What will happen when the term granted by law for the reduction of working hours expires?
As a result of the COVID-19 pandemic, many companies and the labor sector were undoubtedly affected in several ways, one of them was the working day as the regular full working hours.
Due to the health emergency and in order to avoid a massive suspension of employment contracts, the Government approved the reducing the working day hours process which states that the companies that demonstrate, as a direct consequence of the pandemic, an impact of at least 20% of their gross income in relation to the previous year, could choose to reduce the working hours of their employees up to 75% without invoking the suspension of the labor relationship or massive layoffs.
This temporary measure would apply only for an initial period of three months, renewable twice for an equal period, that is, employers can take advantage of this benefit up to a maximum of a 9-month period.
Afterward, in January of this year, a fourth period was added to the additional three making it an extendable authorization up to 12 months.
The companies that opted for this benefit would be facing the maximum period allowed by law in the coming months.
The question that intrigues many entrepreneurs and employers is what can I do now? … many companies have not yet recovered their usual cash flow which puts them in a difficult situation when it comes to meeting their obligations, as they use to do regularly until before the pandemic.
Once the maximum period of work suspension extensions has ended, employers must make a strategic decision at the operational level, concerning the obligations towards their workers, some possibilities are:
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- Return their collaborators to their usual working hours, with the payment of their respective employer obligations.
- Make adjustments in the payroll in terms of the number of employees.
- Duly end the existing labor relations and proceed to make new hires with workdays under the economic possibilities of each company.
- Choose to apply the work suspension procedure, which must be based on the respective legal requirements.
If you have additional questions on this topic, feel free to directly contact our Labor Law Specialists via this email address: carmen@glcabogados.com or by calling at +506 2524-3176 or by calling at +506 2524-3176. Schedule an Appointment