One year after the publication of the work Labor Law in Ibero-America: perfectible, overregulated and protectionist, on the occasion of International Workers’ Day, we review, in this 2022, with other experts in the field, the state of Labor Law in Argentina, Chile, Spain, Mexico and Peru in terms of new regulations and normative reforms, as well as equality plans.
Together with Pablo Mastromarino, a partner in the Labor Law department of the Argentine firm Tanoira Cassagne, we discovered that Labor Law in that country has significant shortcomings. However, he notes that the country has a long-standing legal tradition regarding equality.
For her part, Paulina Miranda, partner in the labor area of Philippi, Prietocarrizosa Ferrero DU & Uría (PPU) – Chile, commented that Chilean Labor Law is robust and developed and the principle of equality is enshrined in the Constitution.
Regarding Spain, we consulted César Navarro Contreras, managing partner of the Labor Department at CMS-Albiñana & Suárez de Lezo – Madrid, and Helena Monzón, associate, who outlined the labor policies implemented by the government. They stated that since 2019, legislation has focused on equality; in 2020, regulations were enacted in response to COVID-19; in December 2021, there were significant regulatory changes concerning temporary employment contracts; and last March, the emergency situation in Ukraine and the rise in gasoline prices were addressed from a labor perspective.
We spoke with Adriana Ramírez, partner in charge of the Labor Department at ECIJA – Mexico, who indicated that labor regulations in the country are recent, which means they lack experience and require more time to mature and become established. However, she is optimistic about further labor gains, including the inclusion and recognition of new forms of employment, and the extension of vacation time and paternity leave.
In Peru, Lidia Vilchez Garcés, a partner in the labor law department of the firm Philippi, Prietocarrizosa Ferrero DU & Uría (PPU), told us that in labor matters they are experiencing a very dynamic and interesting moment as a result of the COVID-19 pandemic and, in addition, there are already some regulations directly aimed at ensuring equality and non-discrimination on the grounds of gender.
What is the current state of Labor Law in terms of new regulations and regulatory reforms?
Pablo Mastromarino, from Tanoira Cassagne – Argentina: “Labor Law in Argentina has major pending issues, both in terms of stimulating employment and with respect to the current evolution of work.
Our legislation still maintains a very rigid approach to labor relations. Its main regulatory framework, the Employment Contract Law, and a large part of the Collective Bargaining Agreements that govern the main activities, are over 50 years old.
Our laws have failed to keep pace with the evolution that employment and labor dynamics have shown in recent years.
Although various alternatives have existed in recent years to modernize labor relations and adapt them to the dynamics of current work; these projects – for now – have not succeeded.
The concept of dependent work is being reformulated globally, and it is essential that Argentina adapt its legislation to this reality in order to be compatible with digital employment, the collaborative economy, the so-called “gig economies”, new platforms, etc.
Although last year our National Congress passed a teleworking law, it fell short and failed to meet the expectations of the market or the various social actors.”
Paulina Miranda, from PPU – Chile: “Compared to the region, Chilean Labor Law is robust and developed: it has a Labor Code that brings together all labor regulations and that has been constantly improving over the years; addressing and trying to solve the constant new labor problems: protection of fundamental rights and non-discrimination, special contracts depending on the activity, teleworking, collective bargaining, modernization of the Labor Directorate, inclusion of disabled people.
Likewise, during the pandemic, several regulations were issued to protect employment and the health and lives of workers. However, issues such as flexible working hours and the generally enshrined right to disconnect, whistleblowers, post-contractual restrictions, job offers, internal investigations, workplace harassment, universal childcare and caregiver systems, worker consultation on strategic matters of larger companies, termination of contracts for poor performance, etc., still need to be developed.
César Navarro Contreras, from CMS- Albiñana & Suárez de Lezo – Spain (Madrid): “The Government of Spain undertook, from the beginning of the current legislature which began in 2019, a program to update labor regulations focused on equality, reducing the use of temporary employment, modernizing procedures and using technologies in the workplace, as a priority.
Thus, as early as March 2019, we saw the first glimpses of equality legislation. This included, on the one hand, the registration of salaries broken down by gender, with the aim of enshrining the principle of “equal pay for equal work” by requiring justification for salary differences. Furthermore, equality plans were given new content, and the number of companies required to have them was expanded.
However, labor legislation suffered significant setbacks due to COVID-19, not because no regulations were enacted during 2020, but because the emergency royal decrees of that period were aimed at addressing the most immediate labor-related effects of the pandemic. Specifically, Spanish labor law was forced to deal with issues such as the suspension of employment contracts, reduction of working hours, and unemployment benefits throughout 2020.
Even so, even in 2020, labor legislation saw innovations, such as the boost that was given to work from a regulatory point of view, and which has meant that all workers who provide services for 30% or more of their working day in a reference period of 3 months must have a remote work agreement with the corresponding compensation of expenses related to their remote services, among other rights.
Regarding new technologies, in May 2021 Spain pioneered the regulation of a presumption of employment status for people who provide services for digital delivery platforms; in addition, information rights regarding algorithms and artificial intelligence have been regulated both in the Workers’ Statute and in some collective agreements.
To conclude last year, in December 2021, there were significant regulatory changes in areas such as temporary employment, which was substantially modified with regard to both the causes and maximum periods of temporary employment, the validity of collective agreements, the prevailing matters of company collective agreements, the negotiation of measures for suspension and reduction of working hours, etc. In fact, this last regulatory modification touches on so many issues that it is known as the “Labor Reform”.
At the beginning of 2022, regulations came into effect aimed at automating certain aspects of administrative sanctioning procedures in labor matters. This will involve the use of big data in areas where such tools can be applied. This new approach will undoubtedly generate intense debate in the coming years.
Furthermore, last March, from a labor perspective, the emergency of the war in Ukraine and the rise in gasoline prices had to be addressed through the approval of an emergency regulation that allowed for the provision of aid, as well as a flexible criterion for the adoption of measures to suspend and reduce working hours.
Looking to the immediate future, we are on the verge of a new “Internship Statute” that will regulate the relationship of students, not yet graduated, who provide services in companies as internships. Furthermore, in light of European regulations, Spain plans to approve whistleblower protection legislation this year.
Adriana Ramírez, from ECIJA – Mexico: “Regarding Labor Law in Mexico, we have a relatively new body of labor regulations, which means it lacks experience and requires more time to mature and become established. To provide context, it wasn’t until February 2017 that the process of changing the law we had since 1973 began. In 2017, the Decree reforming and adding various provisions to Articles 107 and 123 of the Political Constitution of the United Mexican States, concerning Labor Justice, was published in the First Section of the Official Gazette of the Federation.
In this Constitutional Reform of February 2017, various principles of collective bargaining and freedom of association were adopted, guaranteeing the free election of leaders, through the vote of the workers in a personal, free and secret manner, as well as the new model of labor justice.
In September 2018, Mexico ratified the International Labour Organization’s Convention 98, concerning the right to organize and collective bargaining. That same year, it signed the United States-Mexico-Canada Agreement (USMCA) with the United States and Canada, Chapter 23 and Annex 23-A of which address freedom of association and collective bargaining.
Therefore, current labor legislation in Mexico is the result of many relatively recent reforms. In this same vein, a significant reform was the 2019 amendment to the Federal Labor Law. This reform led to the elimination of the conciliation boards and the creation of conciliation centers within the Executive Branch and labor courts within the Judicial Branch. That same year, the rights of domestic workers were recognized in the law. The subcontracting model was introduced in 2012 and further restricted in 2021 with the prohibition of outsourcing.
Regarding the outsourcing reform, it’s also worth mentioning that exhaustive administrative requirements were imposed on companies concerning the Public Registry of Contractors for Specialized Services or Specialized Works, also known as REPSE. In my opinion, this reform seems more fiscal than labor-related.
In short, we have very recently strengthened our labor regulations in Mexico, and there are still more labor victories to come. Undoubtedly, we will see labor legislation move towards the inclusion and recognition of new forms of employment and the extension of vacation time and parental leave, among other issues.
Lidia Vilchez Garcés, from PPU – Peru: “We are living through a very dynamic and interesting time. Firstly, as a result of the COVID-19 pandemic, over the last two years, labor legislation has been characterized primarily by the issuance of emergency measures, whose validity is (or was) conditional upon the persistence of health circumstances. Examples of these extraordinary measures include, among others, the regulation of remote work, paid leave with compensation, and the suspension of employment contracts.”
In addition, we have been witnessing certain partial modifications to the regulations; on the one hand, to specific special regimes, such as the agricultural labor regime, and on the other hand, to some specific institutions within the general regime. Examples of the latter include the recent modifications that dramatically restrict the use of outsourcing services, as well as the increase in the Minimum Living Wage.
Regarding these last two modifications, their unilateral implementation by the Ministry of Labor is questioned, without promoting or guaranteeing a tripartite social dialogue (which includes representatives of workers and employers) in the institutional space available for this purpose: the National Labor Council (CNT).
Of similar unilateral origin is the Draft Labor Code, pre-published in April of this year. This proposal was developed and promoted directly by the Ministry of Labor (without prior consultation with the National Labor Council) and, rather than simply compiling or unifying current regulations, seeks to introduce substantial changes in certain highly relevant aspects (temporary contracts, unionization, strikes, corporate groups, outsourcing, to name a few). This draft suffers from a critical flaw: it has omitted more than 70% of the economically active population who are in the informal sector and, therefore, completely outside the scope of labor legislation. In other words, the Draft adds pressure to the ever-shrinking number of formal businesses and workers, completely disregarding the enormous pending task of formalizing businesses and employment.
Where does labor legislation stand regarding equality plans?
Pablo Mastromarino, from Tanoira Cassagne – Argentina: “Contrary to what happens in terms of labor modernization, where I pointed out that Argentina has an outstanding issue, our country has a long normative tradition in terms of equality.
For about 70 years, Argentina has incorporated the principle of “equal pay for equal work” into its Constitution. This principle was later enshrined in our Labor Contract Law, which prohibits all forms of discrimination based on sex, race, nationality, religion, political affiliation, union membership, or age, and establishes the equal treatment that employers must provide to all workers.
Then, in the 1980s, with the enactment of the so-called Anti-Discrimination Law, our country established an operational mechanism to combat situations of discrimination in different areas, which jurisprudence has later extended to labor relations as well.
It is also important to point out Law No. 26,485 on Comprehensive Protection for Women, which includes specific protection mechanisms regarding workplace violence.
Finally, a little over a year ago, our country ratified ILO Convention No. 190 Against Violence and Harassment at Work.”
Paulina Miranda, from PPU – Chile: “The principle of equality is enshrined in the Political Constitution and included in the Labor Code. In addition to the prohibition of discrimination, the principle of equality is especially reflected in the principle of equal pay, conceived from a gender perspective: men and women who perform the same service have the right to the same pay (without prejudice to which, based on the principle of non-discrimination, it is understood that the principle of equal pay can be extended at a general level: two people who perform the same work have the right to the same pay).
However, I believe that rather than equality plans, the emphasis should be on diversity, equity and inclusion (DE&I) plans, since treating those who are different as equals does not seem to be the appropriate answer.”
Helena Monzón, from CMS-Albiñana & Suárez de Lezo – Spain (Madrid): “As we mentioned in the previous question, Spain has had new regulations regarding equality plans since 2019, which affect equality plans. However, it is necessary to clarify that equality plans have existed in Spain since 2007, as a result of Organic Law 3/2007, of March 22, for the effective equality of women and men.
In this sense, equality plans are understood to be a tool that allows the business world to assess its situation and establish measures that enable it to take steps toward gender equality. Therefore, over time, it became necessary to update the regulations to better reflect the current business environment.
Thus, in Spain, starting this year, companies with 50 or more employees are required to have equality plans (in 2007, only companies with 250 or more employees had this obligation). Furthermore, as part of the negotiation of equality plans, it is necessary to conduct a situational analysis to help companies identify the areas where they need to focus their attention to progress towards equality.
Finally, it is important to bear in mind that equality plans also entail the obligation to carry out a pay audit, so that the parties negotiating the equality plans (unions or legal representatives of the workers) have detailed knowledge of each job and pay concept in which there may be differences in favor of one gender or the other.
In our experience negotiating these types of plans, the most important thing is prior preparation, so that the diagnosis of the situation is as realistic as possible and the measures to be adopted are correctly identified. Our perspective is that, if there is a legal obligation in this area, ideally it should go beyond mere formal compliance, helping our clients to transform these plans into genuine tools for attracting and retaining talent.
Adriana Ramírez, from ECIJA – Mexico: “The issue isn’t labor legislation, in my opinion, although I personally believe they should elaborate on it. The core issue of equality lies in the culture of companies and its application between employers and workers to create a culture of belonging, without prejudice based on color, religion, race, gender, sexual orientation, among others.
At ECIJA Mexico, we are seeing increased concern among our clients regarding compliance and the creation of equality plans. The business world has changed and is more aware of its role in promoting equality. However, legislation aside, it is the responsibility of each individual to avoid discrimination and maintain a work environment free of discrimination and promoting equality. Ultimately, I believe that unless individuals internalize that equality is a duty and a way of life, no matter how much it is enshrined in legislation, they cannot be forced to adopt an egalitarian mindset. In this sense, we need much more education and awareness among citizens to bring about real social change.
Lidia Vilchez Garcés, from PPU – Peru: “In Peru, there are some regulations directly aimed at ensuring equality and non-discrimination on the grounds of gender, both during selection and hiring procedures and throughout the duration of the employment relationship. One of these instruments is Law No. 30709, “Law that prohibits wage discrimination between men and women,” and its Regulations.
These regulations require companies to ensure—through the development of internal instruments such as Salary Policies and Job Classification and Function Charts—that pay differences among their staff are based on objective and reasonable criteria, free from discrimination based on gender or any other prohibited grounds. Labor authorities have even implemented special protocols for SUNAFIL inspectors to monitor compliance with these obligations.
Other noteworthy regulations include those related to the prevention and punishment of sexual harassment in the workplace, as well as the implementation of lactation rooms in workplaces. This type of legislation also helps combat discriminatory treatment in the workplace, since it requires companies to guarantee material conditions that allow their female employees to perform professionally under similar conditions and with equal opportunities to their male counterparts.
While significant progress has been made in national legislation, there is still a long way to go. The current state of our pension systems deserves particular attention from our legislators. Any eventual reform to social security systems in health or pensions must not forget that, in our national context, women often find themselves needing to interrupt or suspend their professional careers to care for their homes due to various factors (such as those highlighted by the pandemic). These circumstances should be taken into account when determining equitable and reasonable minimum contribution periods, so that women can access the various benefits offered by social security in our country on truly equal terms.
