Minimum salary increase and adjustment of socialist food tickets for Venezuelan workers

On April 29, 2016, the President of the Republic passed: (i) Decree Nº 2.307 reprinted in the Official Gazette of the Bolivarian Republic of Venezuela No. 40.895 dated May 3, 2016, because of an error in printing, and under the same Decree number (Decree for the Increase of the Minimum Salary), and (ii) Decree N° 2.308 through which socialist food ticket amounts for workers were adjusted (Decree for the Adjustment of the Socialist Food Ticket). Both decrees were published in the Official Gazette of the Bolivarian Republic of Venezuela N° 40.893 dated April 29, 2016. Hereinafter we point out the most significant aspects of both decrees.

Minimum salary 

National Minimum salary 

The Decree increased the national minimum salary for workers by 30%, effective from May 1, 2016, on, notwithstanding the number of workers who work for a certain employer:

According to the provisions of article 172 of the Organic Labour Law for the Workers (OLL) and Article 6 of the Decree for the Increase of the Minimum Salary, the minimum salary of workers hired part time may be paid prorated to the agreed shift.

Retirees and Pensioners

The Decree adjusted the pensions of retirees and pensioners in the National Public Sector to the same amount fixed as the minimum salary, that is Bs.15.051,15 per month from May 1, 2016, on.

Therefore, the Decree sets the minimum amount for pensions granted by the Venezuelan Institute of Social Security (VISS) at Bs.15.051,15 per month from May 1, 2016, on.

Method of Payment

According to the Decree for the Increase of the Minimum Salary, the minimum salary must be paid in cash and no salary in kind shall make up such minimum salary.

Penalty

Article 7 of the Decree for the Increase in the Minimum Salary establishes that if the employer pays a salary lower than the one set as the minimum national salary, the employer shall be penalized in accordance with article 533 of the OLL, with a fine not lower than 120 tax units, and not higher than 360 tax units.
 

Effect of Salary Increase on Labour Laws

Many labour benefits and obligations are based on the minimum salary. Below we show how the increase in the minimum salary affects the most important labour benefits and obligations set forth under Venezuelan labour law:

Comprehensive Care for Workers’ Children

According to articles 343 and 344 of the OLL and to articles 101 and 102 of the Regulations of the OLL1¹(ROLL), any employer who employs more than 20 workers must offer a childcare or initial education service during the working shift for workers with children from three months to six years of age and whose salary is lower than five minimum salaries, which from May 1, 2016, is Bs.75.255,75. If the employer elects to comply with this obligation by paying a monthly amount to an institution duly authorized by the Ministry of People’s Power for the Family, such monthly payment must be equal to 40% of the minimum salary, which from May 1, 2016, on shall be Bs.6.020,46 for registration fees and monthly fees.

Para-fiscal Contributions

Social Security (Health and Pensions):
 

• Employer’s Rate: 9 to 11%.
• Employee’s Rate: 4%.
• Maximum Amount of Minimum Salaries: Bs.75.255,75 from May 1, 2016.
• Calculation Basis of Minimum Salaries: Five minimum salaries.
• Base Salary: Normal Salary.

Employment Benefits Regime²:
 

• Employer’s Rate: 2%
• Employee’s Rate: 0.5%
• Maximum Amount of Minimum Salaries: Bs.150.511,50 from May 1, 2016.
• Calculation Basis of Minimum Salaries: Ten minimum salaries.
• Base Salary: Normal Salary.

Effective Date

The Decree for the Increase in the Minimum Salary became effective on May 1, 2016.
 

Socialist food tickets

Value of the Meal Allowance

The Decree for the Adjustment of the Socialist Food Ticket adjusted the basis for calculating the food ticket for public and private sector workers to 3.5 tax units³ per day, for 30 days per month, up to a monthly maximum of 105 tax units (currently Bs.619,50 daily and Bs.18.585,00 per month).

Effective Date

The Decree for the Adjustment of the Socialist Food Ticket became effective on May 1, 2016.

Footnotes

¹ Regulations of the Organic Labour Law, OGBRV N° 38.426 dated April 28, 2006.

² Law on Employment Benefits Regime, OGBRV N° 38.281, dated September 27, 2005.

³ A Tax Unit is currently equal to Bs. 177, Administrative Provision No. SNAT/2016/0006, OGBRV Nº 40.846 dated February 11, 2016.