Central America’s remote working landscape
Main image
Central America

Although largely successful around the globe, the necessity of remote working due to the ongoing covid-19 pandemic has seen companies confronted by various regional employment law challenges. Different legislative and regulatory issues have particularly impacted those organisations with cross-border operations; even in neighbouring countries, multinationals can find themselves facing disparate laws and regulations on home working, making a one-size-fits-all policy difficult to implement.

To provide clarity on the issue, IEL spoke with leading lawyers at Aguilar Castillo Love to compare and contrast remote working regulations across Central America, with its employment practitioners offering their expert perspectives on the current situations in Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and Panama, as well as considering what the future of work looks like for the region.

What remote working regulations are in place?

“Currently, there are no specific remote working regulations in place in Guatemala,” explains Luis Manuel Contreras Ramírez. “From a practical standpoint, employers are facing difficulties regarding the supervision of their employees who are working from home. Specifically, one of the concerns is how to keep track of any overtime pay due to employees, if such an agreement is in place between the parties.”

Nicaragua likewise does not have laws for remote working. “The government has considered that the country is not in a dangerous situation in which a general suspension of work is necessary; therefore, it did not decree a state of emergency or massive preventive measures regarding the spread of the virus,” explain Thelma Carrion Blandón and Claudia Guevara Lorio. “However, the private sector took its own preventive measures in relation to the management of its personnel to avoid or reduce the spread of the virus, opting as far as possible for working from home to protect its employees.”

Similarly, Honduras does not have a specific law that regulates remote working. Instead, the National Congress issued Legislative Decree No. 31-2020, which contains the “Special Law of Economic Acceleration and Social Protection against the Effects of the Coronavirus Covid-19”. Article 8 authorises the implementation of remote working as a security measure to prevent the spread of the disease, both in the public and private sectors, for employees to be able to carry out their work part-time or completely remotely. However, the secretary of state for labour and social security is working on more in-depth guidelines to regulate remote work in the country.

By contrast, in Costa Rica, the law regulating remote working was implemented in September 2019 and provides three forms of remote working: home teleworking; telecentre, with places assigned by the company near the worker’s city; and remote, for workers who can travel to different locations. Employees have also benefited from an occupational health manual that expressly provides the basic supplies that a worker must have to carry out their duties from home, such as desk measurements, type of chair, lighting, and ventilation.

“Many of the countries that have specific laws on remote working regulated the payment of an amount of money to cover the increases of costs applicable to public services, such as water, electricity, and internet,” explain Álvaro Aguilar and Gloriana Lara Ramos. “In Costa Rica, the law provided that the parties were free to agree on a measurement method for the company to compensate for the increase in expenses or they could reach a mutual agreement on said expenses. The law established the possibility of contracting directly under the remote working modality, thus creating a distinction between temporary remote working (current state due to pandemic), partial remote working (one to three days per week), or full remote working.”

Even now that public transport is available again, some employers opt to pay for private transportation to reduce the risk of contagion

In El Salvador, the Telework Regulation Law (Decree No. 600) was enacted on 16 June 2020. “According to the law, telework applies to new hires as well as to those employees who have an existing individual work contract, both in the private and public sectors, and it is strictly voluntary,” explain Carlos Alfaro Castillo and Lorena Madrid Chavez. “In the case of employees who have an existing individual work contract, this must be modified through an addendum, in which they agree on the conditions to which telework will be subject, as well as the direction in which the work will be carried out, said modification may be omitted in the event of a national emergency, public calamity, exception, or suspension of constitutional rights and disasters, declared by the competent authority.”

In Panama, teleworking regulations came into effect in September 2020. “It is a very recent norm, there is no jurisprudence yet on its interpretation,” says Maripaz Cordero Vindas. “It contemplates aspects of expenses that the employer must assume that may not be regulated in other regions (internet, electricity, equipment, and work tools). It does not contain specific aspects on issues of professional risk or compulsory insurance. The law requires that the agreement be in writing and accepted voluntarily by the employee, this change of modality requires the signing of an addendum to the employment contract and subsequently registered with the Ministry of Labor. Meeting these demands has been a challenge for many companies.”

What have been the big challenges for employers?

There have been several practical, legal, business, and compliance challenges for employers to consider in Nicaragua. “Not all sectors can use this modality, precisely because of the nature of their activity,” say Carrión and Guevara Lorío. “The lack of recognition of some expenses derived from telework, such as the limitation that, if you pay a fixed, constant sum and without accountability regardless of the name that is given to compensate an expense to the worker, it can be had as part of the salary. Assume in some cases subsidies for infected workers, which the health system does not assume as such for the protection of the rest of your workers.”

“From a legal standpoint, the change of venue to perform the work must be expressly agreed upon by the parties to avoid the argument of an indirect dismissal,” says Ramírez in Guatemala. “From a business standpoint, many employers faced the challenge of an increased expense due to the need to pay for private transportation for their employees while public transportation was suspended. Even now that public transport is available again, some employers opt to pay for private transportation to reduce the risk of contagion.”

“In Honduras, not much was heard or known about remote work, until the start of the pandemic,” explains Ondina Santos. “The implementation of remote work arose in the face of an unexpected and urgent situation and, therefore, both employers and employees were unprepared to meet all challenges that this modality brought with it. One of the biggest challenges that remote work brings is cultural transformation; implementing a new work mode, unknown to many, which includes the implementation of new technologies, digitalising documents, measuring employee productivity, assignment of tasks, and meetings through video calls to work in the best way.”

Santos also highlights that the socioeconomic situation in Honduras means not all employees will have access to the internet, computers, or other tools necessary to carry out their work remotely. “Also, from a legal point of view, the lack of local legislation applicable to remote work has caused disagreements between employer and employee, regarding working hours, remuneration, work-related costs, and other remote working conditions,” she adds.

The vast majority of employers in Costa Rica did not have proper handling or knowledge of the medical information of their workers

In Costa Rica, increased utility expenses paid to workers has been widely discussed as compensation under the law is far from clear, explain Aguilar and Ramos. “This led the Minister of Labor to issue a non-binding criterion that determines that the company must pay the costs associated with the use of electricity, water, and internet, and that this money or these services would not be instruments of work and, therefore, should be considered as salary in kind.”

Additionally, employers have had to implement health and safety protocols to take into account those employees who remain in the workplace and those who work from home. “The pandemic has proved that the vast majority of employers in Costa Rica did not have proper handling or knowledge of the medical information of their workers,” add Aguilar and Ramos. “This has generated different contingencies in light of the pandemic, since many employees report suffering from diseases that could be considered a risk factor, which is why they request the working from home modality to be applied to avoid having contact with the virus and its possible implications.”

Another problem for employers involves employees who moved to other residencies that do not correspond to the addresses approved for teleworking. “This entails risks for the company of equipment loss and especially increases the risk of leakage of sensitive or confidential information contained in the equipment,” explain Aguilar and Ramos. “Likewise, these actions violate occupational health regulations, so in the event of an accident or illness, insurers could refuse to cover the worker who is performing a function in a place other than their home. This could eventually leave the company liable if it did not control the place of execution of the services.”

Increased reports of alcohol and drug consumption during working hours is also of concern. “In our country this is considered a disease,” say Aguilar and Ramos. “This categorisation obliges the company to give the worker the opportunity to rehabilitate themself before executing a dismissal due to poor performance or consumption of these substances during work time.”

How long will remote working continue post-pandemic?

“With the exception of jobs for which a physical presence is indispensable, I envision remote working becoming the norm, rather than the exception,” says Ramírez in Guatemala, an opinion that Santos in Honduras agrees with.

“It is understood that employees will be obliged to resume their work at their workplace when the situation allows it,” she says. “However, the benefits of remote work for employers – which include the reduction of costs in energy, water, internet, and cleaning services, payment of rent, time flexibility, minimising the probability of facing accidents at work, among others – could influence companies to analyse the feasibility of permanent home working.”

“Nowadays, especially in Costa Rica, this modality that already existed before the pandemic is definitely here to stay,” say Aguilar and Ramos. “Many companies have made significant investments so that a large part of their payroll can remain in this mode once the effects of the pandemic have been overcome. There have even been initiatives and surveys that prove that more than 50% of both public and private sector roles can be remotely workable.”

What advice for multinational employers in the region?

“Transform!” offers Santos in Honduras. “Adapt to the new technologies and the new opportunities that they offer to achieve maximum performance from employees through remote work; implement fluid communication channels between your team; provide the appropriate tools to your employees; be empathic with the situations your employees may be going through at home; promote the training of workers; and, above all, consider that the legislation does not broadly regulate remote work, so regulate remote work within your own companies to have clear rules and avoid disagreements.”

“Innovate new ways of working,” agree Carrión and Guevara Lorío in Nicaragua. “Adapt to the regulations of each country. Analyse what areas of the organisation can be done under this mode. Make employees aware of carrying out their duties responsibly, just as they would in their workplace.”

“The pandemic and the convenience of working from home have introduced major changes in the way work can be performed by many employees,” says Ramírez in Guatemala. “Some of the changes impact directly in the work relationship itself and regarding the current working conditions as stated in the agreements signed by the employees. A thorough review of their internal rules and the current labour agreements is necessary to determine any changes needed to minimise or avoid contingencies from a labour standpoint, concerning indirect dismissal claims by employees or penalties imposed by the Inspección General de Trabajo.”

Experience has taught us that those companies that have invested in training their managers or workers have been more successful

“It is a good time to review and put in order the records and files of employees,” agrees Cordero Vindas for those employers with interests in Panama. “Define a planned strategy and a roadmap to adapt to teleworking from the legal and practical point of view. Communicate with employees to achieve the signing of the respective addenda and conditions of expenses that the company will assume without incurring excessive expenses that is or is not required by law. This is an agreement between the parties as long as the minimum required by law is met.

“Carry out a proper review and documentation of work equipment and tools available and delivered and supplied by the employer. Review the policies and scope of reimbursement of expenses on the benefits of internet payment, electricity, cellphone, or other types of connectivity of employees.”

“First, understand that each country has a different normative reality and, therefore, it is not necessarily feasible to apply global policies,” say Aguilar and Ramos. “For example, Argentine law provides that online payment is not a salary in kind, while in Costa Rica it is up for debate. It is always vital the measures implemented are in accordance with local regulations.

“Additionally, it is important that companies update their occupational health policies and develop and provide more resources to this area, in line with human resources departments. Experience has taught us that those companies that have invested in training their managers or workers with personnel under their charge have been more successful in managing and attending to all the different contingencies derived from the pandemic, so this is definitely an issue that is important to implement.”