In this episode, we focus on the Latin American region. Our Consultant, Jaime Zegarra from Peru engages in a conversation with Senior Associates Fernando Neville from Argentina and Mercedes Espinoza from Mexico, along with our Associate Roberta Santos da Silva from Brazil, to review the key employment trends in Argentina, Mexico, and Brazil from 2023 and looking ahead to 2024.

Argentina

Emergency Decree - changes to labor regulations

President Mr. Javier Milei recently issued an emergency decree declaring a national economic emergency and providing for the deregulation of the national economy. Among other measures, the decree provides for the "modernization of labor legislation to facilitate the process of creating jobs". It provides for the elimination and modification of several regulations, including labor regulations.

The most relevant labor-related points of the emergency decree are the following:

• The elimination of fines for unregistered or improperly registered employment contracts. Local labor regulations provided for very expensive fines for such cases. The elimination of these fines will result in a considerable reduction of litigation costs.
• Unions and business associations may agree to replace the current severance compensation system (a compensation equivalent to the employee’s best monthly salary multiplied by their years of service) for a compensation fund. The implementation of this fund will be subject to negotiation in collective bargaining agreements. The cost of the fund shall be borne by the employer, with monthly contributions that may not exceed an amount equivalent to 8% of the employee’s salary.
• Increase of the trial period from 3 to 8 months. The employer may dismiss the employee during the trial period without paying severance compensation.
• Creation of a special category for independent contractors called "independent worker with collaborators". This category will cover independent contractors that may hire up to 5 people to provide certain services. The decree expressly provides that there will be no labor relationship either with the principal nor between the independent contractor and his/her collaborators.
• Limitations to strikes. The decree includes union blockades as a fair cause for termination. This is aimed at preventing employees from organizing coercive protests impeding access to the workplace or preventing employees from working.

The emergency decree is currently in force. It will be submitted before the Permanent Bicameral Commission of the Congress for analysis, and this commission will provide an opinion on its validity. Subsequently, both Chambers of the Congress will either approve or reject the decree. The decree will only lose its validity if both Chambers reject it.

Certain associations have challenged the emergency decree, asserting that it is unconstitutional. Recently, the National Labor Court of Appeals ruled that the labor reform implemented through the emergency decree is unconstitutional. The National Government may appeal this ruling before the Supreme Court.

Action point for employers— Even though no immediate action is required from employers, these should monitor the outcome of the legal challenge concerning the constitutionality of the labor law amendments introduced by the decree to see if they become valid.

Mexico

Enforcement of the Mexican Official Standard NOM-037-STPS-2023 - Teleworking-Conditions

The objective of the NOM-037 is to establish safety and health conditions in workplaces where teleworking employees perform their activities, and it became effective on December 5, 2023.

The Official Standard establishes various employer obligations, including requirements to:

• Have an updated list of employees who perform their services in the modality of teleworking.
• Implement a teleworking policy.
• Provide training to telework employees on safety and health, psychosocial and ergonomic factors, as well as on the use of technology.
• Establish processes for the reversibility of the telework modality, as well as for equipment maintenance.
• Provide the necessary equipment for telework, including ergonomic chairs, ergonomic accessories, if necessary, etc.
• Pay a proportional cost of internet and electricity consumption.
• Acknowledge the right of disconnection as a fundamental element of this modality.

Action point for employers— This Official Standard entails a vast list of responsibilities for employers, and such obligations will be subject to increased scrutiny in the coming months of 2024.

New list of occupational diseases

On December 4, 2023, the Labor Department published a Decree to amend the Federal Labor Law which introduced crucial updates to the list of occupational diseases and the assessment of permanent disabilities.

This amendment has brought about the remarkable inclusion of 88 new conditions across various categories. The following additions are particularly noteworthy:

• Psychosocial illnesses such as anxiety, insomnia and illnesses related with stress and depression.
• Incorporation of infectious and parasitic diseases, including COVID-19.
• Increase in the group of occupational cancer diseases, going from 4 to 30 different types.
• Women-specific diseases such as repeated miscarriages, endometriosis, or infertility.
• Diseases caused by intoxication increased from 36 to 46.

It is important to note that such conditions will be considered occupational hazards. This means that, if an employee suffers from them, they will be entitled to access different benefits, representing an impact on employer obligations.

Action point for employers— This update entails additional responsibilities for employers, involving the need to implement additional measures to ensure compliance with occupational health and safety regulations. Additionally, the new list of occupational diseases has a direct impact on the payment of social security contributions to the Mexican Institute of Social Security.

Trend towards modifying working hours to 40 hours per week

This initiative is currently under discussion by the Congress in Mexico and is expected to be voted on during the first semester of 2024.

The implications for companies arising from the reduction of working hours would be substantial, affecting not only labor-related concerns but also social security and tax matters. If this initiative is approved, employers will need to address the following challenges:

• Reorganize employees' shifts.
• Recalculate vacation bonus and overtime payments for each employee.
• Hire more personnel to maintain the organization's operability at the appropriate levels.
• Review internal processes in order to streamline, modernize and even automate processes.
• Analyze the number of employees on the payroll, the type of shifts they are covering and the gaps that will arise in the event of reducing working hours.

Impacts in the reduction of the working hours will depend to a large extent on each economic sector or industry. Thus, companies that have a high labor force and depend on longer hours will see a greater impact.

Action point for employers— This will open the door to having to renegotiate clauses referring to working hours within collective bargaining agreements, as well as modifications to individual labor agreements and internal regulations, among others.

Brazil

Equal pay

On November 23, 2023, Brazil’s Ministry of Labor issued Federal Decree No. 11,795/2023. The decree regulates the recently enacted Gender Pay Parity Law (Law No. 14,611/2023), which provides for equal pay and remuneration criteria between women and men.

This Law reinforced the prohibition on distinguishing salaries between women and men and brought new developments in relation to measures that, until then, were not provided for Brazilian legislation, such as the establishment of salary transparency mechanisms and the provision of specific channels for reporting salary discrimination.

In summary, the new law provided rules related to the Salary Transparency and Remuneration Criteria Report and the purpose is the objective comparison between salaries, remunerations and the proportion of positions held between women and men.

Although the information that must be included in the reports has not been specifically defined, it was determined that companies with 100 or more employees must annually publish reports on salary transparency and remuneration criteria and should include the positions or occupations in the Brazilian Occupation Classification System with their respective functions.

Action point for employers— Although it is still not clear how to implement some of the new measures created by the new laws - a number of points must still be addressed in future regulations - companies should be prepared to face more inspections and monitoring about the matter. The most urgent move for companies with 100 or more employees is to focus their efforts on preparing the information for the transparency report. These reports are expected to be published twice a year in March and September.

Companies may also face challenges in complying with the decree due to potential conflicts between the information required for the report and the need to comply with the Personal Data Protection Law.

Moreover, disclosing remuneration data can also be a sensitive topic for companies, especially from the perspective of attracting and retaining professional talent.

As some other countries in the region recently have been issued some similar regulation, they could anticipate the steps needed to comply with this new obligation by obtaining advice from such countries.

Likewise, it would be advisable to review the current criteria used for assigning salaries within the company payroll, in order to identify possible sources where a discriminatory situation could be taking place,

Harassment prevention policies

Law 14,457/2022 known for establishing the Employment + Women Program, implemented a lot of measures to support parenthood.

The Law creates mechanisms, strategies and obligations that facilitate the entry, retention, and advancement of women in the job market.

Among the various provisions, this Law instituted measures to prevent and combat sexual harassment and other forms of violence in the workplace and assigned responsibility for these measures to the Internal Committee for Accident Prevention.

In the same way, the Ordinance 4,219/22 detailed some new Internal Committee for Accident Prevention obligations established by Law No. 14,457/22 and changed the nomenclature to Internal Committee for the Prevention of Accidents and Harassment.

Action point for employers— The deadline for companies to adapt their Internal Committees for Accident Prevention (CIPA) to the terms of Law 14,457/22 ended on March 21^st. of 2023, but a few companies are still not prepared. In this regard, companies that need to set up an Internal Commission for the Prevention of Accidents and Harassment (CIPA + A) must pay attention to specific procedures indicated in the law.

In considering how companies should adapt to the new legislation, it is important to reflect on current employer practices – including those regarding the implementation of mandatory annual training programs on topics related to workplace violence, harassment, diversity, and equality.

In addition, for companies that already adopt a procedure for receiving, investigating, and applying disciplinary action in cases of harassment, the CIPA+A may decide to keep the format already adopted by the company if it believes it is an efficient process. Due to the new legislation, we highly recommend the companies review their internal policies to ensure they comply with the law.

If the new legislation provides for the obligation to provide training for employees on the prevention system against sexual harassment, it would be good to put it as recommendations, so that we promote our services in said training.

Work shifts for teleworkers

Law No. 14,442/2022 was published in October and regulates the telework framework provided for in articles 75-A, and the following articles of the Brazilian Labor Code (CLT).

Even though such law was published in 2022, it started affecting companies from 2023 once it consolidates significant changes, given that it can impact companies' everyday activities from both an economic and practical perspective.

With the advent of the Law, working hours control became mandatory for teleworking, except for teleworking employees who provide their jobs based on production or task. Before it, companies were not supposed to control teleworkers' work shifts, similar to the practice in the case of positions of trust.

So, to control the work shift for teleworkers, the employer needed to adapt to digital tools, such as software, that could determine the start and end times of the workday. With working hours control, now the teleworking employees have the right to receive payment for overtime and daily hours stipulated in the contract.

Action point for employers— The Law requires changes to internal policies and the adoption of measures through individual and collective agreements.

Companies must establish a telework framework which enables hours to be electronically registered through specific software; that is, login and logout information does not fulfill the requirements of the legislation, nor do timesheets. In case of overtime, the payment of extra hours is due.

Trend for 2024: Gig workers - Online platform workers

The intersection of technology and work presents challenges and opportunities for a modern workforce. The sharing economy and the gig economy are examples of how technology is transforming the world of work, by creating new forms of employment. There is a long ongoing discussion regarding regulating gig workers in the country.

However, these changes also bring with them challenges in relation to working conditions, remuneration and social protection for workers. In Brazil, this has been an increasingly present topic in discussions about employment and labor rights.

So, we can say that these workers are subdivided into two subgroups: delivery drivers and passenger transport drivers.

There is currently no specific legislation regulating the work model intermediated by technology platforms in Brazil, which the federal government is addressing through Decree nº 11.513, which established a Working Group to develop proposals for regulating activities carried out through these platforms.

Action point for employers— This will open the door to regulating service provision activities, transportation of goods, transportation of people and other activities carried out through technological platforms.