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COVID-19: Legal Provisions in Nicaragua

So far, there is no provision or pronouncement by the Executive Branch, which is responsible for overseeing labour regulations through the Ministry of Labour.

Faced with a situation that affects the entire population worldwide, in order to avoid reaching the cancellation of employment contracts, which is the last ratio that must be implemented, and making use of all Nicaraguan labor legislation (our Political Constitution, Labor Code, labor jurisprudence, among others), by common agreement, in most cases the following scenarios could be developing:

  • The so-called Teleworking, which is the implementation of the compliance with the labor obligations from the worker’s home, as far as possible, with the purpose of further developing the economy, avoiding the agglomeration of people and reducing the impact of the spread of the virus. This may be a provision that can be implemented unilaterally by the employer.
  • Sending workers to their homes on holiday, by virtue of the obligation of the employer to draw up the holiday schedule in accordance with the infine part of Art. 76 of the Labour Code and which in these circumstances becomes a right that allows him to take such a provision.
  • Reduction of working hours with reduction of wages by signing a bilateral agreement between the employer and the workers. In accordance with Articles. 51, 55 and 63 L.C., the worker and the employer may agree on different modalities of working hours, and even modify the manner of wage compensation including the option of a salary reduction under the scope of the Articles. 82 and 85 L.C., which establish that the salary will be freely stipulated by the parties, but it can never be less than the legal minimum.
  • Individual suspension of employment contracts under the grounds of mutual consent. This is an option under the scope of Artos. 36 and 37 L.C., but its feasibility will depend on the number of workers of the company to be suspended and the times when the suspension is agreed. Here there must be a proportionality between the total number of the company’s personnel and the number of people to be suspended.

If the number of people whose employment is being suspended is representative of the total number of workers, the company will not have solid arguments to support an “individual suspension”. The labor authority will easily say that we are facing a “collective suspension”.

After an individual suspension, all rights and benefits resulting from the contract and employment relationship are suspended. The suspension can be TOTAL or PARTIAL, with regard to the fundamental conditions of the contract or employment relationship.  In our opinion, this option allows for partial suspension with regard to the fundamental conditions of the contract or employment relationship; therefore, salary, benefits, incentives, etc. may be partially suspended.

In the case of collective suspension, in addition to being preferably agreed upon with the purpose of avoiding a possible labor contingency, the term must be included in the agreement, and the employer is obliged to pay the worker six days of salary and if the term is renewed, another six days must be paid, in accordance with the final part of Article 38 L.C.

Gerardo Escorcia Díaz
García & Bodán