Labour regulations in Bolivia have created a worker-friendly environment with protections to help the workforce. While this is beneficial to employees, it brings many challenges to employers, especially when it comes to dismissing underperforming employees.
HR rules and regulations are among the reasons that Bolivia ranks as one of the most complex countries in the world to do business in, according to TMF Group’s Global Business Complexity Index 2023. Understanding the local laws and how to correctly create an employment contract can greatly help your business.
Importance of the employment contract
Before 2006, an employer could dismiss an employee without cause, but today the burden of proof is on the employer, and any dismissal or warning must be justified. A good employment contract can help to outline the rights and responsibilities that must be complied with by the worker and the company.
Before an employee begins their role within a company, the employer must create an employment contract which makes reference to employee performance. This contract must very clearly state the rights and obligations that the employee has towards the company and the rights and obligations that the company has towards the employee. It must also conform to the General Labour Law, which regulates employment in Bolivia. Stipulations of poor or low performance should be included in the labour contract.
Bolivian labour laws now state that the employee has the right to be reinstated when the cause of dismissal is not properly justified by the company. The company must prove the employee’s poor performance based on the Decree. If it is not properly justified, the worker goes to the Ministry of Labour and requests their reinstatement to an inspector, which starts the process. Reinstatement, in this situation, is mandatory within three working days.
Dismissing an employee
When dismissing an employee in Bolivia, employers must comply with the sanctions included in Article 16 of the General Labour Law, or Article 9 of the Regulatory Decree. These outline the process for justifying that the worker has not complied with their contract before the Ministry of Labour.
Bolivia’s Ministry of Labour rarely accepts the grounds for disciplinary dismissal, unless there is a work regulation in the company approved by the ministry. However, if an employee is not reinstated through this process and is dismissed, they will receive a ’desahucio’, equivalent to three months’ gross salary, to help them find another job or re-enter the labour market.
Prior to a dismissal, an employer can document the low performance of an employee through warnings, which are submitted to the Ministry of Labour. After the third warning, the employee can be immediately dismissed. Dismissed employees are also entitled to the annual bonus that Bolivia grants based on the country’s internal GDP. This amount will have to be calculated along with accumulated holiday pay.
How TMF Group can help
Firing an under- or poor-performing employee in Bolivia is not easy, but having a comprehensive employment contract prior to employment helps with the process. The experts at TMF Group Bolivia know how to draft labour contracts correctly, so that performance can be properly justified and the correct severance payments are outlined to help ensure agreement by all parties involved.
TMF Group can help you to handle the HR administrative burden, even for those employees in remote and smaller offices. We can help keep you compliant locally, handling essentials such as the employee handbook and workforce audits, providing regulatory and local compliance updates, and preparing and submitting reports.
With operations worldwide, TMF Group can support your employees throughout their time with your company – from getting started all the way through to moving on.
Download a copy of this eBook to discover:
- why employee onboarding is critical to talent management strategy
- the importance of supporting employees in-country
- examples of global variations in workplace laws and customs.
If you’re looking to outsource your HR administration, check out our HR Administration Services. With capability in over 100 countries, we can help you handle your local HR administration and compliance – globally.