Being a foreigner or national who has not established fiscal residence in Uruguay in the last five fiscal years prior to moving to the country. The work to be carried out must be carried out full time in Uruguay, demonstrating an effective physical presence in the country of at least two thirds of the calendar year.
Labor income must come exclusively from activities directly related to the IT sector and be developed under a dependent employment contract. The law delegates to the regulation the establishment of the way in which the options will be exercised. Therefore, it will be necessary to wait for the approval of the respective decree by the Executive Power to know the conditions of formalization. Once the option is exercised, it applies to the calendar year of the election and the four subsequent years. If the worker changes jobs, they can keep the benefits in the new job. Failure to comply with any of the conditions entails the obligation to pay taxes under the general regime. This special regime will only benefit those workers who start their employment relationships before February 28, 2025.
Legal Status of Organizations of Workers and Employers
On May 3, 2023, Law N°20.127 regulating the registration of Worker and Employer Organizations was approved, creating a Register of Worker and Employer Organizations within the scope of the Ministry of Labor and Social Security.
Registration in the aforementioned Registry is not mandatory but optional, and a series of formalities and requirements must be followed for this purpose. The effect of said registration is the recognition of a legal status, so that the registered workers' and employers' organizations will have civil rights and obligations under the terms of article 21 of the Civil Code. Workers' organizations that do not comply with the procedure for recognition of legal status will not have the right to have the union dues withheld in their favor for deposit in the organization's bank account. Organizations that have not obtained recognition of legal status may not request to be provided with the necessary information within the framework of a collective bargaining (Art. 4, Law No. 18.566).
Regulation of the Right to be Absent for Pregnancy Check-Ups
Law No. 20.129 of May 9, 2023 established that all pregnant workers, both in the private and public activity, regardless of the legal nature of their employment or functional relationship, will have the right to be absent from their workplace for up to four hours a day month, in order to attend pregnancy check-ups or other related consultations. The law establishes that said hours will be computed as worked for all legal and regulatory purposes, and cannot be deducted from salary or remuneration.
Likewise, the regulation establishes that:
Every worker, in private or public activity, and whatever the legal nature of their labor or functional relationship, will have the right to be absent from the workplace, up to four hours a month, for the purposes of accompanying their spouse, common-law spouse or partner to pregnancy check-ups and corresponding routines. For the exercise of the aforementioned rights: workers must notify their employer at least two days in advance, and the enjoyment of said rights cannot be denied for any reason; and a certificate must be presented with the signature and seal of the treating medical professional or technician.
Amendments to the Law on Collective Bargaining in the Private Sector.
On May 24, 2023, Law No. 20.145 was approved, introducing amendments to Law No. 18.566 on the Collective Bargaining System in the private sector. The modification consisted of correcting the observations made by the Committee on Freedom of Association of the International Labor Organization in 2010, which issued a report in which it objected various articles of Law No. 18.566. The ILO's objections to the Uruguayan collective bargaining law were reiterated throughout these years by various control bodies of said Organization, to the point that our country was included in the ILO “Black List”. The main guidelines of the approved law are the following: Unions may only request information from companies (when they are in a collective bargaining process) when they do not have legal status. Regarding the registration and publication of collective agreements, it was determined that the procedure for registration and publication of agreements and awards "will not constitute any requirement for authorization, homologation or approval by the Executive Branch."
On the validity and ultra-activity of collective agreements, art. 4 of the approved Law provides that the validity of the benefits of the agreement becomes from now on a matter that must be agreed in each specific case. This means that if the collective agreement has a certain term of duration, its benefits will expire at the end of the term, without overactivity.
Social Security Reform
Law No. 20.130 approved on May 2, 2023 reformed the Uruguayan retirement system. Notwithstanding the reform, the Uruguayan pension system continues to be mixed, made up of a system of personal and employer contributions and a private savings retirement system administered by the Pension Savings Administrators (called AFAP’S in Uruguay). The law maintains the current requirement of a minimum of 30 years of work to access common retirement, with the following modifications:
The regulation increases the retirement age from 60 to 65 years, but this will be gradual. People born in 1973 may retire at 61 years of age, those born in 1974 with 62 years, those born in 1975 with 63 years, those born in 1976 with 64 years.
The Retirement Causes:
Normal retirement: 30 years of work and 65 years of age. Early retirement due to a long working career: Those people born in 1976 and later, who are 63 years of age and have 38 years of service with effective contribution or 64 years and 35 years of service with effective contribution may apply for retirement. Anticipated cause for performance in demanding jobs: For performance in demanding activities (construction and rural). 30 years of contribution and 60 years of age are required.
Retirement due to total disability: It will be established when the person obtains a declaration of absolute and permanent disability for all employment.
Compatibility of Work Activity and Retirement
One of the most relevant aspects of the social security reform approved in May of this year was the possibility that retired workers, or those who retire through the Social Security Bank, can also work. This possibility included in Law No. 20.130 was regulated by Decree No. 231/023, published on August 1, 2023. The Law and the Decree provide that, in certain cases and upon
compliance with certain requirements, it is compatible to receive a retirement and, simultaneously, maintain an active working life. It is separately regulated the work and passivity of the dependent worker from the self-employed or non-dependent worker.
Also it is different for people with a single job and those who are in a situation of multiple jobs.
Compatibility between retirement and dependent work with a new activity: People who retire at the normal age either by the industry and commerce, rural or domestic service affiliation sectors of the Social Security Bank, may start working activity even in the same affiliation sector for which they had retired, proving the cessation of the previous working activity that gave rise to the retirement. If it is a question of starting a new activity as a dependent in the same company, it must be proven that at least six months have elapsed since the end of the previous employment relationship. Compatibility between passivity and non-dependent work: For people aged 65 or over, and who in the last 3 years have provided activity as non- dependent, two options are provided. On the one hand, they can maintain their activity as a non-dependent, without making the corresponding retirement contributions. For this, they must have 30 years of recognized services. On the other hand, they can opt to receive the corresponding retirement salary and maintain activity as a non-dependent, as long as they employ in their company a number of people and hours worked equivalent to that existing in the year prior to the enjoyment of their retirement or employ at least one worker during the entire period that they maintain this option.
For people who have multiple jobs in the same affiliation sector, the Regulatory Decree provides them the possibility to terminate one or more of them and retire, while continuing in activity for another or others. This system gives the possibility that a retiree, as such, can have at the same time the quality of active dependent worker. The scope of application covers those dependent affiliates who have normal or early retirement grounds for performing particularly demanding jobs, which includes, among others, the industrial and commercial, domestic and rural sectors. In order to benefit from flexible partial retirement, it is necessary to agree with the same employer, a reduction in your work activity by at least one third of your weekly or monthly workload, with its corresponding remuneration adjustment. The reduction of the salary of the task that will develop will have an impact, proportionally, on the amount received for retirement.
