DOMINICAN REPUBLIC: An Introduction to Labour & Employment

The Upcoming Labour Reform in the Dominican Republic

Since early 2023, following its recovery from the pandemic, the Dominican Republic’s economy has demonstrated strong performance in key areas such as tourism, free trade zones, mining, commerce, and services in general – including capital markets and remittances. This has enabled the country to maintain remarkable macroeconomic stability, favourable for investment, and to generate new private-sector jobs in recent years.

From a labour regulatory perspective, the Dominican Republic is currently governed by Law 16-92 and its amendments, better known as the Dominican Labour Code (hereinafter, the “CT”), enacted in May 1992. While this legislation has effectively fulfilled its primary role of ensuring balance and good industrial relations between employers and employees for more than three decades, over time it has become outdated in several respects, making reform necessary to bring it in line with new realities and market trends.

To this end, a bill is currently under consideration in the National Congress, aimed at updating the existing labour legislation. The bill seeks to:

1. stimulate employment;
2. encourage investment;
3. reduce labour informality;
4. introduce flexibility in working hours;
5. promote first-time employment;
6. incorporate modern frameworks such as telework;
7. modify the dispute resolution system to reduce litigation; and
8. align local legislation with agreements reached with the International Labour Organization, among other international labour standards.

This bill is, in principle, the result of agreements reached between Dominican business groups and labour unions, with government sponsorship. However, certain aspects are still being debated and without consensus.

What needs to be acknowledged is that a labour reform is forthcoming in the Dominican Republic. It is therefore useful to highlight the key aspects already agreed upon in the bill. These are set out below.

Modification of the working hours regime

Currently, the CT provides for a standard workday of up to eight hours per day and 44 hours per week. It also establishes exceptional workdays of up to ten hours for certain employees or under special circumstances.

The bill introduces the possibility for employers and employees to agree to extended shifts of up to 12 hours per day, subject to approval by the labour union (if one exists within the company) or by 50% of the workforce (if no union exists), provided that the total does not exceed 44 hours per week.

This would allow companies to implement a “4 x 3” schedule, meaning four consecutive days of work consisting of three twelve-hour shifts and one eight-hour shift, followed by three consecutive days of rest, thereby enabling rotating work teams.

Modification of the labour dispute resolution regime

At present, many lawyers persuade workers to grant them powers of attorney, authorising them to pursue legal action against former employers. Such powers often prevent workers from reaching direct settlements with employers without the lawyer’s express consent, even when the worker is willing to do so – resulting in prolonged litigation.

To correct this distortion, the bill proposes the creation of a “conciliation judge”, whose role will be to encourage amicable settlements between the parties before a substantive trial takes place. The worker must be physically present during the conciliation process, and no prior agreement with their lawyer may prevent them from reaching a direct settlement with their former employer.

Incorporation of telework

The introduction of teleworking (remote work) is among the most significant innovations in the bill. Widely used during the pandemic and still relevant today, telework provides companies with an alternative working arrangement that can reduce costs and increase efficiency, without jeopardising workers’ labour rights.

Extension of the deadline to suspend enforcement of labour judgments and reduction of guarantee amounts

Under current law, when a labour court issues an adverse judgment against an employer, the judgment becomes enforceable (allowing expropriation measures) on the third day after notification, unless the employer suspends enforcement through one of the mechanisms provided by law, which include:

1. depositing twice the amount of the judgment with the tax authorities;
2. depositing twice the amount of the judgment with a private bank; and
3. providing a bond for twice the amount of the judgment and petitioning the court for suspension.

These mechanisms are complex to complete within three days, leaving companies exposed to enforcement measures.

The reform proposes two major changes:

1. extending the enforceability period from three business days to eight business days (ten calendar days); and
2. requiring guarantees only for the exact amount of the judgment, rather than double.

If the proposal is approved in this regard, it would mitigate two major challenges that companies currently face in the context of labour disputes.

Modification of the “real offer of payment” mechanism

When an employment contract comes to an end, it is common for the employer to be required to settle outstanding final labour benefits with the employee. These include final acquired rights (vacation compensation, Christmas salary compensation, profits compensation and pending salary pending) and severance pay. In such cases, there is a risk that the employee may refuse to voluntarily accept the payment, either on the grounds that the amount offered is less than what they believe they are rightfully entitled to, or for any other personal reason. In these cases, the employer can follow the real offer procedure foreseen by the law in order to guarantee that the intention of payment has been executed, and the employer therefore released from their obligation.

Currently, the Labour Code requires that offers to pay labour entitlements to workers who refuse to accept them must be made in cash and must be delivered in person or at the worker’s domicile.

This mechanism faces two main challenges:

1. employers often do not know the worker’s current address, complicating the offer; and
2. delivering large sums of cash poses security risks for the public officer handling the payment.

The reform proposes that pending payments may also be made via bank transfer to the worker’s account, with full effect.

Increase in fine tariffs

Finally, the bill proposes raising the fines currently set forth in Article 721 of the CT for violations committed by employers to the detriment of workers. This measure seeks to strengthen compliance with labour laws and deter violations.

Conclusion

In summary, the labour reform bill currently before the Dominican Congress introduces significant modifications intended to modernise the regulatory framework, rationalising it, protecting rights and – most importantly – making the country more attractive for foreign investment. While the final outcome remains to be seen, this overview provides a preview of the upcoming changes.