Minimum salary increase in Venezuela

On October 19, 2015, the President of the Republic published Decree Nº 2,056 (the Decree) in the Official Gazette No. 40,769, establishing an increase of 30% in the minimum salary for public and private sector workers as of November 1, 2015.

Hereinafter you will find our comments on the most relevant aspects of the Decree:

Minimum salary

The Decree established the following minimum salary rates for workers, effective as of November 1, 2015, regardless of the number of workers employed:

According to Article 172 of the Organic Law of Work and Workers¹ (LOTTT), the minimum salary of workers contracted part-time may be paid in proportion to the agreed work day.

Retirees and pensioners

The Decree adjusted the pensions of retirees and pensioners of the National Public Administration to the same amount established as theminimum salary, namely Bs. 9,648.18 per month starting on November 1, 2015.

The minimum amount established for the pensions granted by the Venezuelan Institute of Social Securities is Bs. 9,648.18 per month starting on November 1, 2015.

Adolescents and apprentices

The minimum salary for all adolescents and apprentices will be Bs. 7,715.18; however, the Decree establishes that when the work done by adolescents is performed under the same conditions as the rest of the workers, their minimum salary will be as provided in Article 1 of the Decree, namely Bs. 9,648.18 per month as of November 1, 2015.

Method of payment

According to the Decree, the minimum salary must be paid in cash and no type of salary-in-kind shall be understood to form part of such minimum salary.

Penalty

Article 7 of the Decree establishes that any employer paying a salary below the one established as the minimum national salary will be sanctioned according to Article 533 of the LOTTT, with a fine of no less than the equivalent of 120 tax units nor more than the equivalent of 360 tax units.  

Effects of the salary increase on labour legislation

Many of the labour benefits and obligations are calculated based on the minimum salary. Below you will find how the variation in the minimum salary will affect the most relevant labour benefits and obligations under Venezuelan labour legislation:

Comprehensive care for workers’ children

According to Articles 343 and 344 of the LOTTT and Articles 101 and 102 of the Regulations of the LOT², which is still in force, every employer with more than 20 workers must have a child care or initial education service during the work day for workers with children under the age of six, and whose salary is less than five minimum salaries, which as of November 1, 2015, corresponds to the sum of Bs. 48,240.90. If the employer decides to pay an authorized institution in order to fulfill this obligation, the payment should correspond to the 40% of the minimum salary, which as of November 1, 2015, corresponds to the sum of Bs. 3,859.27.

Meal allowance

According to Article 2 of the Partial Reform of the Workers’ Meals Law³, every public and private sector employer must grant its workers a meal allowance for every day actually worked, provided they earn a normal salary of no more than three minimum salaries, which are now equivalent to Bs. 28,944.54 as of November 1, 2015.

Parafiscal contributions

Social Security (Health and Pensions):

• Employer’s rate: 9 to 11%.
• Employee’s rate: 4%.
• Maximum Amount of Minimum Salaries as of November 1, 2015: Bs. 48,240.90.
• Calculation Base of Minimum Salaries: Five minimum salaries.
• Base Salary: Normal Salary.

Employment Benefits Regime⁴ :

• Employer’s Rate: 2%
• Employee’s Rate: 0.5%
• Maximum Amount of Minimum Salaries as of November 1, 2015: Bs. 96,481.80
• Calculation Base of Minimum Salaries: 10 minimum salaries
• Base Salary: Normal Salary

Entry into force

The Decree will enter into force on November 1, 2015.

Footnotes

¹ Organic Law of Work and Workers, Official Gazette of the Bolivarian Republic of Venezuela (OGBRV) 6.076, May 7, 2012.

² Regulations of the Organic Labor Law, OGBRV Nº 38.426, April 28, 2006.

³ Decree with the Rank, value and force of a Law for Food for the Workers, OGBRV N° 6.147,  November 17, 2014.

⁴ Employment Benefits Regime Law, OGBRV N° 38.281, September 27, 2005.