Recommendations Regarding Compliance Measures in Employment Matters

Senior Counsel Luis Diego Obando from Costa Rica, an expert in labor law, shares this article on how labor relations are crucial for companies, yet they face significant legal challenges. Adhering to clear contracts, proper worker classifications, and regulatory benefits is essential to avoid legal issues and safeguard corporate value. Regularly evaluating compliance with labor regulations helps mitigate operational and legal risks.

Good compliance practices in employment relationships

Employment relationships currently face different challenges affecting companies and their workers. One of these challenges is the understanding of labor-related regulatory aspects with a direct and significant impact on the good performance of the company.

Being clear about these aspects is essential to avoid future contingencies for the company. An adequate management of employment relationships from a compliance point of view can be essential to avoid affecting eventual sales or merger processes of the company or reducing its value.

Some of the essential considerations that must be considered from the point of view of regulatory compliance in labor matters are:

• Verification of the existence of written employment contracts ensuring absolute legal certainty.
• The identification of workers with non-fixed or fixed-term labor contracts.
• The correct classification of trusted employees and regular employees.
• The identification of professional services contracts with "employment” elements.
• The analysis of benefits that may be of a salary nature (e.g. bonuses, incentive plans, company car, food) that complement ordinary salary payments and salary in kind. This is because they will impact eventual severance payments, notice payments, Christmas bonuses, and vacations in the event of termination, as well as the reporting of workers' salaries to Social Security or the tax authorities.
• Verification of compliance with the rules on teleworking, if this is the case.
• The identification of work during overtime or on holidays or rest days and their due payment.
• Verifying the existence of an adequate record of the pending vacation days to be enjoyed and ensuring their proper enjoyment.
• Confirmation of the implementation and communication to employees of mandatory policies such as: the occupational health policy, the policy against sexual harassment, and the teleworking policy, if applicable.
• Compliance with the principle of non-discrimination in the workplace.
• Corroborate the proper registration of the company as an employer before the social security and tax authorities and the existence of the corresponding occupational risk policy of the National Insurance Institute, as well as the due payment of the obligations to these institutions.
• Confirm the proper management of disabilities before Social Security and the National Insurance Institute (the latter for occupational risks).
• Verification of the due payment, on time, of Christmas bonus to all workers.
• Confirmation of compliance with regulations on data privacy and intellectual property rights in employment relationships.
• Verification of due compliance with labor regulations at the time of carrying out a job termination (severance payment, notice, proportional Christmas bonus, payment of non-enjoyed vacations, unpaid salaries).