Written by: Fabiola Alvarado Céspedes, Consortium Legal,
In the field of labor relations management, knowledge of the limits of labor legislation on salary modifications is a recurring need. Some laws are more flexible than others in relation to these changes, specifically those that are applied with the objective of lowering the remuneration of workers, the regulations of the Central American region are quite strict.
One of the key concepts in this matter is the ius variandi, which can be conceptualized as the employer’s power to unilaterally modify, without the employee’s consent, certain conditions of the labor relationship agreed upon from the beginning. However, this power is not absolute. The law imposes specific restrictions to prevent its exercise from being detrimental to workers. The employer may modify working conditions if these changes do not imply a reduction in the essential conditions of the employment contract, among which the salary is the most important. In other words, a change of conditions cannot be executed if it results in a detriment to wages.
Therefore, any modification that implies a reduction of the employee’s salary could be considered an abuse of the power. In these cases, the employee has the right to act against the company, since one of the essential elements of the employment contract would be affected.
All the above is applicable to the countries of Guatemala, El Salvador, Honduras, Nicaragua and Costa Rica, where labor regulations establish similar principles regarding the protection of the essential rights of the worker. However, when faced with the need to adjust a worker’s salary, it is essential for companies operating in the region to be aware of the alternatives available.
The option with the least legal risk is to carry out a dismissal with employer’s liability (without just cause) to liquidate the worker with all the corresponding labor benefits and then proceed to a new hiring under the new salary conditions. In this case, no prejudice would be generated to the worker, since a severance payment would be made and, subsequently, the person would be rehired under different conditions, which is allowed in all legislations.
Another possibility to consider is to make the modification provided that the parties involved agree and by means of the subscription of an addendum to the employment contract. In legislations such as the Guatemalan and Nicaraguan, it is possible to modify the salary by express agreement between the parties, as long as the minimums established in the legislation are respected, since the legal system provides for this as an alternative. However, in the rest of the region, even if the worker agrees to the modification or even requests it, the legal risk is reduced but does not disappear completely. It is important to understand that, even with an agreement between both parties, if the worker were to file a claim, it would be likely to succeed, since mutual consent cannot prevail over the labor regulations in force.
Labor rights are designed to be unwaivable, which means that any modification that harms them, even if made with the worker’s consent, is not valid under the law. The latter also means that the agreements, in the event of a dispute in court, could be considered improper or ineffective.
When an employee is affected by a salary reduction unilaterally imposed by the employer, he/she will have the possibility to terminate the employment relationship with liability for the employer, by virtue of the breach of contract. Before initiating a legal claim, the employee must exhaust the means of conciliation within the company, seeking to resolve the situation amicably. If this process does not produce satisfactory results that do not cause prejudice to the worker, he/she will have the right to bring the process to court and claim all the benefits that correspond to him/her, such as Christmas bonus, vacations, severance and notice.
Flexibility in salary schemes is subject to clear legal restrictions that seek to protect the fundamental rights of workers. To avoid legal conflicts, it is essential to know the options that are framed within the legality, thus ensuring a balance between the actions of the company and the protection of the labor rights of workers.
