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Summary of Labor Regulations in Uruguay"

Here's a brief summary of the main labor aspects and regulations to consider for companies in this process.

Minimum Wages and Labor Costs Labor costs include three main components: minimum wages according to each activity category, additional benefits such as leave, bonuses ("thirteenth" salary), vacation pay ("sum for the best enjoyment of leave"), overtime, severance pay, and tax contributions (contributions to the pension or social security system).

By law, minimum wages in our country are currently established by Collective Agreements negotiated in Wage Councils. These are tripartite integration bodies (with representatives from: workers – unions -, employers, and government) that, through collective bargaining, establish minimum wages, categories, and other benefits for workers in each sector. Similarly, salary adjustments are negotiated, taking into account primarily the evolution of inflation.

Working Hours and Weekly Regime The working day is legally limited to 8 hours per day. Any hours worked beyond this limit are considered "overtime," which, according to the norm, are paid at a 100% surcharge on the hourly salary (except on rest days, where they are paid at a 150% surcharge). Moreover, a mid-shift break must be taken during the workday. The weekly limit for work is 44 or 48 hours (depending on the activity, with 48 hours in the industrial sector mostly and 44 in commerce and services). A weekly rest day or a day and a half off (depending on the regimen) must be established.

Employment Contract and Types of Hiring in our Legislation

Firstly, it's important to note that it's not mandatory for the Employment Contract to be in writing. However, it's obligatory to register the worker in the Work Control Form (Ministry of Labor and Social Security) and with BPS (Social Security Bank). Despite the above, signing a written contract is a good business practice that we strongly suggest, for its utility in facilitating evidence (in case of a claim) of the aspects negotiated by the parties (e.g., if there is a probation period, if there are clauses of exclusive dedication, confidentiality, and other aspects that may have been negotiated).

Regarding its duration, Employment Contracts can be made for an indefinite period (including a trial period after which the hiring is definitively understood), for a fixed term (with limited duration), or subject to a resolutive condition (such as replacement contracts). Depending on the above, the payment of severance pay may or may not apply when the worker's termination occurs.

Severance Pay

The termination of the employment contract by the will (unilateral) of the employer does not require, in our country, prior notice, consent, or acceptance of the worker. Nor is it necessary to express a just cause or reason (generally and except for certain exceptions).

However, this termination of the contract entails the obligation to compensate the worker with the payment of a sum for "damages," which is legally pre-established or "tariffed." Such compensation is calculated based on the length of service and the salary in force at the time of departure. One monthly salary (understood as the total monthly income) is due for each year or fraction, with a maximum of six. Unlike other systems, in Uruguay after six years of service, the severance pay to be received does not continue to increase.

Union Aspects. Freedom of Work and Right to Strike in Uruguay

The right to strike and the exercise of trade union activity are established in the Constitution of the Republic. Also, in the Trade Union Freedom Law (No. 17,940), which

ampara a los delegados y afiliados en casos de discriminación, persecución o despido por motivos antisindicales.

The recently approved Law of Urgent Consideration ("LUC") regulates, among other issues, the occupation of workplaces, understood as one of the modalities of the strike, but limiting them to some extent. This provision arises in response to observations made by the ILO (International Labour Organization), after it was understood that our system did not respect the freedom of work (of non-strikers) and the freedom of enterprise, as occupations were allowed that prevented access by other individuals. In this regard, the mentioned norm establishes: "The State guarantees the peaceful exercise of the right to strike, the right of non-strikers to access and work in their respective establishments, and the right of company management to enter the premises freely." This means that violent forms of exercising the strike are not admitted. The right of all those workers who do not adhere to union measures to enter the workplace and work is guaranteed, ensuring them the right to negative trade union freedom. Furthermore, (in the same norm) pickets that obstruct the free movement of people, goods, or services in public or private spaces of public use are declared illegitimate. This means that union organizations can no longer obstruct entry to the company, which was hitherto a practice (known as "hard pickets") that was sometimes used as an alternative to occupation, preventing access, for example, by supplier or customer vehicles to the company




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