Law 21227 and 19728

CLIENT ALERT | DRAFT LAW THAT TEMPORARILY RELAXES THE ACCESS REQUIREMENTS AND INCREASES THE AMOUNT OF BENEFITS TO THE UNEMPLOYMENT INSURANCE OF LAW Nº 19.728, DUE TO THE PANDEMIC ORIGINATED BY COVID-19, AND IMPROVES THE BENEFITS OF LAW Nº 21.227.

Labor and Inmigration Department

 

On June 30, 2020, by Message No. 100-368 of June 30, 2020, the Draft Law amending the current regulations on Unemployment Insurance and the Employment Protection Law was submitted to the Senate, the first constitutional procedure.

The most relevant points of this project are:

  1. Improvement and strengthening of the conditions of access and coverage for unemployment benefits (Unemployment Insurance) under Law No. 19.728.

It is proposed to improve the conditions of access and coverage of the Unemployment Insurance of Law No. 19.728, establishing the right of workers affiliated to this insurance, who are unemployed or who become unemployed after receiving some of the benefits of Title I of Law No. 21.227 (insurance proposed by the by the Employment Protection Law), to have access to the Unemployment Insurance under the new conditions. The proposals of the Project are:

  • a. Reduce to three, the continuous quotations before the end of the contract.
  • b. Reduce to six the continuous or discontinuous monthly contributions in the last twelve months prior to the month of termination of the contract, in which case the last two contributions must be continuous with the same employer.
  1. Improve the amount of benefits associated with Unemployment Insurance

The Project establishes in a transitory way, that is until October 31st of the present year, tables with coverage of benefits by unemployment that replace the regular tables established in articles 15 and 25 of Law Nº 19.728.

The proposed tables are as follows:

MONTHS AVERAGE PERCENTAGE OF REMUNERATION
First 70%
Second 55%
Third 55%
Fourth 55%
Fifth 55%
Sixth or higher 50%

 

MONTHS AVERAGE PERCENTAGE OF REMUNERATION HIGHEST VALUE LOWEST VALUE
First 70% $652.956 $225.000
Second 55% $513.038 $225.000
Third 55% $513.038 $225.000
Fourth 55% $513.038 $225.000
Fifth 45% $419.757 $225.000

 

  1. Improvement of the benefits of Law No. 21.227

It proposes improvements in the benefits established in Law No. 21.227, commonly known as the “Employment Protection Law”, making the tables of coverage for unemployment insurance indicated in number 2 above applicable.

As of the approval and entry into force of the proposed law, workers will begin to receive Unemployment Insurance according to the tables referred to in number 2 of this Client Alert.

  1. Additional remuneration to the Company Administrating Funds of Cessation of the Law Nº 19.728.

The Project also establishes a rule that will regulate the way in which the Unemployment Fund can be used to grant additional compensation to the Unemployment Fund Management Company. This will be determined by means of a study to be prepared by the Superintendence of Pensions and the Budget Office by August 2021 at the latest.

  1. Regarding the Validity of the Law.

It is proposed that the provisions of the Draft Law should apply from the date of its publication in the Official Gazette until 31 October of the current year, with the exception of benefits paid under the temporary reduction of working hours agreement, which will apply until 31 July 2021.

All the benefits referred to in this Project must be requested and paid during their respective term. As of November 1 of this year, the benefits will be determined and paid in accordance with the permanent regulations of Law No. 19.728.

The purpose of this document is to present, summarily, the main aspects of this Draft Law, for the knowledge of our clients, not representing an opinion or legal recommendation and it is only of an informative nature. Likewise, we reiterate that the Draft Law was recently sent to the National Congress on June 30th, so it could be amended before its approval.

Any doubts or queries regarding its content, please address them to the contact attorneys indicated in this report.