#DominicanRepublic 🇩🇴 #BDS_Article: Labor Code Reform Bill – A Significant Step Toward Labor Flexibility
The recent submission of the Labor Code reform bill by the Executive Branch marks a significant...
The recent reform enacted by the Legislative Assembly introduces significant changes to Articles 197, 200, and 202 of the Labor Code, modifying the rules governing the accrual and payment of the Christmas bonus (aguinaldo) to employees. While the reform seeks to modernize and clarify the applicable framework, it also presents practical challenges for companies in terms of immediate implementation.
According to the amendment to Article 197, the new vesting date for entitlement to the Christmas bonus is set as October 20 of each year. Accordingly, employees who have remained in continuous service through that date will be entitled to receive the corresponding benefit. This replaces the previous reference date of December 12, effectively advancing the point at which the right to the bonus is acquired.
The amendment to Article 200 establishes that the Christmas bonus must be paid between October 20 and December 20 of each year, with the employer determining the specific payment date within that window. However, the decree expressly provides that the payment may not be made after December 20. While this change offers greater administrative flexibility, it also requires employers to adjust their financial planning to meet the new deadlines.
As for Article 202, the reform provides that October 20 will serve as the reference date for calculating the Christmas bonus. In addition, if an employee is dismissed before that date, they will be entitled to a pro rata payment based on their length of service. This provision standardizes the criteria for calculating and settling the benefit.
However, these changes may prove troublesome for employers, particularly during the first year of implementation. Traditionally, the Christmas bonus was calculated on a December-to-December basis, reflecting a full calendar year. By moving the calculation date to October 20, a timing gap is created that may result in a double financial burden for companies, since the October-December period of the previous year was already included in the bonus previously paid.
As a result, employers may be required to pay an additional portion corresponding to those months, creating an unanticipated financial impact and potential inconsistencies in labor accounting.
This situation highlights the need for transitional regulations or interpretative guidelines to clarify how the new scheme should be applied without resulting in duplicate payments —thus safeguarding both the employees’ rights and the financial sustainability of companies.
Please contact us if you have further questions or require assistance regarding the proper application of this reform.
