FIXED-TERM LABOR CONTRACTING: ASPECTS TO CONSIDER

In the Bolivian business sector, it is essential to know and understand the rules that regulate the labor relations between employers and workers, especially if they are responsible for the management of human resources within a company. For this reason, on this occasion we will deal with fixed-term employment contracts, a topic of vital importance for companies in our country.

Our legal system recognizes different types of employment contracts depending on the duration of the employment relationship, being the following:

• Indefinite term

• Seasonal

• For work or service

• Fixed term.
  

It is important to note that the indefinite-term contract is the general rule par excellence that must be complied with when hiring workers, while the fixed-term contract is an exception to such rule.

In this sense, the fixed-term contract is characterized by establishing an employment relationship with a limited duration, defined by a start date and a specific end date, being this determination essential for both the employer and the employee to know clearly and in advance the exact moment in which the employment relationship will end.

However, the validity and effectiveness of this type of contract are subject to compliance with certain rules and requirements:

1. Duration and renewal: It may be agreed for a term equal to or less than One (1) year and may be renewed for an equal term, prior authorization by the Ministry of Labor.

2. Prohibitions: No more than two (2) fixed-term contracts may be signed successively, and it is prohibited to hire workers for the Company's own permanent tasks. By own and permanent tasks should be understood as those functions that are directly related to the main economic activity of the company.

3. Form: It must necessarily be celebrated in writing to record the type of contract., so that it is not considered an employment relationship of an indefinite nature.

4. Interruption: In case of opting for a third fixed-term contracting or successive contracting of the same worker, it is essential to interrupt the contracting for a minimum of three (3) months, so that the conversion to an

   indefinite-term employment relationship does not take place.

5. Endorsement: The fixed-term contract must necessarily be endorsed by the Ministry of Labor, in

   accordance with the provisions of Ministerial Resolution No. 01/2024 dated January 2, 2024. In addition, the

   endorsement of the contract helps to avoid fines in the event of a possible labor inspection.

6. Exception: Fixed-term contracts may be signed for tasks specific to the company, but these must be strictly

   temporary, such as substitutes for the company's own tasks.

With regard to the exceptionality provided for fixed-term contracts to perform personal, but not permanent, tasks within a company, it is essential to observe Ministerial Resolution No. 650/2007 dated April 27, 2007, which clearly defines personal, non-permanent tasks as those that, while linked to the usual or main economic activity of the company, are characterized by being extraordinarily temporary, indicating the following as such:

•  Substitution tasks due to licenses, medical leaves, pre- and post-natal breaks, commission declarations.

• Tasks for a certain period of time due to seasonal needs, circumstantial market demands, extraordinary

  demand for products or services, which require additional hiring of workers.

• Tasks for a certain period of time in organizations or entities whose closing date or completion of activities is

  predetermined.

In this context, it can be deduced that fixed-term contracts are only applicable for temporary work or for tasks that, although they may be specific to the company, cannot be permanent, and that, in the event of non-compliance with the rules that regulate this type of contract, there is a risk that the contract will be considered as an indefinite one. Therefore, it is important that companies thoroughly evaluate the functions that an employee will perform, in order to minimize the risks of this type of employment contract.

In light of the above, companies are recommended to implement and maintain updated job manuals that clearly and precisely regulate the nature of the tasks assigned to employees during the employment relationship. Likewise, it is essential to carefully analyze the possibility of a fixed-term employment contract, in order to avoid future labor conflicts that may generate significant economic losses.

Victor Manuel Vásquez Alfaro

Litigation and Corporate Lawyer