Salary: definition and legal basis
Talking about salary is a risky undertaking because of the strong emotions the topic stirs up. There are many different opinions about its concept and nature.
The Pan-Hispanic Dictionary of Legal Spanish defines it as follows:
“Salary: Total economic compensation received by workers, in cash or in kind, for the professional provision of labor services on behalf of others, whether they remunerate actual work, whatever the form of remuneration, or rest periods counted as work time.”.
The international legal basis for wages is found in the ILO Convention 95 Regarding the protection of wages, which, in its article 1, establishes that: “For the purposes of this Convention, the term wages means remuneration or earnings, however designated or calculated, provided that it can be valued in cash, fixed by agreement or by national legislation, and due by an employer to a worker under a contract of employment, written or oral, for work performed or to be performed or for services rendered or to be rendered.”
Meanwhile, the national legal basis is found in our Labor Code, in its article 192. This article defines salary as follows: “Salary is the remuneration that the employer must pay the worker as compensation for the work performed.
The salary consists of the cash that must be paid to the worker per hour, per day, per week, per fortnight, or per month, and any other benefit that the worker receives for their work.”
In that same sense, its constitutional basis is supported by article 62, paragraph 9 of the Constitution of the Dominican Republic, which states that: “Every worker has the right to a fair and sufficient wage that allows them to live with dignity and cover their own and their family's basic material, social, and intellectual needs. Equal pay for work of equal value is guaranteed, without discrimination based on gender or any other grounds, and under identical conditions of ability, efficiency, and seniority;”
Minimum wage
The International Labour Organization (ILO) has established that: “The minimum wage has been defined as the minimum amount of remuneration that an employer is obliged to pay to his employees for the work they have carried out during a certain period, an amount that cannot be reduced either by virtue of a collective agreement or an individual agreement.”.
It is estimated that minimum wages have been established in more than 90 percent of ILO member states.
In accordance with the ILO, “The purpose of establishing a minimum wage is to protect workers against being paid unduly low wages. The existence of a minimum wage helps to ensure that everyone benefits from a fair distribution of the fruits of progress and that a living wage is paid to all those who are employed and need this kind of protection.”
- I invite you to read this article: What is the minimum wage and how is it established in the Dominican Republic?
Minimum wages can also be an integral element of policies aimed at overcoming poverty and reducing inequality, including the disparities that exist between men and women.
Minimum wage systems should be defined and designed in such a way that they act as a complement and reinforcement to other social and employment policies that aim to establish working conditions.
Over time, the primary purpose of establishing a minimum wage has evolved and is now more broadly applicable. It is no longer merely a tool to be selectively applied in low-wage sectors.
To understand this evolution, it would be helpful to take a look at ILO Conventions 26 and 131.
The Convention concerning the Methods for Fixing Minimum Wages, 1928 (No. 26), This convention stipulates that member countries must establish minimum wages in those industries or parts of industries where there is no effective means of establishing fair minimum wages for all workers through collective agreements or other means, or where wages are too low.
While, several decades later, it was adopted Minimum Wage Fixing Convention, 1970 (No. 131), which obliges Member States to provide protection to “all groups of wage earners whose conditions of employment make the application of the [minimum wage] system appropriate». At the heart of this Convention is the principle of holding thorough consultations with social partners.
Our Labor Code defines the minimum wage as follows: “Minimum wage is the lowest wage that can be agreed upon in an employment contract.”.
Employers and workers may agree on wage rates higher than those established by the resolutions of the National Wage Committee, but in no case may they agree on wages lower than those established for that industry.
These increases can be implemented at any time. They can also be spontaneous, initiated by the employer, and can apply to all employees or a group of them.
Article 217 of our Labor Code states that: “A worker who, at the time a minimum wage scale is approved, enjoys a salary higher than that set in said scale for the work he performs, must continue to receive the same salary.”
Setting minimum wage rates is a somewhat complex technical process and is governed by the provisions of Section Six of Chapter II of Title I of Book Seven of Law 16-92, which established the Labor Code.
Principle of equality in salary matters
The Constitution of the Dominican Republic, establishes in its article 62, paragraph 9 that: “(…) Equal pay for work of equal value is guaranteed, without discrimination based on gender or other factors and under identical conditions of ability, efficiency and seniority;”
In that same vein, the Equal Remuneration Convention, 1951 (No. 100), indicates the following: “Each Member shall, by means adapted to the existing methods of fixing rates of remuneration, promote and, to the extent compatible with such methods, ensure the application to all workers of the principle of equal remuneration between male and female labor for work of equal value.”
Whereas, our Labor Code, in its article 194, prescribes that: “Equal work, under identical conditions of ability, efficiency or seniority, always corresponds to equal pay, regardless of the people who perform it.”
It is important to note that this principle refers to the salary that a given position should receive without taking into account the person who occupies it. In other words, the salary set for a job position should be the same regardless of who fills it.
However, for this principle to be immutable, the conditions established in the aforementioned instruments must be met. That is, the work must be of equal value, under identical conditions of capacity, efficiency, or seniority.
That said, it should be clear that the salary policy packages applied by some sectors, in which a base salary is established for the position and incentives are also offered for ability, efficiency or seniority, are neither unfair nor illegal.
For example: if a certain position has a base salary of RD$21,000 and the company policy clearly states that incentives will be paid to employees who: 1) speak more than one language; 2) have specialized training; or 3) have worked for the company for a certain period of time, then an employee who does not meet these conditions cannot demand the same salary as those who do.
Another instrument that regulates this principle is the Discrimination (Employment and Occupation) Convention, 1958 (No. 111). This agreement establishes that: “Each Member for which this Convention is in force undertakes to formulate and implement a national policy which shall promote, by methods appropriate to national conditions and practice, equality of opportunity and treatment in respect of employment and occupation, with a view to eliminating any discrimination in this respect.”
It is important to note that this agreement clarifies in its article 1.2 that, “Distinctions, exclusions, or preferences based on the qualifications required for a particular job will not be considered discrimination.”
Article 206 of the Labor Code follows the same line of thought, stipulating: “When a worker temporarily or permanently occupies a job with higher pay than his own, he must receive the salary corresponding to the former, without this implying that he has the right to the improvements or bonuses that, due to his special efficiency or his long service in the company, the person who previously occupied that position may have.”
Currency, form, place and period of salary payment
The salary amount is that which the parties have agreed upon in the employment contract, regardless of whether the contract has been verbal or written.
Under no circumstances may the salary agreed by the parties be less than the minimum legally established by the National Wage Committee.
In accordance with the provisions of Article 195 of the Labor Code,
“The salary is stipulated and paid in full in legal tender, on the date agreed between the parties. It may also include any other remuneration, whatever its type.”.
Wages can be paid by unit of time, by unit of work, by commission, by adjustment or lump sum, or by combining some of these methods.”
As we can see, wages can be paid in various ways. However, pursuant to Convention 95 and Article 196 of the Labor Code, payment of wages through the issuance and delivery of tokens, vouchers, cards, certificates, or other forms is prohibited.
While it is true that, in principle, salaries should be paid in cash, nowadays it is most common for workers to receive their payment through an electronic transfer to their bank account or through a check made out to them.
Wages cannot be paid for periods longer than one month. Unless otherwise agreed, workers who are paid hourly or daily must be paid weekly.
Similarly, in work for a specific project, the employer must pay the worker weekly, the value proportional to the work performed, unless otherwise agreed, but may retain as a guarantee an amount not greater than one third of that value.
The salary payment will be in full, except for discounts authorized by the Labor Code and special laws that regulate the matter.
Article 196 of the Labor Code states that: “Wage payments must be made personally to the worker on a working day and no later than one hour after the end of the workday on the day on which said payment is due (…)”
Wages should be paid at the location where the employee provides services. However, as mentioned previously, most payments are made via bank transfer to the employee's account.
Non-seizability of wages and legally permitted deductions
Our Labor Code specifies very clearly, in its article 200, that the salary or credits arising from the rights recognized by law to workers are unseizable, except for one-third for alimony payments.
However, the same cited article clarifies that the seizure in excess of one third is admissible for alimony payments provided under the law on mandatory assistance for minor children (Arts. 170 et seq. of Law 136-03).
Article 201 of the Labor Code states that:
“Salary payments may be subject to these deductions:
- 1. Those authorized by law;
- 2. Those relating to union dues, with prior written authorization from the worker;
- 3. Salary advances made by the employer;
- 4. Those related to loans granted by banking institutions with the recommendation and guarantee of the employer. For this concept, no more than one-sixth of the monthly salary received by the worker may be deducted;
- 5. Those relating to the employee's contributions to private pension plans.”
The topic of salary deductions is both highly controversial and fascinating. As we can see from Article 201, deductions related to Law 87-01, which establishes the Dominican Social Security System, contributions to Infotep (the National Institute for Technical and Vocational Training), income tax payments to the General Directorate of Internal Taxes, and others, are deductions that the employer is obligated to make from the employee's salary.
Also, by application of the principle of freedom of association, workers must authorize in writing their employer to deduct the dues they must pay to the union to which they belong.
Likewise, the employer is authorized to deduct from the employee any salary advances that have been made to him.
Similarly, the employer may deduct loan payments from the employee's paycheck if the loan was obtained through a bank at the employer's recommendation. However, caution is advised, as the law clearly limits this deduction to one-sixth of the employee's monthly salary.
Finally, the employer may deduct contributions to private pension plans from the employee's pay. These pension plans should not be confused with pensions established under Law 87-01.
It is necessary to clarify a misconception that exists in the Dominican labor market. This confusion not only affects less academically prepared workers, but also exists among lawyers and employers.
I am referring to the fact that when a worker has a fixed monthly, bi-weekly or weekly salary and does not work on a day that he was scheduled to work, without being a beneficiary of one of the licenses contemplated in article 54, he goes to a Local Representation of the Ministry of Labor to report that his employer "reduced" his salary for that day.
In that case, there is no salary deduction. Rather, there is a non-payment of salary because the employee did not work that day and, therefore, is not entitled to that day's wages.
In other words, we cannot speak of illegal salary deduction when the worker does not receive payment for one or more days that he did not work due to a cause inherent to his person.
Article 207 states that: “Workers” wage claims cannot be assigned and in all cases have priority over claims of any other nature, with the exception of those belonging to the State, the National District and the municipalities.”
Minimum wage subject to social security contributions
The minimum wage subject to social security contributions is the amount obtained by adding the four (4) minimum wages of the non-sectorized private sector and dividing by 4. The reference base is the resolution of the National Wage Committee that sets the minimum wage of the non-sectorized private sector.
The Social Security Treasury set the amount of the National Minimum Wage at RD$18,702.00 on Friday, March 17, 2023, effective April 1, 2023.
To obtain that amount, the minimum wages set in resolution 1-2023 were used as a base, that is, the following are added: RD$13,685 + RD$14,835 + RD$22,138 + RD$24,150 = RD$74,808. This total is divided by 4 and we have: RD$74,808 / 4 = RD$18,702.00.
In that regard, the contribution limits for the three insurances from April 1, 2023 to January 31, 2024 will be the following: RD$74,808.00, for the Occupational Risk Insurance; RD$187,020.00, for the Family Health Insurance, and RD$374,040.00, for the Old Age, Disability and Survivors Insurance (Pensions).
Likewise, the institution responsible for administering the Single Information and Collection System (SUIR), and the distribution and payment of resources of the Dominican Social Security System (SDSS), established the National Minimum Wage amount at RD$19,449.75, to calculate the contribution limits of the Contributory Regime effective from February 1, 2024.
To obtain this amount, the minimum wages established in resolution 1-2023, effective February 1, 2024, were used as a base; that is, the following are added: RD$14.232 + RD$15,428 + RD$23,023 + RD$25,116 = RD$77,799. This total is divided by 4, resulting in: RD$77,799 / 4 = RD$19,449.75
Regarding the contribution limits of the Contributory Regime that will come into effect from February 1, 2024, the items will be RD$77,799, for Occupational Risk Insurance; RD$194,497.50, for Family Health Insurance, and RD$388,995, for Old Age, Disability and Survivor Insurance (Pensions).
The calculation of the contribution limits of the Contributory Regime was based on the average of the four classifications of the minimum wages of the non-sectorized private sector established by the National Wage Committee, of the Ministry of Labor, through Resolution No. 01-2023 dated March 8, 2023.
Individual participation in company profits (bonus)
“If the employee has a share in the company's profits, the employer is obliged to provide him with a report on the profits and losses upon completion of the balance sheet. He must also allow the employee to consult the accounting books whenever it may be of interest to him.”. This is in accordance with article 202 of the Labor Code.
If you want to learn more about this point, I invite you to watch this video:
Wages for overtime, night work, and work on non-working days
Article 203 stipulates that: “Wages corresponding to overtime work must be paid to workers in the following manner:
1. For each hour or fraction of an hour worked in excess of the workday and up to sixty-eight hours per week, with an increase of no less than thirty-five percent over the value of the normal hour;
2. For each hour or fraction of an hour worked in excess of sixty-eight hours per week, with an increase of not less than one hundred percent over the value of the normal hour.
If the worker's salary is paid for work performed, the value of the normal hour of work will be determined by the quotient resulting from dividing the amount of salary earned by the number of hours spent on said work.”
Law 16-92, which establishes our Labor Code, provides in its article 204 that: “Wages for night shift hours must be paid to workers with an increase of no less than fifteen percent over the value of a normal hour.”
He Night Work Convention, 1990 (No. 171), Article 1 states that:
“For the purposes of this Agreement:
(a) The term night work means any work carried out during a period of at least seven consecutive hours, covering the interval between midnight and five in the morning and which will be determined by the competent authority after consultation with the most representative organizations of employers and workers or through collective agreements;
(b) The term night worker means any salaried worker whose job requires the performance of night work hours in a substantial number, exceeding a specified limit. This number shall be determined by the competent authority after consultation with the most representative organizations of employers and workers, or by means of collective agreements.”
Article 1, ILO Convention 171
Article 205 of the Labor Code states that: “When, by agreement between the parties, the worker provides services on a day legally declared non-working, he will receive as remuneration the salary to which he is entitled increased by one hundred percent.”
- If you want to delve deeper into these topics, I invite you to read the following article: The working day and overtime
Christmas bonus
“The employer is obliged to pay the worker in the month of December, the Christmas salary, consisting of one-twelfth of the ordinary salary earned by the worker in the calendar year, without prejudice to the uses and practices of the company, what is agreed in the collective agreement or the right of the employer to grant a larger sum for this concept.
However, in no case will the Christmas salary be greater than the amount of five legally established minimum wages.
The payment of this salary excludes overtime pay and the salary corresponding to participation in the company's profits.
The Christmas bonus will not be counted for the purposes of notice, severance pay and the financial assistance provided for in this Code.”
Article 219 of the Labor Code of the Dominican Republic.
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If you want to delve deeper into this point, I invite you to watch the following video:
Ordinary salary and extraordinary salary: jurisprudential criteria
Whereas, although all the benefits that a worker receives as consideration for the service provided are considered salary, for the purposes of calculating workers' rights, only the ordinary salary received by the worker is taken into account and not the items considered as wages
(Judgment of July 6, 2005, BJ No. 1136, pp. 1126-1139);
extraordinary
Considering that this Court has held that the amounts received by workers on a fixed and permanent basis are part of their ordinary salary, and has been defining it in relation to food and lodging in hotel areas;
(Judgment of October 16, 2003, BJ No. 1103, pp. 981-995),
Considering that representation expenses, fuel, cell phones and residential telephones are extraordinary tools that the employer puts at the expense of the worker so that he can fulfill his work in the face of the demands and nature of the function he performs, which have an extraordinary character and cannot be admitted as part of the ordinary salary in sectors such as the one in question;
Judgment of March 21, 2012, pp. 11 and 12 (Banco del Progreso Dominicano vs. Pedro Castillo)
Considering that incentive bonuses are premiums based on the employer's interest in achieving higher production and better work quality, the work incentive, in this case the bonus, is a true extraordinary salary for labor that cannot in any way be categorized as a supplement to the ordinary salary;
Considering that this Court has ruled that it is the responsibility of the judges of the merits to establish the amount of the salary earned by the worker, for which they must examine the evidence presented to them, having the power to base their decision on the most credible evidence among dissimilar evidence and discard those that, in their judgment, are not in accordance with the facts of the case (judgment of November 9, 2011), however, that amount cannot be distorted by values that the worker receives as a condition of the provision of the nature of his service, such as representation expenses or extraordinary salaries and the incentive bonus that cannot be counted as ordinary salary;
Judgment of March 21, 2012, pp. 12 (Banco del Progreso Dominicano vs. Pedro Castillo)
Considering that the payroll of permanent staff is evidence that can be dismissed by any other means of proof, in the case of this matter, although “expenses and incentives” received by Mr. Pedro Erwin Castillo Lefeld were presented, these do not qualify as ordinary salaries, therefore, the salary that should have been established was RD$300,000.00 Pesos per month, for the payment of the acquired rights mentioned in the judgment subject to this appeal, in that sense, the present means is dismissed due to misrepresentation and lack of legal basis;
Judgment of March 21, 2012, pp. 12 (Banco del Progreso Dominicano vs. Pedro Castillo)
Considering that, in the development of the two grounds for cassation proposed, which are joined for study due to their connection, the appellant alleges in summary the following: “that the appealed judgment violates the second and third paragraphs of its operative part, due to the erroneous application of Articles 192 and 86 of the Labor Code, by considering that the sum delivered to the respondent to cover fuel expenses is salary; the economic allowance for fuel does not correspond to salary, much less ordinary salary, according to Article 192 of the Labor Code, so that based on this misrepresentation it condemns the appellant to the payment of substantial sums, misrepresenting the facts and documents of the case by stating that the appellant company has not challenged the settlement of expenses for fuel, but on the contrary, said judgment forgets that the company denied the regularity of said payment and maintained that the worker had not proven that it was a monthly payment, in this sense the judgment confuses one thing with another, remaining devoid of motivation on a decisive point; the defects of "The contradiction and lack of reasoning, in addition to the lack of legal basis and violation of Article 141 of the Code of Civil Procedure are evident, therefore the sentence must be annulled in that sense";
SCJ June 13, 2012 (C. Federico Gómez vs Genara Alejandra Rosario Carrasco), p. 6
Considering that the expenses incurred by the worker in the performance of his services do not constitute a personal benefit and, therefore, cannot be considered of a salary nature;
SCJ June 13, 2012 (C. Federico Gómez vs Genara Alejandra Rosario Carrasco), p. 9
Considering that gasoline expenses are similar in nature to the tools that the employer provides to his operator so that he can perform his work, consequently, by assimilating gasoline expenses as ordinary salary, the Court a-qua incurred a lack of legal basis and consequently the sentence must be overturned;
Considering that, by giving the category of ordinary salary to the expenses for gasoline, the values corresponding to his real computable salary for the payment of labor benefits increased and consequently the values corresponding to the penalty expressed in article 86 of the Labor Code also the Court a-qua incurs a lack of legal basis;
Considering that the difference between ordinary salary and extraordinary salary has been examined for the case in question, noting that in order to classify the former, it is necessary:
a) it is earned within the normal working day, even if paid in kind (judgment of August 28, 1963, BJ no. 673, p. 909);
b) has its cause in the provision of services;
c) is received constantly and permanently; and
d) It is charged in periods of no more than one month
Considering that the Court of Cassation defines ordinary salary as the remuneration earned by the worker, “as a consequence of the provision of the service within the normal working day, in a constant and permanent manner in periods not exceeding one month”,
(Judgment of 24 November 1999, BJ No. 1086, Judgment of 15 November 2000, BJ No. 1086, p. 732).
Consequently, all sums earned by the worker due to or in connection with their work that do not meet these characteristics must be categorized as "extraordinary wages" which cannot be included in the calculation of severance pay and unemployment benefits;
Considering that, according to authoritative doctrine on the matter and the constant jurisprudence of this Supreme Court of Justice, the following elements are required to be classified as ordinary salary: a) it is earned within the normal working day; b) it has its cause in the provision of services; c) it is received in a constant and permanent manner; and d) it is collected in periods not exceeding one month;
Judgment TC/0376/16, of August 11, 2016 (Thomas A. Pelliccia and Pamela J. Pelliccia vs Carol Morgan) p. 34
Considering that, in the case of the species, not all the items had the conditions of being constant or permanent, and above all they were paid in periods longer than one month, which gave it a complementary and extraordinary character, except for simulation or fraud, of which there is no evidence, nor was it the subject of discussion before the judges of the merits;
Judgment TC/0376/16, of August 11, 2016 (Thomas A. Pelliccia and Pamela J. Pelliccia vs Carol Morgan), p. 34
Considering that the extraordinary nature of these salaries, except as indicated below, does not in any way imply that they have the meaning of a gift or liberality, nor that they are a detachment; the authoritative doctrine has different positions on the complementary and extraordinary nature, but none resembles said concepts, since neither the Christmas salary, nor the participation of profits, which are based on the remunerative nature of the salary and social justice derived from the protective principle, have those meanings;
Judgment TC/0376/16, of August 11, 2016 (Thomas A. Pelliccia and Pamela J. Pelliccia vs Carol Morgan), pp. 34-35
