On May 1, 2021, the President of the Republic promulgated: (i) Decree Nº 4,602 which increased the national minimum salary granted to all public and private sector workers to Bs. 7,000,000 and (ii) Decree N° 4,603 which increased the socialist food ticket payments for workers to Bs. 3,000,000 (Decree for the Adjustment of the Socialist Food Ticket). Both decrees were published in the Official Gazette N° 6,622 Extraordinary, dated May 1, 2021.

Below we point out the most significant aspects of the decree.

Minimum salary

National minimum salary

The Decree for the Increase of the Minimum Salary increased the national minimum salary for workers by 288.88%, effective from May 1, 2021:

According to the provisions of article 172 of the Organic Labour Law for the Workers (OLL) and Article 7° of the Decree for the Increase of the Minimum Salary, the minimum salary of part-time workers may be paid prorated to the agreed shift.

Retirees and pensioners

The decree adjusted the pensions of retirees and pensioners in the National Public Sector to Bs. 7,000,000 per month from May 1, 2021.

Also, the Decree for the Increase of the Minimum Salary set out a minimum amount for pensions granted by the Venezuelan Institute of Social Security to Bs. 7.000,000. per month from May 1, 2021 on.

Method of payment

According to Article 3° of the Decree for the Increase of the Minimum Salary and Article 123 of the OLL, the minimum salary must be paid cash and no portion in kind shall make up such minimum salary.

Sanctions

If the employer pays a salary lower than the one fixed as the minimum national salary, the employer will be obliged to pay the difference that exists with the employment benefits according to Article 130 of the OLL, and will also be penalized in accordance with Article 533 of the OLL, with a fine not lower than 120 tax units¹ (TU), and not higher than 360 TU.

Effect of salary increase in labor law

Under the labor legislation, many labor benefits and obligations are calculated based on the minimum salary. Hereinafter we show how variations in the increase in the minimum salary will affect the most important labor benefits and obligations set forth under Venezuelan labor law:

Comprehensive care for workers’ children

According to Articles 343 and 344 of the OLL and Articles 101 and 102 of the Regulations of the Organic Labor Law²  (ROLL) still in force, any employer who employs more than 20 workers must offer a childcare or initial education service during the working shift for workers with children from three months to six years of age and whose salary is lower than five minimum salaries, which from May 1, 2021 amounts to Bs 35,000,000. If the employer elects to comply with this obligation by paying a monthly amount to an institution duly authorized, such monthly payment must equal to 40% of the minimum salary, which from May 1, 2021, on shall be the amount of Bs. 2.800,000 for registration fees and monthly fees.

Para-fiscal contributions

Social Security (Health and Pensions):

• Employer’s Rate: 9 to 11%.
• Employee’s Rate: 4%.
• Maximum Amount of Minimum Salaries: Bs. 35,000,000 from May 1^st, 2021.
• Calculation Basis of Minimum Salaries: Five minimum salaries.
• Base Salary: Normal Salary.

Employment Benefits Regime:³

• Employer’s Rate: 2%
• Employee’s Rate: 0,5%
• Maximum Amount of Minimum Salaries: Bs. 70,000,000 from May 1^st, 2021.
• Calculation Basis of Minimum Salaries: Ten minimum salaries
• Base Salary: Normal Salary

Socialist food tickets

Value of the meal allowance

The Decree for the Adjustment of the Socialist Food Ticket set out to Bs. 3.000,000 per month the Socialist Food Ticket for public and private sector workers. Article 7 of the Decree with Rank, Value and Force of Law of the Basket Socialist Ticket for Workers establishes that this amount should not have any effect on salary, pursuant to the provisions of the OLL, unless it is recognized as such in collective agreements or employment contracts.

Effective date

Both Decrees became effective on May 1, 2020.

2 Regulations of the Organic Labor Law, Official Gazette No. 38,426 dated April 28, 2006

3 Law on Employment Benefits Regime, Official Gazette No. 38,281, dated September 27, 2005