Venezuela

    1.1 In what circumstances does the employee transfer law apply?

    The employee transfer law applies to:

    • The transfer of a business. This happens with the transfer of the property or ownership of the business by any other means (i.e. sale, transfer or other), from an individual or a legal entity to another, in circumstances where there is a continuation of the activities. The partial transfer of business is possible, as long as the transferred part qualifies as an autonomous economic entity upon transfer.
    • The transfer of employees. It is possible for the two employers to agree on the transfer of any given employee.
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    Author: D’Empaire Reyna Abogados

    Date: January 2017

    1.2 Does the employee transfer law apply to (a) a sale of a business or (b) outsourcing?

    (a) Sale of a business:

    The employee transfer law applies in cases of sale of a business. A business is understood to include property assets, customers and know-how. The continuation of the activities is a mandatory requirement for there to be a transfer of the business. 

    (b) Outsourcing:

    Employee transfer law does not apply to outsourcing.

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    Author: D’Empaire Reyna Abogados

    Date: January 2017

    1.3 In outline, what are the implications of the employee transfer law?

    When the employee transfer law applies:

    • All rights and duties of the transferor stemming from the employment contract as of the date of the transfer are transferred to the new employer.  Employees retain the same terms and conditions of employment prevailing at the time of the transfer, including length of service.
    • The transfer must be notified in writing to the employees, the union and the Labour Ministry. 
    • The transferor and transferee are jointly and severally liable for five years for any labour obligations accrued up to the time of the transfer.

    As a general rule, employees in Venezuela cannot be unilaterally terminated by the employer because of the labour freeze that is in force. Transferred employees also benefit from this protection against dismissal.

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    Author: D’Empaire Reyna Abogados

    Date: January 2017

    2.1 Who transfers?

    Where there is a transfer of a business, the employee transfer law applies to all employees assigned to the transferee.

    Where there is a transfer of employees, the employee transfer law applies to all consenting employees. A transfer, in this case, does not take place without the employee's consent.

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    Author: D’Empaire Reyna Abogados

    Date: January 2017

    2.2 Can employees object to transferring?

    An employee can object to transferring and resign within three months of the transfer notice. Employees who object are entitled to enhanced severance payments, equal to twice the statutory severance payments (i.e. the amount they would have received in the event of resignation with cause).

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    Author: D’Empaire Reyna Abogados

    Date: January 2017

    2.3 What happens to terms of employment contracts?

    The employment contracts of employees who have accepted the transfer continue without any interruption and on the same terms. Previous employment with the transferor is considered as ‘continuous employment’ with the transferee, and must be taken into account for the purposes of any compensation schemes and length of service. 

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    Author: D’Empaire Reyna Abogados

    Date: January 2017

    2.4 What about other employee benefits?

    All employees are entitled to the same labour conditions and benefits as applied before the transfer. The transferee must maintain all contractual benefits previously provided by the transferor. Therefore, length of service and employee benefits should not have a detrimental effect on employees' rights. The employment conditions may only be changed in exceptional circumstances, such as mergers or cases of force majeure. Employers may also substitute certain employee benefits for others, provided the new benefits are more advantageous to the employee. 

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    Author: D’Empaire Reyna Abogados

    Date: January 2017

    2.5 What happens to pension rights?

    Employers are required to enroll their employees in the Venezuelan social security system which operates as a traditional pay-as-you-go scheme. Employers and employees are required to pay monthly contributions to the social security system based on the employee’s income. Employees’ entitlement to pension benefits remains the same after the transfer and the new employer must continue to make appropriate contributions.

    In the case of a private pension scheme, the transferee must fulfill and continue to offer the terms agreed between the employee and the transferor. These arrangements cannot be modified to the detriment of the employee.   

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    Author: D’Empaire Reyna Abogados

    Date: January 2017

    2.6 What liabilities transfer?

    The transferor and transferee are jointly and severally liable with respect to all the employee´s vested rights at the time of the transfer and up to five years afterwards. In the case of pending labour trials, the transferor is liable until five years from the date of the final judgment and the employee can choose whether to enforce the judgment against the transferor or transferee.

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    Author: D’Empaire Reyna Abogados

    Date: January 2017

    2.7 Do collective agreements transfer?

    Collective agreements transfer in principle until they expire. If the terms of the collective agreement of the transferee are more beneficial for employees then that agreement would apply.  

    Generally, the terms of a collective agreement cannot be modified by the new employer. Case law has established that this principle applies to certain rights, such as pension rights, even if the collective agreement has expired.

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    Author: D’Empaire Reyna Abogados

    Date: January 2017

    2.8 How does the transferee obtain information on transferring employees?

    There are no statutory rules on providing or obtaining information about employees. However it is advisable for the transferee to request information from the transferor about the transferring employees, including the following:

    • length of service;
    • salary;
    • occupational health;
    • pending court cases or administrative procedures involving employees;
    • social security contributions.
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    Author: D’Empaire Reyna Abogados

    Date: January 2017

    3.1 Can employers make changes to employment contracts?

    All employees are entitled to the same labour conditions and benefits as applied before the transfer. The transferee is required to maintain and fulfill the contractual obligations agreed by the transferor. In principle, this applies for the duration of the employment contract.  However, employers may make changes to employment contracts if there is a major change in circumstances, such as a merger, a change to the employer’s legal purpose, or a force majeure

    However, the employer’s desire simply to harmonise terms with other employees, for example, would not be sufficient grounds to justify changing the employment contracts in a way that is detrimental to the employees.  In such a case, the employer would have to seek the employees’ consent to the change or substitute one employee benefit for another, so as to make it more advantageous for the employee. 

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    Author: D’Empaire Reyna Abogados

    Date: January 2017

    3.2 When can employers safely dismiss employees before or after a transfer?

    There is currently a labour freeze in Venezuela which prevents employers from terminating their employees without just cause and the prior authorisation of the Labour Ministry. The labour freeze applies to all employees except those in managerial positions. Only in the most extreme cases of misconduct will the Labour Ministry grant authorisation for dismissal. Therefore, in practice, employers tend to seek the agreement of employees to terminate the labour relationship. The same rules apply whether or not there is a transfer of the business.

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    Author: D’Empaire Reyna Abogados

    Date: January 2017

    4.1 Who must employers consult?

    There are no requirements to consult with employees or union representatives on the transfer of assets or a business. However, the transfer of a business must be notified to the employees, union representatives (if any) and the Labour Ministry.

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    Author: D’Empaire Reyna Abogados

    Date: January 2017

    4.2	What information must they provide?

    Generally, employers must provide the following information:

    • the means by which the transfer will take place (e.g. sale or merger);
    • the estimated transfer date;
    • basic information about the transferee.

    In addition, the notice should include an option for employees to terminate their employment.

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    Author: D’Empaire Reyna Abogados

    Date: January 2017

    4.3	What does consultation involve?

    There are no consultation requirements. However, notice of the transfer must be given in writing, setting out the transferee’s commitment to match the benefits granted by the transferor and the different options available to the employees.

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    Author: D’Empaire Reyna Abogados

    Date: January 2017

    4.4	How long does consultation last?

    There are no consultation requirements.

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    Author: D’Empaire Reyna Abogados

    Date: January 2017

    4.5	What happens if an employer fails properly to inform or consult?

    Failure to give notice to employees, union representatives and the Labour Ministry does not affect the validity of a transfer. However, employers may be subject to claims by employees for payment of enhanced severance pay that they would have been entitled to. Employers may even be subject to claims for fraudulent intent, if the facts suggest this.

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    Author: D’Empaire Reyna Abogados

    Date: January 2017

    5.1	Identify up to three issues in this country of which employers should be aware?

    There is a labour freeze in Venezuela which prevents employers from dismissing employees without just cause. Under the labour freeze an employer that wishes to terminate an employment relationship must obtain authorisation from the Labour Ministry. 

    All employment conditions and benefits must remain in the same terms as previously agreed with the transferor and cannot be modified to the detriment of the employees.

    Even though there is no statutory obligation to consult with employees about the transfer of a business, employers should notify employees about the transfer so as to head off any claims for payment of enhanced severance pay or claims of fraudulent intent by the employer.

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    Author: D’Empaire Reyna Abogados

    Date: January 2017

    5.2	Would the employee transfer law apply on a cross-border transfer into or out of this country?

    Employee transfer law would apply to a cross-border transfer into Venezuela, as its territorial scope covers all services rendered in Venezuela.

    As for a cross-border transfer out of Venezuela, Venezuelan labour law applies to employees whose employment contract was made in Venezuela, whether or not they work abroad later on.  Hence, employee transfer law would apply to these employees, unless the applicable foreign law offers better employee protection in the case of a transfer.

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    Author: D’Empaire Reyna Abogados

    Date: January 2017

    6.1	What are the main national laws protecting employees upon transfers of businesses?

    The provisions on transfers can be found in the Labour Law published in Official Gazette No. 6,076 of 7 May 2012 and the Regulation published in Official Gazette No. 38,426 of 28 April 2006.

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    Author: D’Empaire Reyna Abogados

    Date: January 2017

     

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