Venezuela’s Ministry of Labor has enacted the establishment of a forced labor program, which will require public and private sector employers to supply their workers as “temporary loans” to State-owned companies to boost the country’s economic development in essential industries, such as agriculture.
In accordance with the program and under the presidential decree, known as the “State of Economic Emergency Decree No. 2,323”1, employers must loan workers who either are physically fit or have the necessary professional skills to perform the activities that are on demand by the requesting State-owned company. The program is effective as of July 22, 2016, and can be applied for a 60-day period, which may be renewed indefinitely. This mandatory program will have significant implications for both the workforce and private sector employers.
Job Suspension and Security
During the time in which the “borrowed workers” render services to the State-owned company, their employment status will be suspended (just as though they were placed on unpaid leave) and they will enjoy job security protecting them from dismissal. Under the labor law, job security (known as “inamovilidad”) means that the employer cannot terminate the employment relationship without a fair cause and unless the dismissal is authorized by the Labor Inspector’s Office after a hearing.
Wages, Meal Benefits and Seniority
During the period of temporary loan, the borrowed workers are not required to render services to their employers nor are employers required to pay their employees a salary or cover the meal benefit (known as “Cestaticket Socialista”). Rather, the borrowed workers’ wages and meal benefits must be paid by the requesting State-owned company.
However, the employer that lends the workers must continue to make contributions into their social security funds, even while the borrowed workers render services to the requesting entity. Further, during the temporary loan, the borrowed workers will retain their seniority for purposes of calculating their entitlement to a garden variety of social benefits.
Reinstatement and Job Placement
Once the period of the temporary loan is completed, the borrowed workers will return to work for their employer under the same terms and conditions that were present previously. In the event the borrowed workers became disabled during the temporary loan --- whether the disability is due to an occupational or non-occupational illness or accident --- the employer is required to accommodate the workers by placing them in jobs that are most suitable for their abilities.
Although the temporary loan is established as a mandatory program, the State of Economic Emergency Decree is silent on whether sanctions or a fine might be imposed for its noncompliance. The temporary loan might be deemed forced or compulsory labor and a violation of fundamental human rights under the International Labour Organization’s Forced Labour Convention No. 29. If a worker refuses to participate in the program, the employer should obtain a signed, written statement from the worker where he or she, in no uncertain terms, explains the reasons for noncompliance with the program arise from his or her own volition. Such statement will serve as proof that the employer’s noncompliance with the government’s order is due to the worker’s refusal and not the company’s.
Employers can maintain the company’s productivity during the period in which their employees participate in the program by replacing the borrowed workers with workers hired under a fixed-term employment contract, which would be lawful under the Venezuelan Labor Law. For such cases, the parties should agree to a written contract that clearly sets forth that the employer is hiring the worker temporarily and for the limited purpose of supplying a replacement during the temporary loan period to enable the employer’s compliance with the program.
Lastly, prior to sending off a worker to perform services for a State-owned company, the parties involved (i.e., the employer, the State-owned company, and the borrowed worker) should enter into a health, safety and environmental compliance agreement, whereby a medical provider will certify --- before and subsequent to the temporary loan --- that the worker’s health is satisfactory. Such certifications may help the employer defend against any claim for indemnity for an occupational illness or disability that may arise in connection with the services the worker rendered under the temporary loan program.