El Salvador: Approval of new minum wages

Written by Carlos Rodriguez

 

We hereby inform that the Executive Branch issued Executive Decrees 9 and 10; the first one increases the minimum wage in the agricultural, fishing, coffee harvesting, sugar cane harvesting, and other agricultural activities sectors and the second one in the commerce, services, industry, textile and garment manufacturing, sugar mills, coffee processing, and other agro-industrial activities sectors, as well as for home workers working in all these areas.

 

Both Decrees will become effective as of August 1, 2021.

 

Minimum Wages in accordance with the approved increase will be:

 

Industry, commerce and services, sugar mills, and other agribusiness activities:

$365.00 (monthly pay); $12.00 (regular day pay); $1.50 (hourly pay).

 

Textile and apparel manufacturing sectors:

$359.16 (monthly pay); $11.81 (regular day pay); $1.48 (hourly pay).

 

Coffee Benefits:

$272.66 (monthly pay); $8.96 (regular day pay); $1.12 (hourly pay).

 

Agriculture, Fishing, Sugar Cane Harvesting, Coffee Harvesting, and other Agricultural Activities:

 $243.46 (monthly pay, regardless of a number of days), $8.00 (regular day pay); $1.00(hourly pay).

 

Sugarcane Harvesting Collector:

$272.66 (monthly pay); $8.86(hourly pay); and $1.12 (hourly pay).

 

 

Important aspects contained in the Decree:

  • The benefits established in the Labor Code, such as days of rest, vacations, Christmas bonus, indemnifications, and others will be based on the established minimum salary, except when the stipulated salary is higher.
  • The rights established in the Decree in favor of workers cannot be renounced and the agreements, pacts, or contracts that contravene them will have no value whatsoever. This regard indicates that it is not possible to agree on salaries lower than the minimum wage according to the sector. It should be clarified that in the case of part-time work, i.e., work shifts of less than 8 hours, the minimum wage may be paid in proportion to the hours worked. However, in accordance with Art. 144 of the Labor Code, which is still in force, in the case of a working day of fewer than 8 hours but more than 5 hours, the employer must pay the minimum wage for the full working day.
  •  Reaffirms the obligation of the workers to perform the work with appropriate diligence and efficiency in the manner, time and place established in the Individual Work Contract when applying the duly authorized Internal Work Regulations as established in the Labor Code.
  •  Employers are forbidden to alter to the prejudice of the workers the working conditions prevailing in the company at the entry of this Decree, especially:
      1. Reduce the wages paid under Labor Contracts, internal regulations or company practices and other sources of labor obligations.
      2. Increase the accustomed measures or recharge in any way the work to be performed.
  • Employers must keep and exhibit records, wage payment schedules, attendance control, receipts, documents or proof necessary to prove the payment of the minimum wage and benefits referred to in the decree to the workers.
  • Employers who violate any provision of this Decree shall incur a fine for each violation of the minimum wage rates established, without thereby ceasing to comply with labor law, in accordance with the provisions of the Labor Code and Applicable Regulations. The unit fine remains at $57.14.
  • The General Directorate of Labor Inspection will verify compliance with the provisions of this Decree and in case of non-compliance will impose and enforce fines. Currently, the Ministry of Labor imposes fines, by multiplying the number of workers and occasions in which the respective provisions have not been fulfilled.

 

Additional aspects that should be taken into account, not reflected in the Decree:

  • The minimum wage is paid according to the worker’s activity, not according to the category of the company.  That is to say, if the company is a textile manufacturing company, but the worker has an administrative position, the labor authorities think that the minimum wage of the industry, commerce and service sector applies.
  • Overtime worked and the benefits expressly mentioned in the Decrees must be paid based on the minimum wage rate, except when the employee’s salary is higher.
  • When it comes to salaries that have a base and a variable portion based on performance, how they are to be paid is not expressly regulated. In this sense, it is most likely that the base salary is at least equal to the minimum salary and the variable part can be modified. However, if the base is lower than the minimum wage but the variable part makes the salary received by the worker every month higher than the minimum wage, the position that there is no non-compliance could be defended by showing the documents of the history of wages received, although it may depend on the criterion of the labor inspector who attends the case. 
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