The Collective Suspension of Work Contracts. Alternative to the Situation of Covid-19 for The Tourism Sector

The Collective Suspension of Work Contracts. Alternative to The Situation of Covid-19 for the Tourism Sector of the Law Firm Corrales & Associates Blog

Alternative to the COVID-19 Situation for the Tourism Sector

The Collective Suspension of Work Contracts Law Firm Corrales & Associates BlogMany companies in the tourism industry are currently faced with the situation that the borders of neighboring countries are closed, flight cancellations to Nicaragua are announced, and the cancellation of trips by tourists, all due to the threat of COVID-19. This situation will probably put tourism companies back in crisis. Corrales & Associates wants to propose the collective suspension of employment contracts as an alternative to face the situation in relation to human resources.

The current Labor Code (CT) regulates in Title II, Chapter V, the collective suspension of the employment contract. This suspension may cover all staff, or only part of it, as long as it isn’t executed in a discriminatory manner. This measure allows the temporary cessation of operations of the company without causing any legal problems, at the same time that it maintains the labor bond with the workers.

Subsection “d)” of Article 38 CT establishes the acts of God or force majeure as a sufficient reason for the suspension of the employment contracts. In this case, the employer must pay only six days of salary at the time of the suspension and will have no obligation to pay wages during the period of the suspension. For that matter, it is our opinion that the lack of clients due to the COVID-19 crisis is a clear situation of force majeure not attributable to the employer.

According to the same paragraph mentioned, the authorization of the Departmental Labor Inspectorate (IDT) is not required, but only the agreement between the employer and the workers, who will be represented through a committee elected among themselves. We recommend that the election of workers’ representation is carried out through an assembly called for that purpose and that it be recorded in a minute.

At the time of agreeing on the suspension, a minute must be drawn up which will indicate which jobs and which contracts will be suspended, the reasons for the suspension, and the duration of the measure. The minute must be signed by the Employer and the workers’ representatives. We also recommend including in the minutes a wording that allows the suspension period to be extended if the current situation continues or worsens. If the IDT authorization is desired, the administrative oral labor procedure issued by the Minister of Labor must be followed

The CT does not indicate whether during the suspension period the worker will continue to accumulate time for his labor benefits. Our opinion is that vacation time and the Thirteenth month are not accumulated during the suspension.

An alternative to the suspension could be the use, with the consent of the workers, of the vacation days that they have accumulated to date. This is an alternative that allows workers to receive income while being out of work. Workers are entitled to fifteen days of continuous rest for every six months of effective work

  • Article 36 CT.
  • Ministry Resolution JCHG-019—1208, published in La Gaceta 237 on December 12, 2008.
  • Article 76 of the Labor Code.