RELEVAT ASPECTS OF LABOR CONTRACTING
I need to hire personnel for my company, ¿what type of agreements must I execute?
Employers need to hire people at the start of a business operation, when the company is expanded or when they wish to form a branch. The adequate agreement must be used according with the company's needs. There could be two ways of hiring personnel for a company: a) individuals that work as independent workers; and b) individuals that work under subordination to the employer. If the company needs to maintain control over the management of the activities to be performed, then those individuals have to work as subordinates of the employer. This kind of hiring can only be achieved through individual labor agreements. On the contrary, if the company does not need to directly control the management of its activities, nor requires that the employees work under a fixed schedule or a determined number of daily hours, then the hiring would be considered as a commercial relationship known as professional services. 
Are there any legal issues if in my company I pay the salary to my employees as fees for professional services rendered and in exchange they hand in commercial invoices?
Some employers require commercial invoices from their employees every time the employer pays the salaries, or how they are called, the "fees". By doing so, the employer may face certain legal issues regarding those individuals that do perform their work under the subordination and instructions of the employer, that is, when the employer instructs its employees to satisfactorily perform their work, demands from them compliance of a given schedule and of an hourly work day and also provides materials, instruments and all necessary input to perform their work, since according with the law, this kind of relationship must be ruled by labor regulations. Therefore, in said case, the employer is compelled to pay a salary, not a fee, with all the underlying differences between either means of payment that could affect, one way or the other, the interests of the employer.
Not doing it as stated, could confront the employer with a labor lawsuit filed by the hired employee who has the right to claim before labor authorities the settlement of employee's labor privileges to which the employee is entitled by law, since the employer failed to comply with one of the essential elements of the labor relationship: the salary.
Do I have to execute a labor agreement with my employees? If I do it, do they acquire rights?
Both the employee and the employer are required to execute in writing almost all labor agreements; however, the burden of such requirement is heavier to the employer than it is to the employee since not only the employer has to produce written labor agreements but also has to deliver a copy thereof to the General Labor Direction within a term of 15 days as of the date of the execution of the labor agreement. Workers have the same rights whether under a labor agreement or in its absence.
If the written labor agreement is not executed the employer ends up as the most harmed party since employer will be hardly able to prove, in the event of a labor lawsuit, the labor conditions agreed upon with the employee.
When does the labor relationship effectively starts?
Any labor relationship starts as of the first day the employee starts working, regardless of the existence or not of a labor agreement or whether employee is then under the trial period.
ABOUT THE WORK DAY (HOURS) AND OVERTIME
What are the maximum work day hours that I can hire an employee?
Limits thereof are ruled by the law, as follows:
- Day work: a maximum of 8 hours of effective work and 44 weekly hours.
- Night shift: a maximum of 6 hours of effective work and 36 weekly hours.
Composed shift: a maximum of 7 hours of effective work and 42 weekly hours.
It is important that employers observe these maximum limits when organizing the work schedule of the company, since if a maximum limit schedule is above to that mandated by law, the difference, then, shall be considered as extraordinary work.
Can I demand from my employees to work overtime? How should I pay them?
It is not possible to demand from your employees to work overtime since the overtime work is performed freely, without obligation. However, it is possible that overtime be binding when it has been previously agreed upon with a labor union via a Collective Bargaining for Labor Conditions; in this case, the commitment to perform overtime falls solely upon the members of the relevant labor union.
Overtime is paid as extraordinary salary and each overtime hour is equivalent, at least, to an additional 50% of the regular hourly pay.
How can I amend the hourly work day limits of my employees?
Employer and employee may agree to establish different limits to those mandated by law regarding the hourly work day (day shift, night shift or compounded shift), but only under compliance with the following conditions:
- When reducing the work day limits in the event the employee is not required to work the total hours established by law.
- To increase the work day maximum limit up to an additional two daily hours. As an example: instead of working 8 ordinary daily hours an employee may work 10 ordinary daily hours or, instead of working 6 night time hours, employee may work up to 8 hours. However, this hourly increase is only possible when the work performed is not carried out under dangerous or unhealthy conditions; and in no case if the amount of working hours allowed by law exceeds the maximum limits provided by the law, namely: in the case of the ordinary daily hour-work day of 44 hours per week, the night shift of 36 hours per week and the compounded shift of 42 hours weekly.
Finally, it is important to stress that said increases must count with the employee's agreement thereof and that the amendment to the daily work hours must be in writing and a copy therewith must be delivered to the General Labor Direction.
PERIOD OF REST, REMUNERATION AND LOSS OF THE RIGHT
If my employees work during their period of rest, must I pay them the time worked based on extraordinary terms?
When an employee works in a day which corresponds to the employee's weekly period of rest, or in a day off, the employer has to pay the employee the ordinary salary for that day plus extraordinary salary for the time the employee worked during that day.
How do I pay my employees the days off that concur with the weekly period of rest? And what happens if they work during those days?
The calendar poses, every now and then, some concurrences therein, for example: an employee may have the right to a weekly period of rest on a Sunday and it is possible that a particular Sunday be also a day off. Even if a day off concurs with a weekly period of rest, the employer must pay both days in full, which means that this particular day is worth double and the employee does not have to work. The possibility that the employer and the employee agree to work on a rest period which concurs with a day off may happen, then, in such case the employer must pay the time worked as extraordinary time, and in addition pay both ordinary salaries for those days that concurred.
For example: an employee makes Q.50.oo per day. It just happens that during this given week the weekly period of rest (which in this case is a Sunday) concurs with a day off. How much pay is the employee entitled to for working that day? The Employee will receive Q50.oo for the weekly rest period plus Q50.oo for the concurring day off, totaling Q100.oo.
Let us assume that the employee works 8 hours during that particular day when the weekly rest period and the day off concur, how much would be the employee's pay in terms of extraordinary remuneration? In this case the ordinary daily hour is worth Q6.25, therefore the extraordinary hour is worth Q9.37 and if the employee worked a full 8 hour extraordinary time the resulting salary would be Q75.oo plus the concurrent Q100.oo, so the total pay would reach Q175.oo as a consequence of having worked 8 hours during a day where the weekly period of rest concurred with a day off.
ALL YOU NEED TO KNOW ABOUT VACATION TIME
At what period of time am I required to grant vacation time to my employees?
Vacation time must be granted to employees after a continuous year work. The employer has the right to establish the date when the employee's vacation time will start; however, the date established by the employer must guarantee that the employee shall enjoy the vacation time within 60 days following the date when the employee reached a year of continuous services.
Can I set off via payments my employees vacation time?
It is not possible. Some employees, moved by a legitimate economic interest, accept to work during their vacation time to obtain additional compensation from their employer; however, this practice is not legal and if it occurs, it will pose a possibility of a penalty against the employer.
Employees' vacation time must be enjoyed through an effective rest. An employer should appreciate and understand the benefits in terms of productivity of the company when the employees effectively enjoy their vacation time, since the physical and mental health of the employee are protected and in addition favors her/his familiar integration.
What documents do I have to provide to show that my employees have been granted their vacation period?
When an employee returns to his workplace after having enjoyed vacation time, it is important for the employer to request a signed acknowledgement from the employee stating that he/she has enjoyed the vacation time. This document is of the essence for the employer to evidence that the corresponding vacation time has been granted to the employees. If employer does not demand said acknowledgment employer is risking that labor authorities determine that vacation time has not been granted to employees, unless employer proves otherwise which is very difficult.
PAYMENTS THAT ARE PART OF THE SALARY
Are commissions part of the salary of my employees?
Commissions are an integral part of the total salary of employees. Everything that an employer grants as payment for services rendered by employees is considered as salary. Keeping this concept clear is very important for a sound organization of a company since labor privileges (vacation time, year-end bonus, yearly bonus and indemnifications) must be figured out based on all amounts earned, which means over the total salary, therefore commissions must be included within the ordinary total salary at the moment of determining all said privileges.
What benefits must be considered as economic advantages? How are they handled?
Any and all economic benefits of any nature, in cash or otherwise, granted by the employer in a continued basis to employees as payment for the services rendered, are considered economic advantages. When an employer wishes to upgrade the employees' pay but is not able to do it in cash, then the employer would grant certain economic advantages which are, precisely, any type of economic benefits that indirectly increase the employee's earnings.
The economic advantages are part of an employee's ordinary salary; if an employer grants them employer must take them into account in order to figure out all applicable labor privileges. In light of such situation, the granting of economic advantages should be a well thought decision by the employer and it is advisable for the employer to keep written evidence of the proportionate amount of said economic advantages with respect to the amount of salary earned by the employee. When an employer does not keep written evidence of said proportion, then the law mandates that the computation of those economic advantages be a flat 30% of the salary earned by the employee.
Can I pay my employees' salaries by via a bank account?
Yes, you can, provided the employees agree with that form of payment. The general rule regarding payment of salary is that it has to be made in cash of legal tender. In Guatemala, that currency is the Quetzal. However, it is allowed that through a collective bargaining agreement or through individual labor agreements the payment be made via bank checks or via a deposit in a bank account provided that this option favors the employee and employee expressly accepts it.
CAUSES FOR TEMPORARY SUSPENSION OF LABOR AGREEMENTS.
In which cases can I grant licenses to my employees and how do I handle whether these licenses are with or without the right to salary?
Licenses may be granted directly by law or may be voluntarily granted by the employer. Licenses with a right to salary are those provided for, in general, in section 61, sub-paragraph ñ, point 6 of the Labor Code. Those licenses are mandatory upon the employer. Other licenses without the right to salary do exist and are also mandatory upon the employer to grant them, as it happens with a member of a labor union that holds a public position of popular election and the employer, therefore, is committed to grant a license without the right to salary for as long as the term of the position for which the employee was elected lasts. In addition, some other types of licenses without the right to salary exist that are generally granted by the employer who is not legally bound thereto. They could be of any kind, for example: leaves for female employees to assist to a parents' meeting at her child's school; leaves for employees to assist to studying groups to prepare for a test., etc. These licenses may be with o without salary rights, following the sole decision of the employer.
Can I dismiss my employees while they are suspended?
Employers have the right to carry out two types of direct dismissals: legally justified or unjustified. In the event that an employee is individually suspended from employee's labor agreement, the employer cannot exercise the right to directly and in an unjustified manner dismiss employee; if employer proceeds otherwise, such dismissal will have no legal effect and employee will resume his/her labor obligations by the time the period of suspension is over. On the other hand, if a direct dismissal is for a just cause, that is when there is cause that entitles the employer to dismiss employee, then this dismissal is legally valid even if exercised during the employee's suspension period.
IMPORTANT CONSIDERATIONS THAT SHOULD BE TAKEN INTO ACCOUNT WHEN TERMINATING A LABOR RELATIONSHIP
Under what circumstances do I have to indemnify employees as a consequence of the termination of their labor relationship?
The legal obligation to indemnify an employee comes forth when the employer dismisses employee without just cause; this means that dismissal was exercised with no legal cause as set forth in article 77 of the Labor Code. Employee's indemnification only exists in said event. When the labor agreement is for an indefinite term, indemnification is ruled by article 82 of the Labor Code; when the agreement is for a given term or for a specific given work, the indemnification is ruled in accordance with article 84 of the Labor Code. Likewise, indemnification is mandatory when employee is considered justly dismissed as a consequence of the employer generating one of the indirect dismissal causes as ruled by article 79 of the Labor Code.
When I dismiss an employee for just cause, what labor benefits do I have to compensate the employee with? And, what would those benefits be if I dismiss employee without a just cause?
At the time a labor relationship is terminated, regardless of the grounds for such dismissal, the employer must pay the employee, the following:
- The applicable salary up to the date of dismissal
- The proportional year-end bonus
- The annual bonus proportional to the time worked as of the last payment of this privilege
- The proportional amount of vacation time applicable as of the last payment when employee took vacations.
If direct dismissal is for just cause, the employer does not have to pay any other benefits, other than those stated above.
If direct dismissal is without just cause, then the employer must pay, in addition to the benefits stated above, the applicable dismissal indemnification.
When is it considered the occurrence of an indirect dismissal?
The decision for an indirect dismissal is upon the employee when he/she considers that the employer has incurred any of the causes set forth in article 79 of the Labor Code. For example: when the employer omits payment of the salary to the employee by the date the payment period is due; when the employer has an ill conduct toward the employee; if employer changes, without a prior agreement with the employee, the basic work conditions, etc.
Can I indemnify my employees on a yearly basis?
A real indemnification exists when the labor relationship ends, meaning that the employee will not continue to perform services on behalf of the employer. Some companies have made it customary to indemnify their employees on a yearly basis with the purpose of minimizing the amount relative to labor liabilities that, at the end of the labor relationship, could be applicable to the employee. However, these "liquidations" or agreement terminations are legally null and void since the employee is not terminating the services on behalf of the employer. Afterwards, the employee may sue the employer demanding re-adjustment of the applicable indemnification. Besides, it could happen that, after 5 years of indemnifying the employees, on a yearly basis, employee resigns without the right of a benefit for indemnification. It is further obvious how inconvenient this practice is for employers when they have granted employees with an indemnification on a yearly basis, when after a number of years the employee incurs a direct dismissal cause which means that this employee would not have been entitled to that benefit.
WHAT SHOULD I PAY THE EMPLOYEE WHO IS SUBJECT TO AN OCCUPATIONAL HAZARD?
What are occupational hazards and what do I have to pay the employee who has gone through one? What happens if the employee dies as a consequence of an occupational hazard?
An occupational hazard consists in the possibility that during performing his/her labor responsibilities in a company an accident occurs due to lack of security at work. The employer is responsible for implementing all needed security measures to prevent or avoid occupational hazards. Normally, these security measures are provided for in the company's Workplace Security and Hygiene By-Laws.
If an employee suffers an accident as a consequence of the lack of labor risk precautions attributable to the employer and the employee is under Social Security benefits, then this Social Security system will assume all subsidies to which the employee is entitled in the event the employee has to be suspended from work for his/her recovery. If the employee is not under the Social Security benefits system, then the employer will have to assume all costs during the suspension period.
If an employee dies as a consequence of a labor hazard attributable to the lack of preventive measures on the part of the employer, then employer will have to pay the employee's heirs, besides the post mortem indemnification for the time served, an additional indemnification for the underlying responsibility regarding the labor hazard that happened in the company.
EXISTENCE OF LABOR UNIONS
What is the benefit for employers upon the existence of labor unions?
A labor union could benefit an employer to help the execution of collective bargaining agreements that allow a better organization of the company; this agreements are tax-exempt; to train employees and increase the company's productivity since the labor union can form and manage training centers that could also be formed through donations by the employer which are deductible from the Income Tax that the employer pays to tax authorities. Formation of labor unions is also beneficial in that the employees will have a sound representation before the employer therefore facilitating a stronger harmony in the company's labor relationships, even through the implementation of alternative means to solve conflicts. The company, additionally, acquires a commercial benefit at the international level since currently, within the framework of the globalization trends, companies that respect labor unions' freedom are positively regarded. These are just some of the benefits that can help the employer in dealing with an honest, strong and adequately trained labor union.
EMPLOYER'S OBLIGATION TO CREATE A COLLECTIVE BARGAINING AGREEMENT .
Am I required, as an employer, to negotiate a collective bargaining agreement?
An employer may be required to negotiate a collective bargaining agreement when the labor union that proposes the project of such agreement has the strength or the minimum legitimacy required by law. Said minimum legitimacy and strength that a union must have to force the employer to negotiate a collective agreement means that at least one fourth of all employees of the company or the production center, must be affiliated to the union. If the labor union lacks this minimum strength or legitimacy, then the employer is not forced to participate in a negotiation thereof.
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