Venezuela Announces New Minimum Wage And Meal Benefit Increases

Author:Ms Claudia Alimenti
Profession:Littler Mendelson
 
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On January 9, 2017, Venezuela's President Nicolás Maduro announced a 50% increase in the monthly minimum wage for the private and public sectors, effective January 1, 2017.

Minimum Wage Increase

The new minimum wage has been set at 40,638.15 Venezuelan bolivars (VEF 40,638.15) per month and 1,354.60 bolivars (VEF 1,354.60) per day.

Cash Payment

The minimum wage must be paid in cash.  No other type of payment can be counted as part of the salary.

Fixed Amount for Mixed Salary

The fixed amount for an employee who receives a mixed salary1 cannot be less than the new minimum wage.  For example, if an employee receives a fixed salary, plus a variable salary or a fluctuating salary, this amount must not be lower than VEF 40,638.15 per month.

Minimum Amount for Pensions

The new minimum wage will also apply to pensions paid by the Venezuelan public administration and the Venezuelan Social Security Institute ("Instituto Venezolano de los Seguros Sociales" or IVSS).

Part-Time Work

An equivalent fraction for time worked will be paid pursuant to Article 172 of the Venezuelan Labor Law (known by "LOTTT," the labor code's acronym in Spanish).

Impact over Social Contributions and Employee Benefits

The economic impact of the minimum wage increase on social contributions and employee benefits under the Venezuelan labor regime is as follows:

Benefits

Caps for Benefits

January 1, 2017

Day Care

5 times the minimum wage

Workers who earn a monthly salary equivalent to or lower than VEF 203,190.75 are entitled to a daycare benefit. Employers must pay 40% of the minimum wage per month, which is the equivalent of VEF 16,255.26, in order to comply with the benefit.  Payments are made directly to the institution providing the child care and are not deemed part of the employee's salary.

Contributions

Caps for Contributions

January 1, 2017

Social Security

5 times the minimum wage

Both employers and employees must contribute monthly to IVSS.  The employer is required to withhold and pay the employee's contributions.  All contributions are computed as a percentage of the employee's normal salary up to a maximum of five minimum monthly salaries (VEF 203,190.75). Employees are obliged to contribute 4% of their salary and employers must contribute between...

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