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News regarding the protection of the Salvadoran employment

Kattya Vidal

As part of the measures to ensure and protect the employment of Salvadorans in these times of emergency in which we live, the Legislative Assembly approved on May 5, 2020, the Salvadoran Employment Protection Law, which aims and scope to establish measures that mitigate the economic impact and its effects on Salvadoran employment caused by the pandemic by COVID-19 and the sanitary measures imposed to face it, as well as developing exceptional and temporary measures to safeguard the job stability of workers in the Salvadoran private sector, guaranteeing workers a decent income, without prejudice to the sustainability of business activity, without distinction of sectors or economic items.


Article 4 of the aforementioned Law establishes the obligatory subjects in the processing and materialization of benefits and measures in favor of workers, provided for in the law, in which the following will participate: The corresponding employers and the Development Bank of El Salvador (BANDESAL) in its capacity as administrator of the public funds that will be assigned for such purposes.


Among the fundamental measures established in the Law, the following can be mentioned:


1. Measures are created for the protection of employment, among which the following stand out:


The duty of companies duly authorized to operate during the State of Emergency to comply with their labor obligations in accordance with current law and employment contracts with regard to employees who are performing their duties.

Provisions for the enjoyment and payment of vacations while the State of Emergency lasts or the current regulations related to the pandemic by COVID-19.

Revocation of sanctions imposed on employers by the Ministry of Labor and Social Security during the COVID-19 pandemic; once the fact that caused the sanction has been corrected.

2. A subsidy is created for micro, small and medium-sized companies registered as employers in the Salvadoran Social Security Institute, ISSS, that are affected by the COVID-19 crisis and its effects, which will be administered by the Development Bank from El Salvador, BANDESAL and will apply to employers who:


They counted in the register of the Salvadoran Social Security Institute. ISSS with less than one hundred employees reported in the last return filed between the months of December 2019 to February 2020, as applicable; and:

They had annual gross sales income in 2019, declared as of March 31, 2020, or failing that in 2018, for an amount equal to or less than seven million United States dollars. 

3. An online credit program for working capital is created for Salvadoran companies or entrepreneurs registered as employers in the Salvadoran Social Security Institute affected by the COVID-19 crisis, which must accrue up to a maximum of 3% in concept of interest rate and for a maximum term of 10 years and a grace period of 12 months which will be administered by the Development Bank of El Salvador, BANDESAL. 


4. A productive financing program is created for the informal sector, and it applies to those who have at least one credit in force in the national financial system and / or cooperative financial system or credit history registered as of December 2019, that have a credit risk category A or B as of February 29, 2020, and that have been affected by COVID-19, mainly in working capital that allows their economic recovery. The loans will be granted at a maximum interest rate of 3% per year, for a maximum term of 10 years and with a 12-month grace period, which will be administered by the Development Bank of El Salvador, BANDESAL. 


The decree went into effect on May 5, 2020, and will end its effects when the funds destined to attend to the national emergency end.


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