Hourly Employment Law

OBJECTIVE OF THE LAW. The objective of this law is to promote dignified employment, maintain jobs, and prevent the growth of unemployment and underemployment rates in the country, opening work opportunities to the unemployed population. This law is called the "Hourly Employment Law" and is governed within the framework of the National Plan and Country Vision, in harmony with the Constitution of the Republic, Labor Legislation and Social Security, and International Conventions subscribed to and ratified with the International Labour Organization (ILO).

PURPOSE OF THE LAW. The purpose of this law is:

• 1)

  To promote dignified and decent employment, prevent the increase in unemployment and underemployment rates in the formal sector of the economy and simultaneously ensure that these workers enjoy the benefits of social security and occupational health;

• 2)

  To promote education, training, and professional development of workers and working women as a mechanism that facilitates their labor market insertion to achieve better levels of productivity and competitiveness that result in better incomes;

• 3)

  To take full advantage of the installed capacity of productive units within the framework of economic reactivation programs in both the private and public sectors, in accordance with the contents of the National Plan and Country Vision;

• 4)

  To stimulate investment dynamics and employment generation in the private and public sectors, especially in branches of economic activities with greater capacity to absorb labor; and,

• 5)

  To ensure that the Economically Active Population (EAP) of the country, vulnerable social groups, and youth who join the labor force each year find dignified employment in the labor market with respect for their labor rights and enable youth to develop integrally, reducing the rates of abuse, violence, and juvenile delinquency that particularly affects the most vulnerable groups and that young people of productive age refrain from abandoning the country, putting their lives at risk and breaking family ties.

MODALITIES AND FORMS OF HIRING. The parties may enter into employment contracts by hours or in half ordinary working days, daytime, mixed, or nighttime shifts under the following modalities: 1) For a limited period; or, 2) For specific works or services. In these cases, hiring is subject to the regulations of rights and obligations established in this Law. The worker hired under this modality is protected against unjustified dismissal during the term of the employment contract, subject to the provisions of Article 121 of the Labor Code. The provisions of Article 120 reformed subsection g) of the Labor Code are applicable in the same terms, as expressly referred to in receiving, in accordance with what is stipulated, the benefit for natural death of the worker, provided that it occurs within the term of duration of the contract and the requirements established in the reform indicated in Decree 150-2008 effective as of November 5, 2008 are met. In any case, the minimum daily working day for which hiring may occur under this Law is three (3) hours. The parties may also exceptionally enter into half-day employment contracts or hourly contracts or in full working days, in which the percentage established in Article 4 of this Law is not taken into account, in those new industries or economic activities whose nature of the business activity is based on hourly employment, part-time, or part-time work, such as new technological communication activities like Call Centers or Contact Centers and others that must be qualified by the Secretary of State in the Labor and Social Security Offices. Work effectively executed outside the limits of the ordinary working day constitutes extraordinary shifts and must be remunerated in accordance with the provisions of the Labor Code. By the special modality of this Law, it is understood that the actual time of work is regulated by the type of working day agreed upon for the purposes of applying disciplinary sanctions or causes of dismissal, especially regarding the classification of faults or absences of the worker for two (2) consecutive days or three (3) alternating days within the month, in which the fault or absences on two (2) of the effective working days or agreed shifts must be considered as consecutive; any other requirement must be regulated in the regulations of this Law.

SCOPE OF APPLICATION. The Law applies nationally, in both urban and rural areas, to all natural or legal persons who are employers, owners of productive units or services, as well as to special programs developed by the public sector that require hiring for determined periods. Productive units or service providers that are beginning operations or those that are already in operation may hire under this Law up to forty percent (40%) of workers and working women, a percentage that must be calculated on the basis of the total payroll reported at the time of registration of the productive or service unit before the Secretary of State in the Labor and Social Security Offices, except in the case of those already registered. For the purposes of the preceding paragraph, the number of seasonal workers and working women who perform cyclical work, as well as temporary workers or working women, should not be taken into account in determining the percentage. Exempted from the percentage established in this Article are companies that have up to ten (10) workers, and must retain permanent personnel as of the date this Law enters into force. In companies where a collective contract is in force, workers under this law modality enjoy the benefits of the collective contract that may be applicable to them, provided they choose to contribute in accordance with the provisions of Article 60-A of the Labor Code. Up to five percent (5%) of the percentage established in this Article of hired workers and working women corresponds to vulnerable social groups such as: Elderly adults, persons with disabilities, youth exposed to migration risks or who have been deported, youth who have completed reeducation processes for violating the law, youth rehabilitated from drug and alcohol consumption, youth who have left gangs or organized crime groups, war veterans, and retirees who receive pensions below the minimum wage. As for productive or service units that have from one (1) to ten (10) workers, preference in hiring persons belonging to vulnerable sectors must be up to ten percent (10%). Productive units or service providers that perform work which, while inherent to their business line, are not continuous because they depend on production contracts, contracts for determined quantities for delivery on specific dates with occasional clients, so that the delivery or arrival of the scheduled date ends the contracted work, as well as those work activities that are determined to be temporary, seasons, or times of the year when they intensify or require temporary increases in labor, may hire workers under the terms of this Law.

PROHIBITIONS. The prohibitions of this Law are as follows: 1) Productive or service units that hire workers within the framework of this Law cannot carry out reductions of permanent salaried personnel, except for just causes of dismissal, resignation, or termination of the employment contract by mutual agreement. Vacancies in permanent positions resulting from: justified dismissal, termination of the employment contract by mutual agreement, resignation of the permanent worker, or creation of new positions, if the employer decides to fill them, may be filled with personnel hired under this Law, in which case they automatically acquire the status of permanent worker, understood as initiating a new employment relationship, without the probationary period applying in this case. When the permanent position is filled, the employer retains at their discretion the right to re-hire personnel under this modality until filling the forty percent (40%) percentage established in Article 4 of this Law. The employer who fails to comply with what is stipulated in the preceding paragraph must be sanctioned by the Secretary of State in the Labor and Social Security Offices with a fine equivalent to twenty-five percent (25%) of the salaries of their permanent payroll. 2) The execution of verbal contracts within the framework of this Law.

REMUNERATION. The remuneration of workers hired under the scope of this law is composed of: 1) BASE SALARY. It is the compensation that the employer must pay to the worker or working woman by virtue of the employment contract, a compensation that must be effective in the legal currency of the country. When it is unskilled labor, the Base Salary cannot be less than the hourly minimum wage applicable to each sector of the economy where hiring is performed. When hiring is for skilled labor, the Base Salary must be what is agreed upon between the parties, but in no case may it be less than the hourly Base Salary that corresponds by Law. Skilled labor is understood to be that offered by a person whose technical or professional studies and experience in the matter for which hiring is being performed guarantee the result of the provision of the service in terms of productivity and quality. The Base Salary must be agreed upon for hours effectively worked, without exceeding the maximum working days established in the Labor Code. The Base Salary must be calculated as follows:

• a)

  A Base Salary that is set per hour and is not less than the minimum wage established for each production or service sector. The hourly Base Salary is obtained by dividing the monthly minimum wage set for each sector by the number of monthly hours established for the ordinary daytime, mixed, or nighttime working day. To obtain the monthly hours established for the ordinary daytime, mixed, or nighttime working day, the hours corresponding to the working days established in the Labor Code shall be multiplied by the average of four point twenty-nine (4.29) weeks per month.

• b)

  The weekly Base Salary is obtained by multiplying the hourly base salary by the hours actually worked by workers in the week; and,

• c)

  The monthly Base Salary is obtained by multiplying the weekly base salary by the average of four point twenty-nine (4.29) weeks per month. 2) ACCRUED RIGHTS AND NON-HABITUAL COMPENSATION. Productive or service units must pay their workers a Base Salary plus the accrued rights corresponding to the thirteenth and fourteenth months of salary equivalent to sixteen percent (16%) on the agreed base salary. Productive or service units must pay their workers non-habitual compensation equivalent to four percent (4%) on the agreed Base Salary, a value that is equivalent to the payment of severance aid, a right which workers covered under this work regime do not enjoy. The rights referred to in this Article and non-habitual compensation must be paid on the same date, frequency, and manner in which the Base Salary is paid.

RIGHTS OF WORKERS. Workers hired under this Law are subject to the provisions therein regarding rights, obligations, and benefits, without prejudice to any others that the contracting parties may agree upon. It is understood that workers hired under the Hourly Employment modality enjoy the fundamental rights established in the Labor Code and the eight (8) fundamental ILO Conventions ratified by the State of Honduras, among which are Conventions 87 and 98, which guarantee freedom of association, protection of the right to unionization, and collective bargaining. Likewise, they have the right to enjoy one day of paid vacation per month worked, which must be enjoyed in accordance with what is agreed upon between the parties.

LABOR PROTECTION AND SOCIAL SECURITY. Regarding all matters related to occupational health, hygiene, and safety measures, occupational hazards, disability, old age and death, benefits for natural maternity and illness and maternity of workers hired under this Law, the provisions of the Law of the Honduran Institute of Social Security (IHSS), the General Regulation of Preventive Measures for Work Accidents and Occupational Diseases, and what labor legislation stipulates on this matter shall apply. Productive or service units and workers covered by the Honduran Institute of Social Security (IHSS) must pay the contribution rates established by Law, based on the monthly earned salary. Employers who join this Law are subject to the contribution established by the Law of the National Institute of Professional Training (INFOP).

PREFERENCE FOR PERMANENT HIRING. Workers hired under this modality have the first option to fill a permanent position in the productive or service units that have used this Law, provided the worker meets the profile requirements of the vacant position.

SUPERVISION AND CONTROL. The Secretary of State in the Labor and Social Security Offices through the General Directorate of Employment and the General Labor Inspectorate must monitor compliance with this Law. For the purposes mentioned above, the mandatory registration of Productive or Service Units that are interested in joining this regime is established. Exempted from this registration are companies that implemented Legislative Decree No. 230-2010.

COORDINATION RELATIONSHIPS. To guarantee the effective execution of this Law, as well as the adoption of uniform criteria regarding its application, the Secretary of State in the Labor and Social Security Offices must establish coordination mechanisms with other involved institutions.

FORM OF HIRING. Employers must register an individual employment contract in accordance with the model contract established by the Secretary of State in the Labor and Social Security Offices, in which the rights, obligations, and responsibilities of the parties within the framework of this Law must be documented, without prejudice to the understanding that those included are understood by law, the guarantees and rights granted to workers by this Law, the Constitution of the Republic, the Labor Code, and other Labor and Social Security Laws. The contracts executed must be registered with the Secretary of State in the Labor and Social Security Offices free of charge within a maximum period of fifteen (15) days counted from the execution of the contract. When hirings exceed one (1) year and the Productive and Service Units decide not to continue the hiring, the following procedure must be followed:

• 1)

  When the contract has lasted one year, a bonus of one salary must be paid, calculated on the average salary earned in the last six (6) months;

• 2)

  When the contract has lasted two (2) years, a bonus of one and a half salary must be paid, calculated on the average salary earned in the last six (6) months; and,

• 3)

  When the contract has lasted three (3) years, a bonus of two (2) salaries must be paid, calculated on the average salary earned in the last six (6) months. After these periods, if one or more new positions are created in the contracting Productive and Service Unit in work related to that performed by the worker, they must be hired for said position, considering it as indefinite from that date, and their employment relationship subject to the provisions of the Labor Code and other labor and social security laws, without the probationary period applying in this case. Similarly, after the three (3) year period, said year they must contract indefinitely at least twenty-five percent (25%) of their hourly hired workers or working women, without prejudice to continuing to hire personnel as established in Article 4 of this law regarding the percentage of hiring of hourly workers and working women. Exempted from the provisions of this Article are those new industries or economic activities whose nature of the business activity is based on hourly employment, part-time, or part-time work, such as new technological communication activities like Call Centers or Contact Centers and others that must be qualified by the Secretary of State in the Labor and Social Security Offices. Whoever does not respect the preference right to be hired permanently, violating the right of priority hiring, when creating one or more new positions, must be sanctioned to pay the affected worker what corresponds in accordance with what is established in Articles 116 and 120 of the Labor Code in the proportionality that corresponds. The completion of the work or the end date of the contracted service necessarily ends the contracted employment relationship, without any labor liability for the parties, it being understood that there is no basis for claim payment of the fourteenth month, thirteenth month, and severance aid, except proof to the contrary. Either party may terminate the employment contract before the completion of the work or the end date of the contracted service in accordance with the provisions of Article 121 of the current Labor Code.

FINANCIAL RESOURCES. The Executive Branch must guarantee the budgetary resources required by the Secretary of State in the Labor and Social Security Offices for the effective and immediate application of this Law. The personnel who execute this Law and the personnel of the Labor Market Observatory must be integrated into the budget of the Secretary of State in the Labor and Social Security Offices. The personnel currently hired with resources allocated to the National Hourly Employment Program shall become part of the permanent personnel of the Secretary of State in the Labor and Social Security Offices once this Law enters into force.

UNFORESEEN CASES. Any case not foreseen in this Law and its Regulations must be resolved in accordance with the principles of Labor Law, international labor conventions, and the provisions of the current Labor Code.

REGULATIONS. The Executive Branch through the Secretary of State in the Labor and Social Security Offices must regulate this law within a maximum period of sixty (60) days from the date of its publication in the Official Gazette La Gaceta.

TRANSITIONAL PROVISION. Workers hired under Legislative Decree No. 230-2010 are subject to the provisions contained therein, it being understood that with the effectiveness of this Law a new labor relationship begins.

EFFECTIVENESS AND PUBLICATION. Without prejudice to acquired rights, this Law shall take effect as of the date of its publication in the Official Gazette "La Gaceta". Given in the city of Tegucigalpa, municipality of the Central District, in the Session Hall of the National Congress, on the twentieth day of the month of January of two thousand fourteen. MAURICIO OLIVA HERRERA PRESIDENT, FOR THE LAW GLADIS AURORA LOPEZ CALDERON SECRETARY ÁNGEL DARIO BANEGAS LEIVA SECRETARY Forwarded to the Executive Branch on March 3, 2014. Therefore: Let it be executed. Tegucigalpa, M D C., March 24, 2014. JUAN ORLANDO HERNÁNDEZ ALVARADO PRESIDENT OF THE REPUBLIC THE SECRETARY OF STATE IN THE DEPARTMENTS OF LABOR AND SOCIAL SECURITY CARLOS MADERO