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08 January 2014
In 2002 Colombia began the process of integrating its economy into the globalised world. This resulted in the need for broad institutional transformation. The Labour Law was not excluded from this process – particularly in matters relating to the recruitment of personnel through third parties.
Although the decision to modernise and participate in the world economy had been taken in the 1990s, problems relating to security, drug trafficking and governability impeded the realisation of this goal. Having overcome many of these difficulties, Colombia now has the proper milieu to compete in the international trade of goods and services. In seeking to internationalise its economy, Colombia decided to diversify its exportable products and markets and obtain preferential access. Free trade agreements were chosen as the vehicle by which to launch its new international trade policy.
Of all the free trade agreements signed by Colombia, the most important is that signed with its main trading partner, the United States. Negotiations concluded in 2006, but the treaty was not ratified by the US Senate until five years later because the Democratic Party had requested the treaty to be adjusted in favour of protecting labour rights. The United States wanted to ensure that Colombia was in a position to guarantee labour rights.
The purpose of including labour matters in a free trade agreement is to prevent social dumping. Social dumping consists of artificially lowering the price of products or services through the avoidance of labour rights payments that are legally due. Having a strong chapter on labour rights is of particular importance when negotiating with a developing country that has a large labour force, a significant percentage of which is willing to work for low compensation.
In order to move ahead with the free trade agreement, in April 2011 the US and Colombian governments signed Colombia's Labour Action Plan, which was a separate instrument to the free trade agreement, but which constituted a pre-condition for entry into force of the agreement. The plan established certain measures to be taken within specific timeframes to guarantee Colombia's implementation of international labour standards. These measures included:
In addition to these points, the plan included specific commitments regarding cooperatives and temporary service agencies.
Labour cooperatives are a legal instrument through which individuals come together to form a common enterprise, providing either capital or workforce, towards a common purpose and expecting a mutual benefit. However, this instrument was abused to avoid the formal constitution of a worker-employer relationship and the payment of certain labour rights that result from such relationship. In 2010 Law 1429 (and complementary Decree 2025) was established to regulate cooperatives to prevent such fraudulent uses. Its entry into force was set for mid-2013; however, the plan demanded that it enter into force in 2011.
Law 1429 drew a clear line in establishing that personnel required for permanent core functions cannot be contracted through cooperatives or any other intermediary. 'Permanent core functions' are defined as those which are related to the production of goods or services that are characteristic of the enterprise. The law also established significant fines for both cooperatives and the party that contracted with them should they breach the regulations therein. The new Labour Ministry is responsible for controlling application of the law and informing workers about the new regulation, their labour rights and the course of action to take in order to effect them.
Temporary service agencies are businesses that provide services to other companies by contracting out their own employees to clients for a determined period of time. As with cooperatives, this instrument was often unfairly used to avoid the formal creation of a worker-employer relationship and the payment of labour rights that resulted from such relationship. Temporary service agencies are long established; as such, there was already regulation in place intended to prevent such abuses, the most recent being Decree 4369/2006. This decree established that temporary service agencies can be used in only three circumstances:
The plan focused on a regime for the effective application of the regulation already in place. This involved training labour inspectors, a mechanism to monitor and report inconsistencies and the adoption of more severe penalties.
The implementation of the Labour Plan made the entry into force of the US-Colombia Trade Promotion Agreement possible; the agreement came into force on May 15 2012. Although in this context the protection of labour rights was never a priority for Colombia, it was strengthened as a result of the pursuit of economic interests. Economic internationalisation not only transcends political boundaries between countries, but also transforms the legal institutions therein, particularly labour laws.
For further information on this topic please contact Carolina Solano Medina at VS+M Abogados by telephone (+57 1 610 6180) or email (firstname.lastname@example.org). The VS+M Abogados can be accessed at www.vsmlegal.com.
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Carolina Solano Medina