Flexibilization of social security payments in labor reforms

In recent and multiple interviews, Dr. Alicia Arango, Minister of Labor, has put on the table two proposals that would be included in the labor reform that the National Government will propose in March of next year. The first proposal consists in the possible reduction of the maximum working day, currently 48 hours per week, and the second, in the implementation of hourly labor contracts, which in turn would lead to the possibility of making social security contributions based on the hours worked. This last proposal, which is often referred to as labor flexibilization, will be the subject of this column.

The debate is then centered on this supposed new hiring modality. We say alleged since it is clear that this type of hourly contracting is not currently prohibited in our legal system, but on the contrary, it has always been consecrated and its implementation has always been allowed. Article 161 of the Substantive Labor Code (hereinafter, the "CST") establishes a maximum duration of the workday of 8 hours per day and 48 hours per week, but does not establish a minimum duration that limits the contract. In this understanding, the parties to the employment contract could establish an hourly workday shorter than the maximum established by law, without implying a violation of labor regulations.

Domestic employees hired on a daily basis, waiters hired on weekends and store clerks required to meet exceptional demand are examples of this type of contracting currently in force. In such cases, employees do not work for the entire maximum working day and are paid in proportion to the time worked. However, what the current regulations expressly provide is that, even when the employees do not work the full working day and their monthly remuneration is less than the minimum legal monthly salary in force (hereinafter, the "Smlmv"), their social benefits must be settled and paid, for a month's work, based on the Smlmv and not on the monthly salary they actually received.

The obligation referred to is contemplated by Article 3 of Decree 510 of 2003 (the "Regulatory Decree"), according to which, "the contribution base of the General Pension System shall be at least in all cases one minimum legal monthly salary in force, and a maximum of 25 minimum legal monthly salaries in force". Now, the Regulatory Decree develops the provisions of Article 5 of Law 797 of 2003 (the "Law 797"), according to which, "the basis for calculating the contributions referred to in the preceding article shall be the monthly salary (...) The limit of the contribution basis shall be twenty-five (25) legal monthly minimum wages in force for workers in the public and private sector". Note that while Law 797 refers to the "monthly salary" as the contribution base, the Regulatory Decree refers to the "Smlmv" for such purposes. This is how the Regulatory Decree exceeds, in this way, the regulated Law 797, since, by mandate of Article 28 of the Civil Code, "monthly salary" should be understood as what is actually received by the employee as salary during a month.

For the year 2015, with the Sole Regulatory Decree 1072 the modality to make the contribution and payment of social security contributions by weekly fractions was introduced, being weekly does not allow the payment for periods less than this time, so if you work between one (1) and seven (7) days in the same month, the minimum value that you can cancel is one week, if you work between eight (8) and fourteen days in the same month you must cancel the value equivalent to 2 weeks and so on progressively. Regarding the contribution base, article 2.2.1.1.6.4.5 indicated that, for these cases, the base will be that corresponding to one fourth (1/4) of the legal monthly minimum salary in force, that is, what results from dividing the Smlmv in 4 weeks, and which it called minimum weekly contribution, and regarding the Labor Risks System, it provided that the contribution base income would be the Smlmv.

Thus, as a consequence of the limits assigned by such regulatory decrees, currently, as in the case of domestic employees, occasional waiters and salesmen on demand, even if they work 3 or less days a week during the month for a given employer, the latter may only contribute to the social security system, at the end of the corresponding monthly period, as if they had earned the Smlmv. As a result of this situation, the platform for payment of contributions to the social security system (Pila) does not allow contributions to be made with a base contribution income lower than the Smlmv.

Thus, the debate should not be framed in the context of contractual or labor flexibilization, but rather in the flexibilization of the payment of contributions to the social security system and, therefore, in the possibility of modifying the PILA spreadsheet to allow the payment of these concepts in proportion to the monthly salary actually received by the worker. In other words, there is no need to change the general system or the Law, since the problem lies in the regulatory decrees and their implementation in a technological platform.