On February 17, 2016, Venezuelan President Nicolás Maduro announced a 20% increase in the monthly minimum wage, effective March 1, 2016. President Maduro also announced an increase in the meal benefit, which will now be two and a half tax units1 per day.
Minimum Wage Increase
The new minimum wage has been set at 11,578.80 Venezuelan bolivars (VEF 11,578.80) per month and 385.96 bolivars (VEF 385.96) per day.
The minimum wage must be paid in cash. No other type of payment can be counted as part of the salary.
Fixed Amount for Mixed Salary
The fixed amount for an employee who receives a mixed salary2 cannot be less than the new minimum wage. For example, if an employee receives a fixed salary plus a variable salary or a fluctuating salary, this amount must not be lower than VEF 11,578.80 per month.
Minimum Amount for Pensions
The new minimum wage will also apply to pensions paid by the Venezuelan public administration and the Venezuelan Social Security Institute (“Instituto Venezolano de los Seguros Sociales” or IVSS).
An equivalent fraction for time worked will be paid pursuant to Article 172 of the Venezuelan Labor Law (known by “LOTTT,” the labor code’s acronym in Spanish).
Impact over Social Contributions and Employee Benefits
The economic impact of the minimum wage increase on social contributions and employee benefits under the Venezuelan labor regime is as follows:
Click here to view table.
Payment of a salary lower than that established by the Decree, or payment after the weekly or bi-weekly pay schedule, will result in a minimum fine of 120 tax units (VEF 21,240.00) to a maximum of 360 tax units (VEF 63.720,00).
Increase of the “Meal Benefit” Calculation Base
The new calculation base for the payment of the "Meal Benefit" is the equivalent of two and a half tax units (2.50 UT) per day times 30 days per month, or seventy five tax units (75 UT) per month. This represents a single daily amount of 442.50 bolivars (VEF 442.50) and a single monthly amount of 13,275.00 bolivars (VEF 13,275.00).
The “Meal Benefit” for Workers Law provides that the employer's failure to grant this benefit will result in a fine of 10 tax units (VEF. 1,770.00) or 50 tax units (VEF 8,850.00) for each worker affected.