This is an Update of: Venezuela Announces New Minimum Wage And Meal Benefit Increases
On April 29, 2016, Venezuelan President Nicolás Maduro announced a 30% increase in the monthly minimum wage, effective May 1, 2016. President Maduro also announced an increase in the meal benefit, which will now be three and a half tax units1 per day.
Minimum Wage Increase
The new minimum wage has been set at 15,051.15 Venezuelan bolivars (VEF 15,051.15) per month (currently, approximately $39.88 USD in accordance with the government rate and approximately $13.49 USD in accordance with the exchange rate established by the market through foreign exchange agencies), and 501.71 bolivars (VEF 501.71) per day (currently approximately $1.33 USD in accordance with the government rate and approximately $0.46 USD in accordance with the exchange rate established by the market through foreign exchange agencies).
The minimum wage must be paid in cash. No other type of payment can be counted as part of the salary.
Fixed Amount for Mixed Salary
The fixed amount for an employee who receives a mixed salary2 cannot be less than the new minimum wage. For example, if an employee receives a fixed salary plus a variable salary or a fluctuating salary, this amount must not be lower than VEF 15,051.15 per month.
Minimum Amount for Pensions
The new minimum wage will also apply to pensions paid by the Venezuelan public administration and the Venezuelan Social Security Institute ("Instituto Venezolano de los Seguros Sociales" or IVSS).
An equivalent fraction for time worked will be paid pursuant to Article 172 of the Venezuelan Labor Law (known by "LOTTT," the labor code's acronym in Spanish).
Impact over Social Contributions and Employee Benefits
The economic impact of the minimum wage increase on social contributions and employee benefits under the Venezuelan labor regime is as follows:
Benefits Caps for Benefits March 1, 2016 Day Care Five times the minimum wage Workers who earn a monthly salary equivalent to or lower than VEF 75,255.75 are entitled to a daycare benefit. Employers must pay 40% of the minimum wage per month, which is the equivalent of VEF 6,020.46, in order to comply with the benefit. Payments are made directly to the institution providing the child care and are not deemed part of the employee's salary. Contributions Caps for Contributions March 1, 2016 Social Security Five times the minimum wage Both employers and employees must contribute monthly to...