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Vested labor rights are a set of benefits, entitlements, protective regulations, and similar provisions established in favor of workers by the Political Constitution, labor legislation, international labor agreements, ministerial regulations or decrees, collective bargaining agreements, and bilateral agreements between employers and workers, as outlined in Article 1 of the Vested Labor Rights Act, Law No. 516.
Labor benefits are already established under our labor legislation. These vested labor rights cannot be impaired unilaterally or by mutual agreement with workers, as labor law limits or restricts the civil law principle of autonomy of will or contractual freedom. This is in line with the Preliminary Title, Fundamental Principle V of the Labor Code.
Furthermore, Fundamental Principle III of the Labor Code provides that while an employer may improve upon these minimum guarantees, there must be an agreement between the parties governing this extra-legal benefit; otherwise, it cannot be considered a vested labor right.
In this regard, national labor jurisprudence states:
"[...] it is crystal clear that the parties NEVER AGREED on the payment of any annual bonus. In this sense, Law No. 516, approved on December 3, 2004, and published in the Official Gazette No. 11 on January 17, 2005, establishes in Article 1 that vested labor rights are considered to be: 'For the purposes of the application and interpretation of this Law, 'Vested Labor Rights' shall be understood as the set of benefits, entitlements, protective regulations, and similar provisions established in favor of workers in the Political Constitution, labor legislation, international labor agreements, ministerial regulations or decrees, collective bargaining agreements, and bilateral agreements between employers and workers [...]'. Thus, the annual bonus claimed by the plaintiff from their former employer, not being part of the rights derived from labor legislation (Political Constitution, International Agreements, Ministerial Regulations or Decrees), nor from rights derived from the existence of the employment relationship itself (Collective Agreements, Employment Contract or Bilateral Agreements), constitutes a UNILATERAL act." (National Labor Court of Appeals. Judgment No. 414/2016).
From the above, it follows that if the Political Constitution, the current labor legislation, international labor agreements, ministerial regulations or decrees, collective bargaining agreements, and bilateral agreements signed between employers and workers do not establish a vested labor right, a unilateral contribution from the employer cannot be considered as such, even if it has been granted for a certain period of time.
Our labor legislation contains a minimum set of rights granted to workers, which are essential fundamental rights. Once recognized, these become nonwaivable rights that cannot be disregarded by the employer. As such, they are considered vested labor rights.
An example of a vested and nonwaivable labor right is the minimum wage and its mandatory application, as established by Article 3 of the Minimum Wage Act, which makes it clear that the minimum wage cannot be offset, reduced, withheld, or garnished, except for social security contributions, court-ordered family support payments, and other provisions established by law.
In this regard, national labor jurisprudence states:
"[...] since the minimum wage is vital, nonwaivable, not subject to the statute of limitations, mandatory, and not garnishable, the employer cannot exempt themselves from its fulfillment. As a result, the plaintiff's request is consistent with the law, and therefore the grievance is upheld. The last salary earned by the worker shall be deemed to be the minimum wage in effect on April 16, 2010, the date the employment relationship ended, which will be used as basis to calculate the severance pay in accordance with Article 45 of the Labor Code [...]" (National Labor Court of Appeals. Judgment No. 36/2012).
In our labor legislation, there are several vested labor rights that must be fulfilled by employers to avoid infringement thereof and facing legal processes where they may be subject to significant fines.
Francisco Cerda
Partner at Asesores Nicaragua
