The Legislative Assembly approved an amendment to article 627 of the Labor Code, regarding the increase of fines for those companies that violate the rights of their employees. With this, El Salvador will have new fines for violating labor rights.

Prior to the amendment, $57.14 had to be paid for any of the infractions set forth in Books I, II and III of the Labor Code, such as lack of payment, benefits, leaves of absence, unjustified dismissals, right of association, social security, individual and collective contracts.

After the change in the regulations, the economic capacity and size of the offending institution will be taken into account. Likewise, the salary of the industry, commerce and services sector will be taken as a base.

Among the considerations for making the reform, the decree states that “many employers decide not to comply with their obligations to their employees, preferring to pay the aforementioned fine because it is less costly than complying with the labor rights of their employees”, reads the decree.

The document also explains that the sanctions must respond to the current labor context of El Salvador and the employer-employee relationship. Likewise, it is expected to “incorporate new measurement criteria for the establishment of the penalties”.

What will be the new fines for violating labor rights?

The reform has divided it into four ranges and will depend on the size of the company:

1. Micro-companies with up to 10 workers will have to pay a fine of two minimum wages for each of the violated rights.
2. Small companies with 10 to 50 workers will be fined up to four minimum wages for each benefit violated.
3. Medium-sized companies with more than 50 and up to 100 workers will be fined up to eight minimum wages for each violation. The fine will depend on the seriousness of the infraction, the intentionality and the damage caused.
4. Companies with more than 100 workers will be sanctioned with a fine of up to twelve minimum wages for each benefit violated. The fine will depend on the gravity of the infraction, the intentionality and the damage caused.

For more information on changes in labor legislation, please contact the Labor Law Department of Torres Legal, headed by our partner Raquel Santos, who specializes in Corporate, Immigration and Labor Law.

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