New employment protection measures: PAP and others

With the issuance of Decrees 770, 771 and 803 of 2020, the National Government made a reality the assistance expressed in recent presidential speeches regarding the support for the payment of the Service Premium, together with new labor measures to help both employers and workers to face the economic crisis caused by the Covid-19 pandemic. The following are the most relevant aspects of these new measures.

1. Protection for the unemployed.

The duration of the benefits provided by the Program for the Protection of the Unemployed was reduced from 6 to 3 months, consisting in the payment of Social Security in health and pension and the recognition of a monetary quota, in order to allow access to a greater number of unemployed people considering the availability of resources of the Solidarity, Employment Promotion and Protection of the Unemployed Fund - FOSFEC.

2. Measures regarding the working day.

Employer and worker may develop the working day by means of: 

• Successive work shifts, which may not exceed 8 hours a day and 36 hours a week.
• Flexible work shifts, being able to distribute the ordinary work shift of 48 hours per week in 4 days per week, with a maximum work shift of 12 hours per day. In any case, when there is room for payment of night, Sunday, or holiday surcharges, these will be paid in accordance with the law.

Regarding these alternatives, the following must be taken into account:

• The implementation of any of them must be by mutual agreement.
• These measures do not modify the successive work shifts and the flexible work shifts established in the Substantive Labor Code, they are additional and will only be in force during the period of the Sanitary Emergency.
• Their implementation shall not require the modification of the Internal Labor Regulations.

3. Connectivity assistance.

In order to promote telework and work at home, and improve the conditions of workers under these modalities, while the Health Emergency declared by the Ministry of Health and Social Protection remains in force, the employer will recognize as digital connectivity allowance the value established for the Transport Allowance, that is COP $ 102,853 for 2020, to those workers who earn up to 2 SMLMV.

It is worth remembering that under the telework and work at home modalities, the employer is not obliged to recognize the worker the Transportation Allowance, when he/she is entitled to it, since this is intended to help the worker economically when he/she incurs in expenses for his/her commuting to the workplace. However, with this new provision the employer must again recognize this value, now under the denomination of digital connectivity allowance.

4. Agreement for the payment of the Service Premium.

Employer and employee may agree that the first payment of the service bonus, which must be made no later than June 30, may be made in one or up to 3 payments at a later date, with the deadline for full payment being December 20, 2020.

5. Support Program for the Payment of the Service Premium (PAP) - Decrees 770 and 803 of 2020.

The purpose of this program is to support employers with the first payment of the service premium, subsidizing part of such social benefit. This benefit was also created for the agricultural sector through Decree 803 of 2020.

1.1.   Who can apply?

Decree 770: Legal entities, natural persons, consortiums, and temporary unions may apply if they:

1. have been constituted before January 1, 2020. In the case of natural persons, the date of registration in the commercial registry will be taken as reference.

• Have been registered in the commercial registry, carried out or renewed at least in 2019. The ESALs must only provide a copy of the RUT, but only those obliged to file income tax returns or income and asset declarations, or exogenous information for the taxable year 2019 may apply. Consortiums and temporary unions must only provide a copy of the RUT.
• Demonstrate a decrease of 20% or more of their income according to the method defined by the Ministry of Finance, which may be equal to that indicated for the PAEF.

Decree 803: Natural persons who are workers and/or producers in the Colombian countryside who certify a decrease of 20% or more in their income may apply.

They must also consider the following:

Natural persons. Decrees 770 and 803: Those who: (i) have less than 3 employees reported in the PILA for the contribution period of February 2020; or (ii) are Politically Exposed Persons (PEP) or are spouses, permanent partners, or relatives in the second degree of consanguinity, first degree of affinity or sole civil partner of PEP.

Consortiums and temporary unions. Decree 770: These may not apply with the workers that have been taken into account by the natural or legal persons that form them for their application.

1.2. What is the amount of the contribution?

The amount of the contribution per worker will be COP $ 220,000. In order to determine the total amount of the contribution, this amount must be multiplied by the total number of employees, considering the following:

Number of employees:

Decree 770: Will correspond to those reported in the PILA for the June 2020 contribution period, which must be equal to those reported in the April and May 2020 periods.

Decree 803: Corresponds to those reported in the PILA for the June 2020 contribution period, which must be equal to those reported prior to February 1, 2020.

Concept of employees in Decrees 770 and 803: It will be understood as such the dependent workers for whom the employer contributes to the General Social Security System through the PILA, with an IBC from 1 SMLMV ($ 877,803) up to COP $ 1,000,000.

1.3. How can potential beneficiaries apply?

Beneficiaries of both programs must submit the following documents to the financial institution where they have a deposit product:

• Application signed by the Legal Representative or the natural person employer, as the case may be, stating the intention to avail of the benefit.
• Certification signed by the legal representative or natural person employer and the statutory auditor or public accountant certifying: (i) the decrease in income; and (ii) the number of service premiums to be subsidized.

1.4. Final considerations applicable to both programs (Decree 770 and 803)

• Beneficiaries who have received the contribution, but it is later found that they did not meet the requirements for their application or submitted false documents to obtain it, will be obliged to return it, without prejudice to any liability that may arise.
• The Pension and Parafiscal Management Unit (UGPP) will oversee verifying compliance with the requirements to access the contribution in the exercise of its control functions during the 3 years following the end of the program.
• The resources received by the PAP will be unseizable during the 30 calendar days following the delivery thereof and may not be credited to any type of obligation of the beneficiary. However, the employer may continue to make the discounts previously authorized by the worker.
• If the beneficiary is a debtor of a payroll credit line guaranteed by the National Guarantee Fund and the total sum of both resources received in the same month is greater than the total value of the beneficiary's payroll service premiums, the beneficiaries must pay to such credit an amount equivalent to the value of the PAP state contribution received.
• The beneficiaries must have a deposit product in a financial institution supervised by the Financial Superintendence of Colombia or the Superintendence of Solidarity Economy.
• The Ministry of Finance and Public Credit or the Ministry of Agriculture and Rural Development (in the case of the PAP of the agricultural sector) must regulate the periods and deadlines for compliance with the requirements and delivery of documents.
• For the purposes of program oversight and control, as well as the receipt of applications and other procedures, the UGPP and other entities involved may make use of the documents and procedures currently used for the PAEF. To this end, the UGPP shall be responsible for indicating, by means of a Circular, the necessary modifications to the documents and forms.

Assistance program for workers under contractual suspension.

6.1.  What does it consist of?

This program, administered by the Ministry of Labor, will grant a monthly transfer, for up to 3 months, in the amount of COP $160,000 to those dependent workers who:

• Work for PAEF applicant employers who meet the requirements to be beneficiaries of the program.
• Earn up to 4 SMLMV ($ 3,511,212).
• Have had their employment contract suspended or were on unpaid leave during the months of April, May, or June 2020.
• They are not beneficiaries of the Familias en Acción, Protección Social al Adulto Mayor - Colombia Mayor, Jóvenes en Acción, VAT compensation or Ingreso Solidario programs.

6.2. How will it be delivered?

• The UGPP will identify the beneficiaries according to the payroll for the months of April, May, and June 2020, verifying in PILA the news of temporary suspension of the work contract or unpaid leave. It will also require the financial information of the identified beneficiaries.
• The National Planning Department (DNP) will review that the identified individuals are not beneficiaries of any of the above-mentioned programs and will forward the results to the UGPP.
• The UGPP will define, by means of an administrative act, the monthly list of beneficiaries.
• The Ministry of Labor shall oversee ordering by means of an administrative act the execution of the expenditure and direct transfer of the resources coming from the Ministry of Finance and Public Credit to the beneficiaries' accounts indicated by the financial entities.

6.3. Additional considerations.

• The funds received under this program shall be unseizable during the 30 calendar days following their delivery and may not be credited to any type of obligation of the beneficiary with the financial entity. However, this prohibition shall not apply to obligations that the beneficiary has with third parties in which he/she has given prior consent for the debit of the funds.

The beneficiaries of this program shall not pay any type of commission or fee for the withdrawal or disposition of the transfers they receive.