The Venezuelan Labour Law does not prohibit foreign employers to hire employees directly in Venezuela, therefore it is not necessary to act through a local subsidiary, although it is permitted; however the foreign employer must comply with all the provisions provided by the Venezuelan law regarding employment, including social security and related benefits.

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At least 90 per cent of all employees rendering services to one employer, who employs 10 or more employees, must be of Venezuelan nationality; also the remunerations paid to such foreign personnel must not exceed 20 per cent of the total of the remunerations paid to all employees.

The heads of labour relations, heads of personnel, captains of vessels and aircraft or anyone who performs similar functions, must be of Venezuelan nationality.

When foreign personnel is hired, those who have children that were born in Venezuela or are married to Venezuelans, or have established their domicile in Venezuela, or have longer been resident in it, will be preferred.

The Ministry of Labour, after studying the general conditions of work force availability and the circumstances of each particular case, may authorise temporary exceptions to the aforesaid limits in the following cases:

• when activities require special technical knowledge and an available Venezuelan work force does not exist, authorisation will be granted under the employer’s compromise to train Venezuelan personnel within a period to be provided by the Ministry;
• when there is demand for work force and the Ministry of Labour evidences not to be able to satisfy the need with Venezuelan personnel;
• when the Venezuelan government or an employer controlled by it directly hires immigrants;
• in the case of refugees; and
• in the case of small and medium-sized businesses.

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In Venezuela, labour law is of territorial application. Venezuelan legislation will be applicable to any employment agreement agreed or to be executed in Venezuela; however a labour agreement may be subject to a foreign legislation if such legislation has conditions more favourable to the employee that those provided by Venezuela. The termination of those agreements will be subject to the legislation which has entirely governed such agreement.

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There is a legal presumption of existence of a labour agreement between anyone who renders a personal service and who receives it, therefore there is no particular requirement or any formality that employment agreements must adopt to be enforceable in Venezuela.

However, when a Venezuelan employee is hired for rendering services in another country and the parties wish to be subject to Venezuelan legislation, agreements will have to be written, be notarised before an officer with jurisdiction in the place where it is executed and apostilled with The Hague stamp or legalised by a Venezuelan consular officer in the country where the services will be rendered.

The employer will have to grant a bond or make a deposit in a Venezuelan bank, to the satisfaction of the Labour Inspectorate, for an amount equal to the repatriation expenses of the employee and his or her travel to the place of residence. These agreements must state the following:

• the transportation and food expenses of the employee and all expenses to be caused by the compliance of immigration obligations and any other similar, will be paid by the employer; and
• Venezuelan legislation will be applicable.

Before leaving, the employee will receive from the employer, written information on the general life conditions and requirements of the country where he or she will render services.

However, all judicial actions, applications and legal proceedings directed to or held before administrative or judicial labour officers, will be exempt from any tax, revenue stamp or any other fiscal contribution. The service rendered by such officers will be free for both employees and employers, unless otherwise provided.

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The existence of such agreement will be presumed and be subject to Venezuelan legislation. In the event of litigation, if the employer claims that there is no labour agreement, he will have the burden of proof against such allegation and if the employer does not bring valid evidence, the judge will uphold the existence of the agreement due to the presumption.

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The employer must register employee at the Instituto Venezolano de los Seguros Sociales (IVSS) (Venezuelan Institute of Social Securities), and pay the following contributions:

• To the social security: the amount to be paid will depend on the degree of the risk of the employer’s activity. In the case of lower risk activities, the employer will pay monthly the equivalent of 9 per cent of each employee’s salary and additionally will retain 4 per cent of the employee’s monthly salary and pay it to the Social Security.
• To the Instituto Nacional de Cooperación Educativa Socialista (INCES) (National Institute for Socialist Educative Cooperation): Businesses with five or more employees will pay (every three months) 2 per cent of the salary, and must additionally retain and pay 0.5 per cent of the employee’s salary. If the employer has five or less employees, will pay 0.5 per cent of all yearly profits, each year.
• To the Banco Nacional de Vivienda y Hábitat (BANAVIH) (National Bank of Housing and Habitat): employers will pay (every month) 2 per cent of the employee’s salary and additionally will retain and pay 1 per cent of the employee’s salary.

There are no tax deductible social benefits in Venezuela.

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Employees are entitled to be paid, additionally from their regular salary, the following benefits:

Vacation Bonus: a minimum of seven days’ salary, plus one day for each year worked (up to a total of 21 days’ salary) shall be paid when vacations begin, in addition to the salary corresponding to the vacation period.
• Shared Profits: companies shall distribute among their employees at least 15 per cent of the net profits (the sum of the taxable and exonerated net enrichment amounts pursuant to the Income Tax Law) obtained at the end of their financial year. In order to determine the participation corresponding to each employee, the total benefits to be shared shall be divided among all the salaries earned by all the employees during the respective financial year. The participation corresponding to each employee shall be that which results from multiplying the quotient obtained by the sum of the salaries earned by employees during the respective financial year. The minimum limit of this obligation is to be the equivalent of 15 days’ salary and the maximum limit is to be four months salary.
• Overtime for Working on Holidays and Rest Days: when a monthly salary has been agreed, the payment of holidays and obligatory rest days will be included in the remuneration, but those who render their services on one or more of such days shall be entitled to the remuneration corresponding to those days worked plus an additional surcharge of 50 per cent over the ordinary salary, which shall be calculated based on the normal daily salary earned during the week of the holiday or rest day.
• Surcharge for Working Overtime Hours: the daytime work schedule, which is between 05.00 and 19.00, shall not exceed eight hours per day or 44 hours per week. The mixed work schedule, which shall not exceed seven and a half hours per day or 42 hours per week, comprises periods of daytime and nighttime work. If it includes more than four night-time hours it shall be deemed a night-time work schedule. The night-time schedule shall not exceed seven hours per day, or 40 hours per week. Overtime hours shall be paid with a 50 per cent surcharge, at least, over the salary agreed upon for the ordinary schedule, which shall be calculated based on the normal salary earned by the employee during the week in which the overtime hours were worked.
• Surcharge for Night Shift: the night shift is understood to be that which is worked between 1900 and 0500. It shall be paid with a 30 per cent surcharge, at least, over the agreed salary for the daytime schedule, which shall be calculated based on the normal salary earned by the employee during the week that the day or days of nighttime hours were worked.
• Meal Tickets: every employer is obligated to provide to their employees who earn less than the equivalent of three minimum salaries, one balanced meal per day, which may be provided as follows:
• by operating an own dining room or by hiring one belonging to a third party;
• by hiring a company specialised in meal operation;
• meal tickets;
• meal electronic cards;
• common dining rooms; or
• dining rooms operated by a nutritional administration. In case meal tickets or electronic cards are granted to the employees, the value of such meal ticket will be between 19 and 38 bolivares per day and will also be granted during vacational periods. This benefit may not become part of the salary.

This benefit may be paid in cash money in the case of employers with less than 20 employees.

• Vacations: when the employee completes one year of uninterrupted work for the employer, shall take a period of paid vacation of 15 working days for the first year. In successive years shall be entitled to one extra day for each year of service up to a maximum of 15 additional working days.
• Seniority and Interests over Seniority: after the third month of uninterrupted services, the employee will be entitled to a seniority benefit equivalent to five daily integral salaries (the sum of the normal salary and those earnings of a salary nature that are of an accidental character) for each month of seniority.

The normal salary is the remuneration earned in a regular and permanent manner, excluding earnings of an accidental nature, those derived from seniority, and those that the law deems to have a salary character. All those concepts that the employee receives periodically, such as profit-sharing and vacation bonus, which are received annually, form part of the normal salary. Thus, commissions form part of the normal salary.

After the first year, the employer shall additionally pay two days of integral salary for each year of seniority, accumulative up 30 days of salary.

The seniority benefit shall be deposited and definitively settled monthly in an individual trust or in a seniority benefit pension fund or shall be accredited monthly in the name of the employee in the accounts of the company, according to the written wish of the employee. The sum deposited or accredited monthly shall be paid upon termination of the employment relationship (unless the employee has taken advances against the accumulated seniority benefit as provided by law).

The sums accredited or deposited monthly shall earn interest that shall be accredited or deposited monthly and paid upon completing each year of service, unless the employee states in writing that the interest is to be capitalised. The interest is tax free income for the employee. The interest rates will be as follows:

On the yield produced by the trust or seniority benefit fund, as applicable and, in absence of these or until they are created, at the market rate if it is a financial institution;

If the employee has requested in writing that the deposits be made in an individual trust or in a seniority benefit fund or in a financial institution, and the employer has not complied with the request, then it shall be calculated based on the lending rate determined by the Central Bank using as a reference the six main commercial and universal banks of the country;

If the seniority benefit is on the company’s books, it shall be calculated at the average rate between the lending and borrowing rates determined by the Central Bank using as a reference the six main commercial and universal banks of the country

If the interest has been capitalised, either by wish of the employee or due to the fact that the employer has not paid it annually, it shall be capitalised annually and paid at the end of the employment relationship.

• Notice of Dismissal: The employer is to provide a detailed written notice to the employee of the reasons for the dismissal. Once the employee has been so notified the employer cannot later allege other motives for the dismissal. However, the absence of this written notice does not prevent the employee from demonstrating the dismissal by any other means. When the indefinite-term employment relationship ends due to an unjustified dismissal or based on economic or technological reasons of the company, the employee shall be entitled to notice according to the following rules:
• after one month of uninterrupted work, one week’s notice;
• after six months, two weeks’ notice;
• after one year, one month’s notice;
• after five years, two months’ notice;
• after ten years, three months’ notice.

In the case of omission of the notice, the corresponding lapse shall be computed as part of the seniority of the employee for all legal effects.

• Reinstatement: all permanent employees who earn a monthly salary equal to or less than three minimum salaries, are unfairly dismissed and are not management, have the right to be reinstated in the same position, with the same salary. Moreover, the employer could not refuse to reinstate the employee by paying for an unjustified dismissal.
• Back Salaries: in the event that the employee has been unjustifiably dismissed or has justifiably resigned for reasons attributable to the employer, he or she shall be entitled to be paid all the salaries he or she has failed to receive between the time of the dismissal and the date of reinstatement. Similarly, if he or she has been hired for a fixed term, shall be entitled to be paid all the salaries he or she has failed to receive between the time of the dismissal and the expiry date of the contract.
• Indemnity In Lieu of Notice of Dismissal: if the employer unjustifiably dismisses the employee and does not allow her or him to work the notice period, it shall pay an indemnity equivalent to:
• fifteen days’ salary, when the seniority is greater than one month and less than six months;
• thirty days’, when greater than six months and less than one year;
• forty-five days’, when equal to or greater than one year;
• sixty days’, when equal to or greater than two years, but less than 10; and
• ninety days’, when greater than 10 years.
• Indemnity for Unjustified Dismissal or Justified Resignation: if the employer unjustifiable dismisses the employee, it shall pay her or him an indemnity equivalent to:
• ten days’ salary if the seniority is greater than three months, but less than six months; or
• thirty days’ salary for every year of seniority or fraction greater than six months, up to a maximum of 150 days’ salary.

These last two indemnities shall be calculated based on the integral salary earned in the last month of service.

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In Venezuela, there is not a special role of unions nor special provisions with foreign employers. All such provisions are applicable to them as are applicable to local employers. In case that any foreign employer would have 20 or more employees, they may constitute a union. On the other hand, employees rendering services to foreign employers have the right to be members of any union.

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Employees have the right to form unions, the minimum number of employees to form a union is 20. However, it is not mandatory for employees to be members of a union although union decisions will always affect all those employees who are not members and they will be obligated to pay union fees.

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Unions may be independent parties to a labour controversy. Their rights and duties towards the employer and unionised employees are:

• protect and defend general and professional interests of its members before public authorities;
• represent its members in collective bargaining and conflicts, and especially in conciliation and arbitration;
• promote, negotiate, execute, review and modify collective bargaining agreements;
• represent and defend its members and non-member workers, in the
• exercise of their individual interests and rights in administrative and judicial procedures;
• oversee compliance of those provisions destined to protect employees, guarantee equal opportunities, and protect maternity and family, minors and apprentices;
• create helping and savings funds and co-operative societies, industrial or professional schools, popular libraries and sport and recreation clubs;
• perform studies to promote social, economic and cultural progress of its members and make proposals to public authorities;
• cooperate with public authorities and institutes in the preparation and execution of social and cultural improvement, technical training and job placement;
• respond to consults made by authorities, and provide reports;
• make permanent campaigns to create awareness among employees in the active fight against corruption, consume and distribution of drugs and bad habits to their physical and mental health and to the society; and
• those provided by its by-laws or decided by its associates, to the better fulfilment of its purposes.

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The workers are the owners of the right of stoppage and may exercise it through their unions, or a coalition of unions, when the employer has less than 20 employees and therefore they cannot constitute a union. When the union represents a majority of employees working for an employer and all conciliatory procedures legally provided or agreed in the collective bargaining agreements have been exhausted, the union may bring about a stoppage if it is based in a demand made to the employer to undertake, modify or cease to undertake measures related to working conditions; to negotiate a collective bargaining agreement or to execute an existing one.

When the stoppage is illegal, the employer may request a writ of relief. In case the stoppage is legal, the best remedy for the employer is to negotiate with the union an end to the stoppage.

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Venezuelan Labour Legislation is of territorial nature and is applied to all Venezuelans and foreigners due to the employment rendered or agreed in Venezuela.

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The following ILO Conventions are applicable to labour and employment relations in Venezuela:

1. About the Limitation of the Working Hours (20 November 1944); 2. Unemployment (20 November 1944); 3, Protection of Maternity (20 November 1944); 4. Night Shift for Women (7 March 1933); 5. About The Minimum Age (Industry) (20 November 1944); 6. Night Shifts for Minors (Industry) (7 March 1933); 7. Minimum Age for Maritime Work (20 November 1944); 11. Right of Association in Agriculture (20 November 1944); 13. Ceruse Employment (17 April 1933); 14. Weekly Rest in Industry (20 November 1944); 19. Equal Treatment for Foreign and Domestic Workers in case of Occupational Accidents (20 November 1944); 21. Inspection of Immigrants on Board (20 November 1944), 22. Enrollment of Seafarers (20 November 1944); 26. Methods to Fix Minimum Wages (20 November 1944); 27. Indication of the Package’s Weight Transported by Vessel (17 December 1932); 29. Forced Labour (20 November 1944); 41. Night Shift for Women (20 November 1944); 45. Underground Work for Women (20 November 1944); 81. Labour Inspection in Industry and Commerce (21 July 1967); 87. Freedom of Union and Protection of its Rights (3 September 1982); 88. Employment Services (16 November 1964); 95. Protection of Salary (25 August 1981); 98. About Labour Union Rights and Collective Bargaining (12 December 1968); 100. Equal Remuneration (25 August 1981); 102, Minimum Standard of Social Security (25 August 1981); 103. Protection of Maternity (25 August 1981); 107. On Indigenous People, Tribal and Semitribals (1983); 111. Discrimination in Employment and Occupation (3 June 1971); 117. Social Policy (Regulations and Goals) (1983); 118. Equal Treatment for Foreign and Domestic Workers in Social Security (25 August 1981); 120. About The Hygiene in Business Establishment and Office Facilities (3 June 1971), 121. Benefits for Occupational Accidents and Diseases (25 August 1981), 122. employment policy (25 August 1981); 127. About The Maximum Weight (1983); 129. About The Labour Inspection (Agriculture) (1983); 130. Medical Care (25 August 1981); 143. Rural And Immigrants Workers (1975); 149. About The Nursing Staff (1977); 150. Labour Administration (1978); 153. Hours of Work and Rest Periods (1979); 156. Workers with Family Responsibility (1981); 158. Termination of The Employment Relationship (1982); 169. About The Indigenous People and Tribals (1989).

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Arbitration agreements to resolve employment disputes are valid and enforceable in Venezuela. In the case of collective labour conflicts, article 174 of the Regulations of the Organic Labour Law creates a National Service of Arbitration and Mediation and a list of individual arbitrators providing all requirements to qualify as an arbitrator. In case of individual labour conflicts, the Organic Labour Procedure Law provides an arbitration procedure whereby arbitrators are designated by the Judge from a list officially provided by the Social Cassation Chamber of the Venezuelan Supreme Court of Justice.

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The law requires labour proceedings to be held exclusively in Spanish, and the plaintiff may elect the proceedings to be held in the place where services were rendered, the labour relationship has ended, where the labour contract was executed or the place of domicile of the defendant.

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In Venezuela, all labour or employment proceedings are gratuitous and therefore do not generate or accrue taxes, duties nor fees; however, they generate attorney fees and expenses. When one of the parties totally wins the proceedings, he will be entitled to the payment of attorney’s fees and expenses by the losing party. On the other hand, if the proceedings are not totally won by any of the parties, each party will pay their own expenses and attorney fees.

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The Venezuelan Constitution allows class lawsuits in any area of the law. The Organic Labour Procedure Law expressly provides class actions in Labour litigious matters, although class actions in these matters are very scarce if nonexistent. On the other hand, the Organic Labour Procedure Law also provides the consolidation of multiple labour or employment proceedings. Joint Litigation (several plaintiffs or several defendants) are allowed if their claims are connected by cause of action or object of action, or when the judgment to be rendered with respect to one of the plaintiffs or one of the defendants may affect the interests of the other

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Foreign lawyers cannot serve as counsel in labour or employment proceedings. To serve in any kind of proceedings, they must have a degree of law in Venezuela. If a foreign lawyer has a power of attorney to represent one of the parties, he or she must grant or substitute the power of attorney to a Venezuelan lawyer. All fees earned in Venezuela are subject to local taxation.

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When a party seeks discovery of a specific document, which according to such party is in possession of the other, he or she will have to attach to the petition a copy of the document and any evidence showing that it is on the hands of such party. If the court orders the discovery and the party obligated fails to discover, and there is no evidence showing that such document is not in the possession of the party, the document not discovered will be deemed exactly equal to the copy filed by the petitioner.

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Awards issued by foreign or arbitration courts are recognised and enforced in Venezuela under the following conditions:

• the judgement must be final and res judicata;
• the country where the judgement was rendered must have actual jurisdiction over the case and has not taken the jurisdiction away from Venezuela;
• the defendant must have been properly served with sufficient time to appear and proper guarantees to assure a reasonable possibility of defence; and
• must not be incompatible with any previous final judgement, and there must not be any pending trial over the same object and between the same parties if initiated before.

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Labour courts may grant interim relief with full powers to enforce it. It does apply to assets located abroad. In such case the court must issue a letter rogatory sending the order to any court with jurisdiction in the place where the assets are located.

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Labour courts may issue orders, subpoenas and use other legal processes to compel the production of evidence by a third party and compel a third-party witness to appear before them, and there are provisions of law sanctioning recalcitrant parties although in practice Venezuelan courts will not enforce an order against a recalcitrant third party unless there is a criminal case.

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The Law provides the labour courts with the power to decide the following:

• litigious labour matters that do not correspond to conciliation or arbitration;
• qualification of dismissal as unjustified and reenlistment requests based on labour stability;
• actions for writ of relief due to violation or threat of violation of labour rights and guarantees provided in the Constitution;
• litigious matters arising from social security, labour relations and stipulations in labour contracts; and
• litigious matters arising from class actions.

Within these powers, labour courts may grant any kind of relief to any of the parties. The parties may also seek from the court, if there is a grave presumption of existence of the claimed right, any kind of precautionary measure to protect assets, ensure execution of any award. Such relief power is very broad and includes injunctions, attachments, seizures and prohibition to transfer assets.

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The judgments issued by a labour court are final and appealable. Appellate courts will entirely review the judgment with the power to uphold or annul it. In case of annulment, the appellate court will render a new judgement. In any case, appellate court judgments and arbitration awards are subject to a motion to vacate before the Social Chamber of the Supreme Court of Justice.

In case ordinary remedies have been exhausted, the last available remedy is a writ of relief based on constitutional grounds.

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An award may be challenged on grounds of law, fact, evidence, procedure, breach of a constitutional provision, and wrongful interpretation of the law, facts or evidence. The time for challenging any award is five working days after the issuance of the award in writing.

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If an individual files a lawsuit in violation of an agreement to arbitrate, the petition by the defendant to remit the lawsuit to arbitration would be granted by any labour law in normal circumstances. Such petition would always be treated as a threshold matter and it has to be decided before the lawsuit starts. The right to sue in not unwaiveable although the right to claim any labour right in Venezuela cannot be waived and any waiver will be deemed null and void.

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The law provides that post award interest accrues on an unpaid award from the time execution is ordered until payment is made.

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Labour courts are empowered to award attorneys’ fees to the prevailing party when such party’s claim is entirely awarded or the defence is entirely granted. Attorney fees would also be awarded in case the other party makes a defence or attack that is not successful.

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An appellate court will always review the law and the facts of the case and if it decides to vacate the award, it will render a new judgement to decide the case.

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There is no possibility in law to enforce any award that has been set aside by the courts.

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• The norms of the labour law are deemed to be public policy and so may not be diminished by private agreement between employers and employees.
• When an employment contract for a fixed term is subject to a second or subsequent extension it will be deemed to be for an indefinite term, unless there are special reasons that justify such extensions and exclude the presumed intention of continuing the relationship.
• At this moment, the minimum monthly salary for an ordinary work shift of eight hours is 1,223.89 bolivar per month, ie, 40.79 bolivar per daytime workday.
• There is a prohibition to dismiss permanent employees who are not management nor employees of trust, who have rendered their services to the employer for at least three months, and who earn a monthly salary less than three minimum salaries, which is presently the sum of 3,671.67 bolivar.
• When the employment contract is for an indefinite period, a probationary period of 90 days is presumed by law. During such period, the employer may dismiss an employee who does not satisfy the employment needs.
• The provisions that favour the employees cannot be waived.
• Statute of limitations on labour complaints is of one year after the end of the labour relationship, which is of two years when the claim is based on an accident or disease.
• When the new owner continues to perform the activity of the previous owner with the same personnel and material facilities, regardless of the change of title of the company, existing employment relations shall continue to be the same pre-existing relationships. The substituted employer shall be jointly and severally liable together with the new employer for the obligations deriving from the law or the contracts entered into prior to the substitution, for up to one year.
• Comply with the provisions of the Organic Law on Prevention, Conditions and Labor Environment or LOPCYMAT which provides all the work safety provisions.

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