Labor Law

labor-law-people

Legislation

Labor relationships in the Dominican Republic are governed by the Dominican Labor Code (Law 16-92), which is characterized by its strong protection of the rights of employees.

Territoriality of Dominican Labor Laws

Dominican labor laws are territorial in nature. Any work carried out on Dominican soil is subject to the provisions of the Labor Code irrespective of the nationality or residence of the parties involved.

Mandatory Nature of Dominican Labor Laws

Dominican labor laws are mandatory to the parties in an employment contract. Employees cannot waive any rights that would lessen their benefits under the Labor Code. Any such waiver is automatically considered null and void.

The Employment Contract

Any relationship in which one person obliges himself or herself to provide any form of service to another in exchange for remuneration and under the direction or supervision of the latter is considered to be an employment contract and, as such, subject to the provisions of the Labor Code. Company managers as well as workers are considered employees under Dominican labor laws.

Employment contracts may be  verbal or written. Any party to an employment contract can require the other to sign a written version of a previously verbal agreement. If in writing, any amendment to the employment contract must be in writing as well. Written agreements are recommended in all cases since they foster a clear and sound work relationship.

A private contractor agreement, even if agreed to in written form, may be considered an employment contract if the elements of direction or supervision by one party over the other is present. The Labor Code expressly states as a fundamental principle that the terms of the employment contract are those that reflect the real facts and circumstances of the relationship between the parties, and not necessarily those contained in a written contract, which may hide the true nature of that relationship.

Working Hours and Shifts

Normal working  hours may not exceed eight hours a day nor 44 hours a week. Employees in executive or managerial positions are exempted from this rule.

Daytime work hours range from 7:00 a.m. to 9:00 p.m. A work shift is considered a daytime shift as long as no more than three hours exceed the 9:00 p.m. limit; otherwise it is considered a night shift, which entails  a 15% increase in remuneration. The weekly work shift normally ends on Saturdays at noon, giving the employee 36 hours of uninterrupted rest. Any other arrangement must provide the same minimum uninterrupted weekly rest period of 36 hours.

If an employee is required to work during his weekly period of rest, he is entitled to receive a 100% premium on his salary for his work during that time or given compensatory time off the following week.

Work for more than 44 hours a week is considered overtime and must be paid with a 35% premium over regular hours. Hours worked in excess of 68 hours a week are paid at a 100% premium. Overtime pay does not apply to managers.

Employee Nationality

At least 80% of a company’s work force must be Dominican. Likewise, no less than 80% of the  payroll,  with the exception of salaries for technical or executive positions, must correspond to wages earned by Dominicans. These rules do not apply to employees carrying out executive or managerial duties, or occupying  technical positions for which there is no available Dominican substitute.

Minors

A person is considered of legal age for labor purposes at 16. However, an employment contract may be entered into by a minor for nonhazardous work provided that the minor has reached the age of 14 and has obtained parental authorization. Work hours for minors may not exceed six hours a day  Employment of minors is prohibited in establishments selling alcoholic beverages.

Mandatory Record Keeping

Employers are required to keep, on a permanent basis, the following records:

•    Register of employees, with indication of their wages and work hours.
•    Register of the employees’ vacation time during the year.
•    Register of overtime work.
•    Register of visits by labor inspectors.

Keeping these records is very important for employers, given that in many cases  they are the only admissible evidence that may be presented in court against claims by employees.

Wages

Wages are freely negotiated between the employer and the employee but cannot be less than the legally-established minimum salary. Gratuities or tips are not considered part of the salary.

Minimum Salary

Minimum salaries are established by the National Salary Committee, a  dependency  of the Ministry of Labor, and vary according to business size or industry type. Current minimum salaries for the private sector, in Dominican pesos, are:

Business Size or Industry        Monthly Minimum Salary in DOP

Large business                                                                 12,872
Medium-sized business                                                   8,849
Small business                                                                   7,843.
Free trade zones                                                                8,310
Tourism industry                                                             9,005
Farm workers                                                                 267 per day

Businesses with installations and inventory worth more than four million DOP are categorized as large; those with installations and inventory between two and four million DOP, as medium; and those with less than two million DOP, as small.

Payment

Salaries must be paid in cash and the interval between payments cannot exceed one month. Nonpayment of wages by the employer is considered a criminal offense punishable by a fine and up to five years in prison.

Overtime

Every hour worked above the 44-hours weekly limit is considered overtime and must be paid at 135% of the normal hourly wage. Every hour in excess of 68 hours a week is to be paid at 200% of the normal hourly wage. Night hours are paid with a 15% premium.

Christmas Salary

In addition to a regular  salary, every employee  in the Dominican Republic receives,  on or before December 20, a so-called “Christmas salary,” equal to one-twelfth (1/12) of the total regular salary earned during the year. The term “regular salary” excludes tips, overtime and benefits received from profit sharing.  The Labor Code establishes a maximum Christmas Salary of five times the minimum wage. Nevertheless, many employers waive this limitation and pay employees who have worked the whole year a full extra monthly salary. The Christmas Salary is exempt from income tax.

Profit Sharing

Employers must share 10% of their annual pretax profits, if any, with their employees. However, the Labor Code allows employers to cap profit sharing as follows:

•    An employee with less than three years on the job will receive 45 days’ salary.
•    An employee with three years or more years, 60 days’ salary.

If the company is profitable, payment to the employees must be made within a 90 to 120-day period after the end of the company’s fiscal year.

Businesses in free trade zones, and agricultural, industrial, forestry and mining companies during the first three years of operation, do not have to share profits with their employees.

Time Off

The  Labor  Code  contemplates several forms of time off for  employees, such as  leaves  of absence, vacations and holidays.

Leaves of Absence

An employee is entitled to paid leaves of absence in the following situations:

•    Marriage (five days).
•    Death of a spouse, child, parent or grandparent (three days).
•    For male employees, childbirth by wife or companion (two days).
•    For female employees, childbirth (twelve weeks).

Vacations

Every worker is entitled to an annual paid vacation after a year on the job. Employees with less than five years in the company have the right to a vacation period of 14 working days; those with more than five years, to 18 working days.

Vacations cannot be fractioned for periods shorter than a week and may not be replaced with additional payment or any other form of compensation. The salary for the vacation period must be  paid by the employer on the day before vacations begin.

Termination

Termination implies a permanent break in the employment contract. Several types of termination are contemplated under the Dominican Labor Code.

At Will Termination (“desahucio”)

Any party to an employment contract has the right to terminate it unilaterally without having to specify a cause. The party that terminates the employment contract must give an advance notice to the other party, the extent of which depends on the length of the employment, as follows:

Length of Employment        Minimum Advance Notice
From 3 to 6 months                                           7 days
More than 6 months to 12 months                14 days
More than 12 months                                       28 days

A late notice or no notice at all will entail a penalty equivalent to the employee’s regular salary earned during the applicable minimum period for the advance notice.

Employers who exercise their right to terminate their employees without cause must make severance payments to the terminated employee as detailed below:

Length of Employment                Severance Pay
3 to 6 months                                         6 days’ salary
More than 6 months to 1 year             13 days’ salary
More that 1 year to 5 years                   21 days’ salary per year of employment
More than 5 years                                  23 days’ salary per year of employment

Severance must be paid to the employee within 10 days of the termination; otherwise, the employer will have to pay a penalty of one day’s salary for every day of delay.

For Cause Termination by the Employer (“despido”)

Employers may dismiss their employees alleging one or several of the specific causes listed in the Labor Code. For cause termination by an employer (despido) requires  evidence of the commission by the employee of one or several of the listed grounds for termination. It also requires that the employer give notice of the termination and the grounds on which it is based to the Department of Labor within 48 hours of the dismissal. The right of the employer to base the dismissal on a specific cause for termination expires 15 days after the employee has committed the act alleged as grounds for termination.

Failure to prove cause or to render the notice within the stated 48 hours will make the employer liable for payment to the employee of severance pay.

The advice of legal counsel is strongly recommended before proceeding to terminate an employee for cause.

For Cause Termination by the Employee (“dimisión”)

An employee may resign from his or her job for cause (dimisión).  For cause termination by employees also requires evidence of the commission by the employer of one or several of the listed grounds for termination.  It also requires that the employee give notice of the termination and the grounds on which it is based to the Department of Labor within 48 hours of the resignation. The right of the employee to base the dismissal on a specific cause for termination expires 15 days after the employer has committed the act alleged as grounds for termination.

If the ground for termination is proven, the employee has the right to receive severance pay.

Termination Due to Incapacity or Death of the Employee

In the  event  of incapacity or death of an employee, the employer must pay the employee or his/her heirs, the following:

Length of Employment        Amount of Economic Assistance
From 3 to 6 months                                            5 days’ salary
More than 6 months to 12 months                  10 days’ salary
More than 12 months                                          15 days’ salary per year of employment

Maternity Protection

The Labor Code provides special protection for employees who are pregnant or have recently given birth. At will termination by the employer is strictly forbidden during the pregnancy of the employee and up to three months after the birth of her child. Pregnant employees are entitled to paid maternity leave during the six weeks that precede the probable birth date and the six weeks that follow it. After the birth of her child, the employee has also the right to three rest periods of 20 minutes each per workday to breast-feed, and to half a workday a month to have her child checked by a pediatrician.

An employer cannot terminate an employee at will during her pregnancy nor before three months after childbirth. An employer cannot dismiss an employee for cause during her pregnancy nor before six months after childbirth without the prior authorization of the labor authorities. Non compliance is penalized with the equivalent of five months’ salary, in addition to the standard severance payment.

Suspension of the Employment Contract

An employment contract may be suspended by mutual consent or due to one of the other causes expressly stated in the Labor Code. Under a suspended employment contract, neither employer nor employee have to comply with their respective obligations for the duration of the suspension.

Unions

The Dominican Labor Code acknowledges  the right of employees to associate into unions to defend their interests. Unions must have a minimum of 20 members. Union officials receive special protection from termination by their employer.

Strikes

The Labor Code recognizes the right to strike by unions. Strikes can only involve the peaceful interruption of the work carried out by the employees. Strikes in essential services, such as utilities, communications and hospitals, are illegal.

Before striking, unions must give a 10-day notice to the Ministry of Labor stating the following:

•    The economic conflict or infringement of rights that the strike aims to solve.
•    How previous attempts to solve the conflict without striking have not been successful.
•    That the strike has the approval of at least 51% of the union members.
•    That the services affected by the strike are not essential to the public.

Withholding by the Employer

Employers must make the following deductions from their employee’s salary:

  • Income tax. Withholdings are made in accordance to the tax schedule for individuals. Salaries of 34,106.75 DOP a month or less are exempt.  Withholdings must be disbursed to the DGII every month.
  • Social Security. The Dominican Social Security system contemplates three types of assistance: (a) health insurance, (b) occupational risk insurance, and (c)  insurance for health and labor risks. The system is funded by a percentage of employees’ salaries made by both employee and employer in the proportions described below:

Benefit                  Employee Contribution    Employer Contribution    Total Contribution
Health Insurance                        7.09%                            3.04%                                        10.13%
Risk Insurance                            0%                                  1.25%  + 0.6 (variable)              1.25% +
Incapacity/Retirement Fund   7.10%                             2.87%                                            9.97%

Employers are required to withhold the corresponding amounts from their employees’ wages and disburse them to the government within the first three days of the month following that in which wages were paid.

Relocation of Foreign Workers

Companies wishing to relocate their employees to the Dominican Republic are required to obtain a temporary residency for work purposes for them or a short-stay permit, depending on the time period the employee will be working in the Dominican Republic. A temporary residency is issued for a one-year period, renewable. Short-stay permits are granted for period from two to eleven months.

Domestic Workers

Domestics do not benefit from many of the provisions of the Labor Code (Art. 4). Domestics are defined as workers dedicated to household chores, such as cooking and cleaning, when carried out outside of a business (Art. 258). Condominium employees are not considered domestics.

Domestics are not subject to any regular work hours although every domestic must have a minimum of nine hours per day of uninterrupted rest and a weekly rest of 36 hours without interruption (Arts. 261 and 262).  Domestics do not have the right to receive severance pay when dismissed. However, domestics do have the right to two weeks of paid vacation a year after their first year at work and to receive a Christmas salary as regular workers do.