Labor Reserve Fund Act

OBJECT OF THE LAW. The purpose of this Law is the creation and administration of the Individual Capitalization Labor Reserve Fund established in the Regime of Private Contributions (RAP) with the purpose of guaranteeing the acquired rights of workers, through the benefits derived from the application of this Law for workers in the country.

SCOPE OF APPLICATION. This Law is of public and social order and binds all natural or legal persons that are not state entities, that govern their labor relations in accordance with the Labor Code.

OBJECTIVE AND ADMINISTRATION OF THE FUND IN THE RAP. The Regime of Private Contributions (RAP) shall administer the Individual Capitalization Labor Reserve Fund, which shall be constituted by the contributions made by the employer in order to guarantee payment for severance or seniority bonus to workers once the individual labor relationship has terminated. The administrative management of the Fund must be carried out with the greatest transparency, efficiency and effectiveness in accordance with the standards established for such purposes by the National Commission of Banks and Insurance (CNBS), especially regarding the handling of contributions, commissions, fund investments, distribution of profitability generated by the fund, constitution of reserves and any other aspect related to its management. CHAPTER II OF THE INDIVIDUAL CAPITALIZATION LABOR RESERVE FUND

OF THE INTEGRATION OF THE INDIVIDUAL CAPITALIZATION LABOR RESERVE FUND ADMINISTERED BY THE RAP. The Individual Capitalization Labor Reserve Fund, established in the Regime of Private Contributions (RAP) shall be integrated with mandatory employer contributions equivalent to four percent (4%) monthly of ordinary salary, based on a mandatory contribution ceiling of three (3) minimum salaries at its highest level. The contributions made by the employer must be credited expressly in the name of the worker in the individual account in the Regime of Private Contributions (RAP). Such individual capitalization accounts shall be subject to regulation by the National Commission of Banks and Insurance (CNBS), with respect to the obligations established for supervised financial institutions.

PROHIBITION OF MODIFICATIONS IN THE LABOR RESERVE FUND. It is prohibited for workers and employers to enter into agreements or pacts to change, substitute or modify the characteristics established for the individual Labor Reserve account created by this Law. Employers that, upon its effective date, already have agreed through individual or collective agreements or through special laws, the annual payment of severance benefits or seniority bonus, are not obligated to constitute the Individual Capitalization Labor Reserve, deducting the same from the agreed payment or, failing that, in accordance with what is agreed between both parties.

PAYMENT OF THE INDIVIDUAL CAPITALIZATION LABOR RESERVE. When the worker ceases the labor relationship, for any cause of termination of the individual work contract, he or she shall have the right to receive from the Regime of Private Contributions (RAP) the value constituted in the Individual Capitalization Labor Reserve account in his or her name. The amount constituted as labor reserve together with its returns in case of unjustified dismissal shall be deducted from the value to be received by the worker for severance benefits. In the case that the balance in the Individual Capitalization Labor Reserve is greater than the corresponding Severance, said difference, regardless of the resulting amount, must also be granted to the worker as Labor Compensation for Employment Stability or Seniority Bonus. In case of termination of the labor relationship for any cause other than unjustified dismissal, the value of the amount constituted in the labor reserve account together with its returns shall be paid to the worker as Seniority Bonus as Labor Compensation for Stability. In the case of workers who voluntarily decide to terminate their labor relationship, one hundred percent (100%) of the balance constituted in their name in the Individual Capitalization Labor Reserve Fund shall be granted as seniority bonus; it shall be the obligation of the employer to supplement the payment to the worker if the balance in the RAP account is less than thirty-five percent (35%) of the amount that would correspond to them as indemnification for severance, in the case of those workers with a seniority of more than fifteen (15) years of continuous service. In case of death or total or permanent disability from causes other than those derived from Occupational Hazards, with a work seniority of six (6) months or more, their legal beneficiaries or the worker themselves, as applicable, have the right to receive as Seniority Bonus one hundred percent (100%) of the balance constituted in the Labor Reserve; it shall be the obligation of the employer to supplement the payment to their beneficiaries if the balance in the Labor Reserve account is less than seventy-five percent (75%) of the amount that would correspond to them as indemnification for Severance, as provided in Article 120 letter f) of the Labor Code. In case of death of the worker affiliated to the RAP and in whose name the Individual Capitalization Labor Reserve account has been constituted, the values constituted and their returns must be delivered to the beneficiary persons designated with the RAP by the worker, in which case no other procedure shall be required; or failing that with the presentation of the sentence declaring the testamentary or intestate heir, duly registered. The Regime of Private Contributions (RAP) must establish an expeditious procedure so that within a period of no more than one (1) month the value constituted in the individual capitalization labor reserve account in the name of each worker is credited.

EXCEPTIONS. The following are excepted from the mandatory affiliation obligation established: workers who are contributors to the National Retirement and Pension Institute for Employees and Officials of the Executive Branch (INJUPEMP), the National Foresight Institute of the Teaching Profession (INPREMA), the Military Foresight Institute (IPM), the Social Foresight Institute for Employees of the National Autonomous University of Honduras (INPREUNAH), as well as diplomatic delegations and international organizations accredited in the country, when they have agreements that imply different treatment for the protection of their personnel. Existing social welfare plans and programs in the private sector and State institutions, authorized by the Secretary of State in the Offices of Labor and Social Security and regulated by the Labor Code, must continue in effect for the benefit of workers, except that the benefits of this Law were superior to those already regulated. CHAPTER III INVESTMENT AND PROFITABILITY

OF THE PROFITABILITY OF THE FUND. The Regime of Private Contributions (RAP) may invest the Fund collected from employer contributions in order to obtain profitability from these based on its Institutional Strategic Plan, Investment Plan, Investment Policy, risk analysis and operational framework that allows improving the economic benefits that workers will receive. The administrative expenses for this purpose shall be framed within reasonable limits for similar operations handled in the National Financial System. The National Commission of Banks and Insurance (CNBS) shall ensure that the Regime of Private Contributions (RAP) implements a healthy, safe and profitable management of fund investments. CHAPTER IV FINAL AND TRANSITIONAL PROVISIONS

OF THE FUNDS COLLECTED AS OF THE EFFECTIVE DATE OF THIS LAW. The administration of all funds that the Regime of Private Contributions (RAP) has collected to date on the occasion of the application of the Framework Law of the Social Protection System shall be subject to the provisions of this Law. All payment requests processed in application of the Framework Law of the Social Protection System and that meet the corresponding requirements shall be credited in accordance with the administrative procedures established by the Regime of Private Contributions (RAP) at the time this Law becomes effective.

MULTIPLE FUND ADMINISTRATOR. The Regime of Private Contributions (RAP) is authorized to continue administering the resources constituted in the name of each worker prior to the effective date of this Law. The Regime of Private Contributions (RAP) is authorized for the collection and administration of the Labor Reserve Fund as of the effective date of this Law.

UNENCUMBRABILITY. The contributions and payments of workers and employers to all Funds administered by the Regime of Private Contributions (RAP), as well as the benefits granted under this Law, cannot be subject to transactions that are not fixed by Law, nor may they be seized or subject to any other precautionary measure, except for child support up to fifty percent (50%).

RESPONSIBILITIES. The employer who fails to comply with the obligations of affiliation to the System or does not credit to the Regime of Private Contributions (RAP) as administrator of multiple funds the employer contributions shall be subject to the sanctioning regime that for such purposes is established by the Regime of Private Contributions (RAP).

REGULATION. The Regime of Private Contributions (RAP) shall prepare and approve the required regulations and internal regulations related to the administrative management of the funds, in accordance with the indicated aspects, submitting the same for the knowledge of the National Commission of Banks and Insurance (CNBS), before its publication, which may require modifications in accordance with existing laws and international best practices.

FOR THE CALCULATION OF INCOME TAX. The contributions made to the individual accounts of the Individual Capitalization Labor Reserve Fund, made by the employer, shall not form part of the net taxable income for Income Tax. Additionally, the amounts received by workers as benefits derived from the funds established in this Law shall not form part of the gross income for purposes of calculating Income Tax.

ON THE PAYMENT OF TAXES BY THE RAP. By virtue of its mandate for the nonprofit administration of funds contemplated in this Law and the Law of the Regime of Private Contributions (RAP), the regime is exempt from the payment of all kinds of taxes, fees, fiscal or municipal rates and public and registration charges, as well as tax rates associated with electronic transfers or similar.

EFFECTIVE DATE. This Decree shall become effective on the day 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 thirtieth day of the month of April of two thousand twenty-four. HUGO ROLANDO NOÉ PINO PRESIDENT JOSUÉ FABRICIO CARBAJAL SANDOVAL SECRETARY LINDA FRANCÉS DONAIRE PORTILLO SECRETARY To the Executive Branch: Therefore: Let it be executed. Tegucigalpa, M.D.C., May 9, 2024 IRIS XIOMARA CASTRO SARMIENTO PRESIDENT OF THE REPUBLIC THE SECRETARY OF STATE IN THE OFFICES OF LABOR AND SOCIAL SECURITY