Reasons for termination of the employment contract
An employment contract may be terminated without liability or with liability for either party. An employment contract may be terminated with liability for one of the parties due to:
- Because of the eviction;
- In case of dismissal of the worker;
- When the employee submits their resignation;
- Due to the incapacity or death of the employer or the worker.
We will focus on the termination of the employment contract due to the death or physical or mental incapacity of the employer or the employee.
Many people, including lawyers, employers, and workers, are unaware of the legal concept known as economic assistance.
What is financial assistance?
This is compensation that must be paid to the employee when the employment contract is terminated for one of the reasons listed in Article 82 of the Labor Code. This compensation replaces the payment of employment benefits (notice and severance pay) in the Dominican Republic.
Reasons for financial assistance
Article 82 lists the reasons that give rise to the payment of financial assistance to the worker. These reasons are:
1. Due to the death of the employer or his physical or mental incapacity, provided that these events result in the termination of the business.
2. Due to the death of the worker or his physical or mental incapacity or inability to perform the services he agreed to provide.
3. Due to illness of the worker or absence fulfilling the obligations referred to in paragraph 3 of article 51 or other justified cause that has prevented him from attending his work for a total period of one year, from the day of his first absence.
4. Due to depletion of the raw material that is the object of an extractive industry.
5. Due to the bankruptcy of the company, provided that the operation of the business ceases completely or due to its closure or definitive reduction of its staff, resulting from a lack of resources to continue the operation, its unprofitability or other similar cause, with the approval of the Department of Labor, in the manner established in article 56.
Art. 82 CT.
In the event of the employer's death or physical or mental incapacity
The payment of financial assistance in cases where it occurs due to the death of the employer or because the employer becomes physically or mentally incapacitated, is only applicable when it results in the termination of the business.
Therefore, if the employer dies or becomes incapacitated, there is no obligation to pay financial assistance. This assistance will only be provided in cases where the company is forced to close its operations.
Due to the death of the worker or due to his physical or mental incapacity
In the event of the worker's death or physical or mental incapacity or inability to perform the services he agreed to provide, the employer will be obliged to pay financial assistance.
"In this case, the financial assistance will be paid to the person designated by the worker in a declaration made before the Department of Labor or the local authority exercising its functions, or before a notary. In the absence of this declaration, the right will belong in equal shares and with right of accrual, to the spouse and minor children of the worker, or in the absence of both, to ascendants over sixty years of age or disabled, or in the absence of the latter, to the legal heirs of the worker.".
If the worker is physically or mentally incapacitated from receiving payment of his entitlements, the financial assistance will be given to the person who has him in his care.
Article 82.2 Labor Code
Declaration to designate beneficiaries of financial assistance
The prevailing reality in our country is that the majority of workers do not make the declaration described in paragraph 2 of article 82.
If the minor children of the worker receiving financial assistance are children of his spouse, the corresponding amount can be paid in a single installment.
However, if the worker has children with more than one person, it will be distributed equally between their registered partner and all their minor children.
When the worker dies or becomes permanently disabled, the employer may terminate the employment contract immediately, paying the financial assistance.
This is formalized through a communication addressed to the Ministry of Labor, through the corresponding Local Representation, attaching the documentation that proves the existence of the cause that generates that right (death certificate or medical certificate).
For a justified reason that prevents the worker from attending work for a consecutive year
Another situation in which the payment of financial assistance is appropriate is that in which the worker is prevented from attending his job for a consecutive period equal to or greater than one year counted from his first absence.
When a worker suffers a work or commuting accident that temporarily incapacitates him or suffers a common illness that incapacitates him from performing his work duties, he will receive the corresponding subsidy from the Dominican Social Security System.
However, when a year has passed without the worker being able to report to their job, the employer may decide to terminate the employment contract through financial assistance.
Nature of the ordinal 3rd of article 82 of the CT.
It is important to note that the various licenses that the worker will receive during the period established in paragraph 3 of article 82 of the Labor Code are without pay.
The exception to this rule would be in the case of a common illness or a work or commuting accident, and if, due to the employer's fault, the worker cannot receive the subsidies established in the Social Security Law, Law No. 87-01. This is in accordance with Article 52 of the Labor Code.
Employers have the legal right to terminate the employment contract of those workers whose contracts are suspended by application of article 51, ordinal 3, upon completion of one year from the first absence.
Due to depletion of the raw material that is the object of an extractive industry;
When the raw materials used in an extractive industry are depleted, the company is not obligated to pay its workers severance pay. In such cases, severance pay will be replaced by the economic assistance established in Article 82 of the Labor Code.
Due to the company's bankruptcy or a permanent reduction in its staff;
Financial assistance is also provided in cases where a company goes bankrupt, provided that the business operation ceases entirely or due to its closure or definitive reduction of its staff, resulting from a lack of resources to continue the operation, the unprofitability of this or another similar cause, with the approval of the Department of Labor, in the manner established in article 56.
In accordance with resolution 32/93 of November 17, 1993, issued by the then Secretary of Labor, Dr. Rafael Alburquerque, we have that:
"The employer who requests the termination of employment contracts due to the definitive closure of the company or a definitive reduction of its staff, resulting from the lack of resources to continue operations, unprofitability, or any other similar cause, shall submit a written request to the Department of Labor or the offices of the local authority exercising its functions, indicating the reasons for the planned terminations; the full names, personal identity card number, and series of each worker who may be affected, as well as their respective addresses. The request must be accompanied by the documents that justify the petition.".
Resolution 32/93 on the termination of employment contracts due to the definitive closure of the company or the definitive reduction of its staff, First ordinal.
DGT-1 Form
These applications must be submitted to the Director General of Labor using a form called DGT-1, through the Local Representations of the Ministry of Labor.
Upon receiving the request, the Director General of Labor will order an investigation to verify the existence or non-existence of the causes alleged for the termination of the employment contracts.
Labor inspector's investigation
In the investigation, the labor inspector will gather the opinion of the representatives of the workers who may be affected and will consult the employer on the measures that should be taken to avoid or limit terminations.
After the investigation is completed, the labor inspector will prepare a report which will be sent to the general director of labor so that he can issue the resolution that approves or rejects the request.
Authorization from the Director General of Labor.
If the Director General of Labor approves the termination of the employment contracts, the employer must pay the financial assistance within ten days, starting from the date on which he received the resolution.
Within that same period, you must deliver to the Local Representation of the Ministry of Labor, a copy of the discharge receipts, signed by the workers.
The resolution approving the termination of employment contracts will not have legal effect and will lack effectiveness with respect to the worker who does not receive payment of the economic assistance within ten (10) days.
What is the amount that the employer must pay for financial assistance?
Article 82 of the Labor Code states that: "An economic assistance of five days of ordinary salary is established after continuous work of no less than three months nor more than six; of ten days of ordinary salary after continuous work of no less than six months nor more than one year; and of fifteen days of ordinary salary for each year of service rendered after one year of continuous work, when the contract ends (...)"»
Workers with more than 3 months and less than 6 months
In other words, if a worker is in one of the situations described in article 82 and has a seniority in service of more than three months and less than six months, he will receive a payment equivalent to 5 days of ordinary salary.
For example, Juan Rodríguez joined company AA on March 3, 2022 and passed away on June 10, 2022, with a salary of RD$21,000.
The compensation that corresponds to him for economic assistance to his family members is: RD$21,000/23.83 = RD$881.24 x 5 days = RD$4,406.21.
Workers with more than 6 months and less than 1 year
If an employee has been employed for more than six months but less than one year, they will receive a payment equivalent to 10 days of their regular salary. For example, Pedro Reyes joined company AA on September 3, 2021, and passed away on June 10, 2022, with a salary of RD$1,442,000.
The compensation that corresponds to him for economic assistance to his family members is: RD$21,000/23.83 = RD$881.24 x 10 days = RD$8,812.40.
Workers with more than 1 year
If an employee has more than one year of service, they will receive a payment equivalent to 15 days of regular salary for each year of service. For example, Orlando Ramirez joined AA on September 3, 2016, and passed away on June 10, 2022, with a salary of RD$1,440,000.
The compensation he is entitled to for financial assistance to his family is: 15 days x 5 years = 75 days + 10 days = 85 days.
Therefore, in this case, the worker has a seniority of 5 years, 9 months and 8 days and the amount to be paid for economic assistance will be: RD$21,000/23.83 = RD$881.24 x 85 days = RD$74,905.40
What other rights does a worker have when their employment contract ends due to financial assistance?
As we have already seen in this article, an employment contract can be terminated for various reasons. When settling severance payments, the employee's accrued benefits must be calculated.
Active worker who dies or suffers permanent total disability
If an active employee dies, their family members are entitled to receive financial assistance payments. In addition, they will receive payment of outstanding wages, unused vacation pay (if more than five months have passed), a proportional share of the Christmas bonus, and a proportional share of company profits or bonuses (if applicable).
Workers who suffer a permanent total disability will also be entitled to financial assistance and acquired rights.
In case of depletion of raw materials in the extractive industry or due to bankruptcy of the company.
Similarly, when economic assistance is required due to the depletion of raw materials in an extractive industry or the bankruptcy of a company, workers must receive their economic assistance after the company obtains authorization, and they will also receive the acquired rights that correspond to them.
Due to the expiration of the term established in article 82.3
When a worker has been unable to attend work for a total period of one year, counted from their first absence, they will receive financial assistance. In this case, it is not so easy to determine which acquired rights they are entitled to. Let's look at this in more detail:
Debate on holiday pay
Regarding holiday pay, there is an ongoing debate about the scope of Articles 178 and 185 of the Labor Code.
Some understand that, by application of article 185 of the Labor Code, workers who have remained away from their job due to illness, work accident or any other justified cause, have the right to receive payment for vacation time.
However, Article 178 of the Code clearly states that: "The worker acquires the right to vacation each time he completes one year of uninterrupted service in the company.".
But Article 184 states that "The right to compensation for unused vacation days must be paid, whatever the reason for the termination of the contract."».
Principle of favorability or in dubio pro-operator
When problems of this type arise, we must resort to Principle VIII of the Labor Code, which has been termed by legal scholars as Principle of favorability or in dubio pro-operario.
This principle states that: "In the event of conflicting legal or collective bargaining agreements, the one most favorable to the worker shall prevail. If there is doubt as to the interpretation or scope of the law, the decision shall be made in the manner most favorable to the worker."»
It's important to remember that while an employment contract is suspended, the employee is not obligated to provide services, and the employer is not obligated to pay the agreed-upon wages. However, the seniority of the employment contract is not interrupted during the suspension.
However, vacation pay is considered social security contributions. Therefore, we believe that in the case of an employee whose employment contract was suspended for a period of one year or more, vacation pay is not due when calculating their severance pay.
However, if at the time of starting the leave, the worker had worked for a period of more than five (5) months, he is entitled to payment in accordance with the scale established in article 180, by application of article 179 of the Labor Code.
Christmas bonus
Our labor laws are quite clear in establishing in Article 219 of the Labor Code that the Christmas bonus is equivalent to one-twelfth of the wages earned during the calendar year. Therefore, if a worker has not provided services or earned wages for a year or more, they will not be entitled to this bonus.
Profit sharing or bonus
Article 223 establishes that the workers' participation in the company's profits or bonus must be paid to all those workers who have an indefinite employment contract and who have provided services during the fiscal year in question.
It is more than evident that if the worker in question is entitled to the payment of financial assistance for completing a year without being able to attend his job, it is because he has not been able to work for a whole year and, in that sense, he is not entitled to this right.
However, if the company owes you any amount for the aforementioned concept, it must settle it along with the payment of the financial assistance.
