Other options before the expiration of the Authorizations for Reduction of Working Hours due to COVID-19
At the end of this month, the term stipulated for reductions of the working hours due to the health emergency caused by COVID-19 expires.
To date, it is not known, at least publicly, the intentions at the legislative level to extend these measures again.
Remember that the reduction of working hours is a measure that was established through a law, which stipulated it on a temporary basis and then, it was extended. That means that there is a maximum period for its application and which expires at the end of this month. Therefore, an additional extension should be applied in the same way through a new law, which does not seem to be appearing yet through the legislative process; thus, it allows us to assume that said extension will not exist.
In a previous GLC publication, we had already addressed some options regarding the non-extension of the reduction of working hours; however, this time we want to emphasize the possibilities that companies can implement before the expiration of those authorizations:
This is the most drastic measure and means for those employers who cannot continue to pay employees’ full wages, the application of layoffs with employer responsibility could be applied massively or only to some workers.
Undoubtedly, this option does not only causes bigger consequences for the Costa Rican society due to the socioeconomic blow that it would entail but also at the employer level, since many companies would be unable to pay massive liquidations —remember that a dismissal with employer responsibility entails the payment of all labor ends—. Besides, many companies invest large resources in training their personnel which means that liquidation is not profitable for companies.
If you are an employer and decide to opt for layoffs, remember the following steps:
- Preparation and delivery with receipt of the dismissal letter according to the provisions of the Labor Code.
- Carrying out an adequate calculation that includes all the extremes that must be canceled to the worker as a result of dismissal with employer responsibility.
3. Suspension of the employment contract
This option is contemplated in the Labor Code, unlike the reduction of working hours which had already existed in our legislation and does not have an expiration period; therefore, it can be applied indefinitely.
The suspension of the labor contract was not applied as the main employer’s tool against COVID-19, since the Government implemented the reduction of the working day as a countermeasure to avoid a greater crisis in the country.
As its name indicates, it consists of a procedure for suspending the employment relationship between employer and employee —IT IS NOT A DISMISSAL— it is a temporary suspension of rights and duties for both parties in the employment relationship; however, the employment contract remains in force —therefore we must not liquidate employees— the employment seniority is maintained as well as the respective rights and obligations acquired before the suspension.
Similarly, employers may apply suspensions only to some employees or to the entire payroll. However, this process entails a series of requirements, within which, and for the current context, we can mention:
- It must be based on the fortuitous event or force majeure and it proceeds as long as they had as a necessary, immediate, and direct consequence the suspension of work.
- An application process must be initiated before the General Labor Inspectorate, and the employer will be obliged to verify the alleged cause of substantiation.
In conclusion, the application of one or another measure must be based on an accurate analysis of the business conditions of each employer. Besides, they must be accompanied by the necessary supporting legal documentation.