Contributed By Ferrere Abogados
In the context of an M&A transaction, acquirers should be aware that employees who are terminated by the company have the right to receive compensation equal to one month's remuneration for each year (or fraction thereof) of service, up to a maximum of six months' remuneration. The employer is exempt from paying this compensation in the event of the employees' proven notorious misconduct. This amount increases in cases of dismissal during pregnancy, illness or occupational accident, for example.
If the target company is a free trade zone company, acquirers should bear in mind that, as a general rule, a minimum of 75% of the persons employed by such company must be native or naturalised Uruguayan citizens in order to maintain Free Trade Zone user status and the exemptions, benefits and rights granted by law. A recent law allows the reduction of this percentage upon Executive Branch authorisation, and also introduces certain flexibility for the services sector. Companies outside the free trade zone do not have such limitation.
The statute of limitations for labour claims is one year following the termination of employment, with five years retroactivity.