prohibition: it may not be permitted to agree through collective bargaining the payment of items and sums of salary nature as non-remunerative.

17. Unemployment insurance: it will only apply to the so-called "companies under productive transformation." It constitutes a support for dismissed employees who cannot re-enter the labor market. There will be monetary compensation for 9 months and "financing for employees geographical mobility."

18. New Agency for evaluation of healthcare technology: this agency will be in charge of studying and analyzing drugs, medical supplies and instruments, clinical and surgical techniques and procedures, to determine the possibility of including it on the Mandatory Medical Program [PMO]. The agency will be advisory body for judicial proceedings of any kind in which health issues are discussed.

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