Labor Directorate reconsiders the doctrine regarding the application of the so-called “historical benefits”

One of the substantive changes brought on by law 20.940 (colloquially known as Labor Reform) was the abolition of the employer’s ability to provide, to non-union workers, the benefits given to them collectively held with a union.

Under the new regulatory framework for providing benefits to non-union workers, the law establishes the following requirements:

  1. It must be agreed to by both parties, to have reached an agreement between the company and the union.
  2. The amount of union dues to be paid by the non-unionized worker must be agreed upon by both parties.
  3. The non-unionized worker must accept the applicability of this agreement.

Notwithstanding the foregoing, one of the issues of this new framework – as it was commented upon long ago – is about the status in which those non-unionized workers were given. For example, who keeps the  benefits that were negotiated during a collective bargaining agreement between the company and the union. Additionally, the treatment that should be given to the so-called “historical benefits”, that is, those benefits that were a part of an internal company policy and in the same way reiterated in a collective bargaining agreement.

On the other hand, the initial proposition of the Directorate of Labor (Ord. 4808/114, October 12th, 2017) supported that if a specific benefit – independent of its origin, title, or date of being granted – that was included in the collective bargain contract could only be given to those who were a part of the respective bargaining process. This brought forward that, “(…) The employees of a company, not affiliated with a union, who receive these benefits are to be incorporated into the collective bargaining process negotiated by a union with a company, will be governed by the legislation applicable at the time of such incorporation.” [1].

On May 11th, 2018 the doctrine Ord. 2238/029 was modified and clarified by recognizing the right of the non-unionized workers who had been receiving these benefits for years, which was to be replicated in the collective bargaining agreement in such a way, as to keep these benefits as a part of the non-unionized workers individual contracts. The opinion of this refers to being “agreed” upon – and so it can be accredited.

However, recently (Ord. 3826/031 dated July 20th, 2018) the doctrine of labor management was reconsidered with regards to the extension of benefits and the treatment of historical benefits.

The new position of the Labor Directorate, in exercising its power to establish the meaning and scope of the labor laws, considers the so-called ‘ historical benefits ‘,”Benefits, wages, and working conditions which the employer has granted in a historical and normal manner to their employees, whether they are found to be agreed upon in contracts or work contract annexes, in an express or tacit manner; in corporate policies; wages and benefit manuals, or granted to give effective compliance to labor or social security regulations”, although if the historical benefits are created in a collective bargaining agreement they will not have their source or title in this. Consequently, this does not deprive the rest of the employees that are non-unionized workers access to these types of benefits.

Thus, it is the employee’s right to have unalterable working conditions maintained that are as a result of a general policy of the employer.

This is, in our view, the first substantive decree of the Labor Directorate in relation to the previous Labor Reform, through which the doctrine that existed on this subject was reevaluated.

[1] Dictamen Ord. N° 4808/114;