New law amending the conditions for payment of Supplementary Annual Salary

On January 9, 2015 was published on the Official Gazette Law No. 27.073 (the “Act”), which establishes new regulations on the payment of the second half of the employee’s Supplementary Annual Salary (“SAS”), which is ruled by Section 122 of the Labour Contract Law (” LCL”).

Before the amendment, Section 122 LCL stated that the SAS had to be paid in two (2) instalments: one on June 30 and the other on December 31 of each year. Now, according to the new legislation, the latest instalment must be paid on December 18 of each year. The amount payable must be calculated on fifty percent (50 %) of the highest monthly remuneration earned within the two (2) semesters culminating in the months of June and December.

Also, the Act sets that to calculate SAS for the second half of the year, the employer must estimate December’s salary and if it does not coincide with the actual accrued in that month, the SAS’s second instalment must be recalculated and the difference between the amount collected and the one paid on December 18 must be incorporated to December’s salary.

Regarding the Act, it is necessary to make some observations. First, it should be noticed that Section 122 LCL reflects the content of Law No 23.041 which regulates the basis for calculating SAS’s instalments. Finally, establishing precise dates for SAS’s payment, the Act prevents the employer from breaching employee’s rights not allowing the first to cancel the payment until the fourth business day following its expiration.

The Act came into force on January 9, 2015.

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