Uruguay: Employment & Labour Law

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This country-specific Q&A provides an overview to employment and labour law in Uruguay.

It will cover termination of employment, procedures, protection for workers, compensation as well as insight and opinion on the most common difficulties employers face and any upcoming legal changes planned..

This Q&A is part of the global guide to Employment & Labour. For a full list of jurisdictional Q&As visit http://www.inhouselawyer.co.uk/index.php/practice-areas/employment-labour-law/

  1. Does an employer need a reason in order to lawfully terminate an employment relationship? If so, what reasons are lawful in the jurisdiction?

    Employers have the right to dismiss employees at any time without need of any justification or motive.

    Every time an employer decides to dismiss an employee (either with or without motive) the employer must pay the worker a dismissal indemnity with the only exception of those cases in which the worker has incurred in what is locally called "notoria mala conducta". This concept, which can be literally translated as evident or manifest misconduct is of legal creation, but the actions which might be considered to be misconduct are a matter of judicial interpretation, and thus, there is no definition or single interpretation. An example of the misconducts could be robbery, violence against the employer or other employees, etc.

  2. What, if any, additional considerations apply if large numbers of dismissals (redundancies) are planned?

    There are no specific legal requirements regarding redundancies. Employment contracts and company policies on redundancies would need to be followed.

    An important aspect to consider is that there are certain areas of the economy which have strong and powerful unions. In these areas there could be collective agreements which require fulfilling a certain procedure before the execution of dismissals such as dealing the process in a two – party negotiation (between employers and employees) or three party negotiation (between employers, employees and representatives of the Executive Power).

  3. What, if any, additional considerations apply if a worker’s employment is terminated in the context of a business sale?

    There are no additional considerations that would apply to termination in the context of a business sale.

  4. What, if any, is the minimum notice period to terminate employment?

    There is no minimum notice period required to terminate employment. It is not stipulated by law and could be defined on the labor contract if the parties agree to it.

  5. Is it possible to pay monies out to a worker to end the employment relationship instead of giving notice?

    As referred in question number 4, there is no minimum notice period required to terminate employment. Consequently, the option of garden leave as to place the employees during the notice period to restrain them from communicating information to competitors or using company resources for other employers, it is not applicable in our country.

  6. Can an employer require a worker to be on garden leave, that is, continue to employ and pay a worker during his notice period but require him to stay at home and not participate in any work?

    As referred in questions number 4 and 5, there is no minimum notice period required to terminate employment. Consequently, the option of garden leave it is not applicable in our country.

  7. Does an employer have to follow a prescribed procedure to achieve an effective termination of the employment relationship? If yes, what are the requirements of that procedure or procedures?

    There is no legal requirement, so unless is mentioned in the labour agreements there are no formalities on how to proceed with the termination. In case of temporary contracts, termination of the employment relationship between the parties occurs by the sole fulfillment of the stipulated term or condition.

    The local law does not require the employer to provide notice of termination in writing. It is recommended a verbal communication followed by a formal notification in writing, hence this is a recommendation and not mandatory or law stipulated.

  8. If the employer does not follow any prescribed procedure as described in response to question 7, what are the consequences for the employer?

    As there is no legal requirement in order to comply with a certain procedure there are no consequences. However, as mentioned in question 7, it is convenient to have a formal notification in writing in order to determine the exact date and time of the dismissal.

  9. How, if at all, are collective agreements relevant to the termination of employment?

    Collective agreements would be relevant to the termination of employment if it sets out conditions, benefits or regulations for employers to comply when terminating the employment relationship. It can be seen in collective agreements a provision regarding the termination of employment which requires the employer to consult with the trade union when the employer plans to dismiss a unionized employee.

  10. Does the employer have to obtain the permission of or inform a third party (e.g local labour authorities or court) before being able to validly terminate the employment relationship? If yes, what are the sanctions for breach of this requirement?

    There is no legal provision regarding the permission or information to a third party before validly terminating the employment relationship. The employee is the only one that needs to be noticed of the dismissal decision.

  11. What protection from discrimination or harassment are workers entitled to in respect of the termination of employment?

    Special dismissal in case of sexual harassment is established by law which prevents and punishes sexual harassment in labour relations and protects their victims. In addition to the corresponding administrative and/or criminal complaint, the employee has the right to claim a sum of money for the damage suffered, or to be considered dismissed corresponding to a special indemnity equivalent to 6 monthly installments, cumulative to the common compensation.

    In the event that the victim or witnesses were dismissed or punished within 180 days of the accusation, it will be considered, unless proven to the contrary, that the dismissal or sanctions are due to reprisals. In this case the dismissal will be described as abusive and will entitle the employee to a special indemnity.

    Unlike sexual harassment that is expressly regulated, workplace harassment or mobbing does not have express regulation in our legal system. However, it is recognized by our national jurisprudence, the human dignity and protection of any conduct that assaults in the workplace, even if the aggression does not come from the employer. It foresees the possibility that those workers who consider themselves violated in their basic dignity as a person in the workplace can file a complaint.

    The employee who suffers from workplace harassment may be considered indirectly dismissed, since he does not have the legal duty to withstand acts of harassment in the work environment.

  12. What are the possible consequences for the employer if a worker has suffered discrimination or harassment in the context of termination of employment?

    In case of sexual harassment, as referred in question number 11, in the event that the victim or witnesses were dismissed or punished within 180 days of the accusation, it will be considered, unless proven to the contrary, that the dismissal or sanctions are due to reprisals. In this case the dismissal will be described as abusive and will entitle the employee to a special indemnity from the employer.

    Likewise, the legal liability of harassment in the workplace -regardless of who constitutes it- rests with the employer. The employer may incur in liability for not sanctioning, tolerating and allowing labour harassment. In addition to the fines that can be applied by the Ministry of Labor in case of resolving the existence of workplace harassment in a company, the employer may be ordered to compensate the employee for the moral damage caused by the harassment.

  13. Are any categories of worker (for example, fixed-term workers or workers on family leave) entitled to specific protection, other than protection from discrimination or harassment, on the termination of employment?

    In some cases our laws grant the dismissed employee the right to receive a special indemnity dismissal. This is the case of maternity, sickness and labour accidents dismissal, in which the employee is granted a higher dismissal indemnity.

    In case the dismissal responds to the dismissed worker’s participation in the union or in union related activities, the employee is entitled to file a claim before Labour Courts requesting the nullity of the dismissal and payment of the salaries he did not perceive during the time between the dismissal and the effective reincorporation. The Court will ultimately decide if the worker must be reincorporated and paid said salaries.

  14. Are workers who have made disclosures in the public interest (whistleblowers) entitled to any special protection from termination of employment?

    In our country whistleblowers are not entitled to any special protection from termination of employment.

  15. What financial compensation is required under law or custom to terminate the employment relationship? How do employers usually decide how much compensation is to be paid?

    Financial compensation for termination of employment includes the payment of all legal obligations and also could include contractual obligations when stipulated in the employment agreement or companies’ policies.

    The law establishes that dismissal indemnity consists on an amount equal to one month remuneration (salary plus other benefits) for each year or fraction of work at the company, with a maximum of 6 years. It is good and common practice that the employers pay the compensation according to the legal provisions.

    There could also be contractual obligations which include the amounts payable in accordance with the employment agreement and policies of the company such as incentives, retirement policies, compensations, etc.

  16. Can an employer reach agreement with a worker on the termination of employment in which the employee validly waives his rights in return for a payment? If yes, describe any limitations that apply.

    In order for this type of agreement to be considered valid in our country, it is necessary to fulfill the legal requirements of a transaction (usually referred to as “settlement agreement”) between both parties. The requirements are the following: the existence of a pending or potential litigation, the performance of mutual concessions, the object of the transaction should refer to dubious or uncertain rights and the employee must sign the agreement duly assisted by a legal counsellor.

    In case any of the previous requirements is missing, such agreement can be considered null due to the principle of inalienability of labour rights. Under this principle, the worker is unable to voluntarily deprive himself of the guarantees provided by labor legislation, even for his own benefit.

  17. Is it possible to restrict a worker from working for competitors after the termination of employment? If yes, describe any relevant requirements or limitations.

    The prohibition against competing should be negotiated expressly. This can occur both at the beginning of the relationship as at the conclusion of it. An agreement of this kind will only be effective when it prohibits developing activities similar to those of the company for their own or for a company of the same category, during a specific period and in a reasonable territory.

  18. Can an employer require a worker to keep information relating to the employer confidential after the termination of employment?

    An employer can require a worker to keep information relating to the employer confidential after the termination of employment in case it is stipulated in the employment agreement or in the code of conduct. It is convenient to provide a complete definition of confidential information in the employment agreement or code, in order to provide guidance to the employees and defend the enforceability of the clause in case there is a breach.

  19. Are employers obliged to provide references to new employers if these are requested?

    Former employers are not obliged to provide references to new employers. In case they decide to provide it, the references should be fair and accurate; some employers may only give a factual reference stating dates of employment, job title and salary.

  20. What, in your opinion, are the most common difficulties faced by employers in your jurisdiction when terminating employment and how do you consider employers can mitigate these?

    As mentioned in question number 2, there are certain areas of the economy which have strong and powerful Unions. In these cases and mainly if the dismissals include the termination of the employment of authorities of the union such as delegates or representatives, the employer will have the burden of proving that the dismissals are independent from the participation in the union or in union related activities.

    In case of misconduct dismissals it is important for the employer to have suitable and legal documents in order to either avoid a lawsuit or in the case of a lawsuit be able to demonstrate a solid case. It is convenient to sign a final release of obligations in a settlement agreement with the participation of the parties’ counsellors.

  21. Are any legal changes planned that are likely to impact on the way employers in your jurisdiction approach termination of employment? If so, please describe what impact you foresee from such changes and how employers can prepare for them?

    As from the date of this questionnaire, there is no specific legal change plan likely to have an effect on the approach of the termination of employment.