Luis Esteban Palacios

Venezuela

Luis Esteban Palacios

Palacios Ortega y Asociados

Calle Guaicaipuro, Torre Forum

Piso 6, Ofic. A

Urb. El Rosal

Caracas, 1010-A
Venezuela

What are the key employment and labor law issues that must be identified?

·  It will be considered substitution of employer when there is a transfer of property, ownership or exploitation of a company from one individual or corporate entity to another, regardless of the cause, and said company continues conducting its labors.

·  When the new employer continues conducting previous activities with the same personnel and material installations, regardless of the change in ownership, it will be considered that there was a substitution of employer.

·  Due Diligence is recommended to obtain information about the relationship between the company the union and the workers. Specially debt with the Social Security and the workers.

What unilateral changes can the new employer make to wages?

·  Substitution of employer will not have negative effects of the employee unless he/she is notified in writing. Additionally, said substitution must be notified to the Labor Inspector and to the union to which the employee is affiliated.

·  Once said notification has been conducted, if the employee esteems said substitution to be against his best interests, he may request the termination of the work relationship and the payment of his severance which must be calculated as in the case of wrongful dismissal.

·  In case an employee is paid his severance due to substitution of employee and said employee continues rendering services to the company, said payment will be considered an advance of what would correspond upon termination of the work relationship.

What legal rights and guarantees can’t be waived when an acquisition occurs?

·  No law may stipulate dispositions which may alter the intangibility and progressivity of labor rights and benefits. In labor relationships reality will prevail over forms or appearances.

·  Labor rights are non-waivable. Any action, agreement or covenant which implies some form of waiver of these rights will be considered void. Only upon termination of the labor relationship is it possible to enter into agreements or covenants, in accordance with the requirements established by law.

The non-waivability does not exclude the possibility of a settlement so long as it is in writing and contains a detailed description of the facts which motivated it and of the rights which it contains. Said settlement must be conducted before a competent labor officer and will be considered res judicata.

What liabilities remain with the former employer?

·  After one year, only the liability of the new employer will survive, unless there are previous labor suits, case in which definitive sentences may be executed indistinctly against the employer that was substituted or against the substitute. Liability of the substituted employer will prevail for a term of one (1) year counted as of the date in which an unappealable sentence is issued.

What are the top three ways to work effectively with a labor union during one of these transactions?

·  Keep close contact with the union revise the collective labor contract and obtain the support of the union.

·  Verify if the Collective Contract there are notifications, restrictions or rules that may impact the adquisition and its structure