Extension of labor benefits for contractors

Last August 14, 2017, the Representative to the House of Representatives, Angélica Lozano Correa, presented before the Congress of the Republic, Bill No. 90 of 2017, by means of which "the decent work regime for service provision contractors is issued and other provisions on administrative contracting and State modernization" are dictated. 

Said project proposes the implementation of a series of measures tending to grant the prerogatives of a labor contract to persons linked through service provision contracts in the private and public sector, which would equate their treatment to that of an employment relationship.

Next, we will proceed to analyze the most relevant prerogatives incorporated by the Bill in question:

i. Fine for late payment of fees: The Bill establishes that, in contracts for the provision of services, the parties must clearly establish a determined or determinable date for the payment of fees in favor of the contractor, and which may only be made for monthly periods. Therefore, contractors who fail to make the respective fee payments to contractors in accordance with the dates established in the contract must pay a penalty corresponding to 1% of the monthly amount of fees due for each business day of delay.

ii. Enhanced Labor Stability: It is intended to recognize contractors the right to "Enhanced Labor Stability", when they are in circumstances of manifest weakness and defenselessness due to deterioration of their health, physical disability, and pregnant or breastfeeding women, without it being necessary to prove the existence of an actual contract or labor relationship. In this sense, the contractor who, without prior authorization from the Ministry of Labor, terminates the employment of a contractor who is in one of the situations described above, must pay the contractor "the totality of the fees not received during the entire period of termination, as well as an indemnity corresponding to 30% of the fees not received during the same period".

At this point it is worth asking whether the provisions set forth in the Project will be adjusted in attention to the guidelines set forth by the Constitutional Court in Unified Ruling 049 of 2017, whereby it defines the right to "Enhanced Occupational Stability", expressly indicating its scope.

iii. Paid Annual Rest and Rest Premium: Contractors would be entitled to a paid annual rest of five (5) working days and the payment of a rest premium equivalent to twenty-five percent (25%) of the average of the fees received monthly in the last six (6) months. However, such guarantee shall only apply to those contractors with absolute dedication who complete one (1) continuous or discontinuous year of relationship with the same contractor. The text of the Bill does not specify the meaning or scope of the expression "Absolute Dedication", which would generate different interpretations.

iv. Right to Union Association: Contractors are recognized as autonomous and independent workers, and therefore they are guaranteed the constitutional right to union assembly and association, being allowed to join the public or private union of their preference, as well as to form new union organizations under the same conditions contained in the Substantive Labor Code.

The above prerogative is contrary to the provisions of Article 39 of the National Constitution, according to which the right to union association is reserved for workers and their employers, i.e., it is reserved for labor relations.

v. Access to Family Compensation Funds: Contractors must affiliate their contractors to a family compensation fund plan that offers at least access to benefits in education, training, tourism, recreation and sports.

vi. Annual Savings Bonus: When a contractor with absolute dedication has completed one (1) year of continuous or discontinuous services with the same contractor, the contractor shall be entitled to have the contractor deposit in the National Savings Fund a savings bonus equivalent to 25% of the value of the fees accrued for one month in the average of the last six months.

From the provisions described above, it may be concluded that, with said Bill, some provisions are included that, by legal or constitutional mandate, are applicable exclusively with respect to labor relations, which would generate additional burdens for the Business Sector.