I. Creation and Object
On March 11th Law 19.690 was enacted, creating the Guarantee Fund of Labor Credits, administered by the BPS, with the purpose of covering the contingency of insolvency of the employer.
Both the law and its regulation establish that employer insolvency exists when the judicial services have been accepted and the bankruptcy agreement has been rejected, or the opening of the liquidity have been judicially decreed and the worker’s credit has not been satisfied
II. Incorporation schedule
The Decree establishes that workers who fall within the scope of application will be progressively insured, according to the following schedule:
a) As of 1/06/2019 employers included in groups 4 (Textile Industry), 6 (Wood, pulp and paper industry), 7 (Chemical, medicine, pharmaceutical, fuels and annexes), 14 (Financial intermediation insurance and pensions), 15 (Health services and annexes), 17 (Graphic industry).
b) As of 1/09/2019 employers included in groups 2 (Refrigerating industry), 3 (Fishing), 5 (Leather, clothing and footwear industry), 12 (Hotels, restaurants and bars), 16 (Educational services), 18 (Cultural entertainment and communication services).
c) As of 1/12/2019 employers included in groups 1 (Processing and preservation of food, beverages and tobacco), 8 (Industry of metallic products, machinery and equipment), 9 (Construction industry and complementary activities), 10 (Commerce in general), 11 (Retail food) and 13 (Transport and storage).
d) As of 1/01/2020 employers included in the remainig activity groups.
III. Protected workers and workers excluded from the scope of application
The benefits regime established by the Law includes all workers in the private sector, except for the following who were expressly excluded by the rule of its scope:
a) Workers who have a kinship bond by affinity or consanguinity with the employer, or with the members of the management bodies of the company or establishment up to and including the third degree.
b) Top management workers, such as directors, general managers and anyone with decision-making powers over substantial issues of the employer's activity.
c) Workers constituting a work cooperative with the purpose of giving continuity to the enterprise where they provided services, provided that the Judge has designated it as the depository of the assets of the company, with faculties of precarious use of the same.
IV. Fund financing
The Guarantee Fund of Labor Credits will be financed from January 2019 with an employer contribution of 0.025% of the items received by the employee that constitute taxable matter, in accordance with the provisions of Article 153 and following of Law No. 16,713, regardless of the employer's retirement affiliation.
Entities exonerated from employer contributions will be exempted from the aforementioned special contribution.
V. Labor credits guaranteed by the Fund and Maximum coverage limit
The Fund will guarantee up to the equivalent amount of 105,000 IU ($ 420,126) the collection of the following credits:
a) Wages generated in the six months immediately following the date of cessation of payment or last salary paid
The regulation limits the concept of salary or wage to the basic remuneration that the worker received; and then clarifies that in the case of remuneration for commissions or piecework, the basic salary should be determined by the average of the amount received in each session in the last six months.
In any case, items such as overtime, intermediate breaks worked, bonuses (seniority, assiduity, nocturnal, productivity, etc.), food and housing, as well as any other marginal salary remuneration are excluded.
b) Licenses, sums for the best enjoyment of the annual license, bonuses generated in the last two years prior to the date foreseen in the previous paragraph.
c) Compensation for legal dismissal.
d) A 10% fine provided for in article 29 of Law No. 18,572, only with respect to the credits provided in the preceding paragraphs.
VI. Essential requirements to access the collection of labor credits through the Guarantee Fund.
In order for the BPS, through the Fund, to pay the labor credits determined by the Law, the worker must accredit: a) the insolvency of the employer; and b) the verification of the credits, both according to the judicial procedures provided for that purpose.
On the other hand, every time the BPS pay labor credits through the Fund, subrogated in the rights and actions of workers who have received such payments, for the nominal amounts paid, plus their accretions (monetary update, legal interest and fine). Therefore, the BPS may appear in court in the same place and with the same rights as the worker holding the labor claim.
Montevideo, March 2019