You are currently viewing The Economic Advantages in Guatemala. What They Are and How They Work

Without a doubt, the so-called "economic advantages" represent a mystery for many employers; how to provide them to their workers without representing any risk in personnel management.

An economic benefit is a non-monetary contribution provided by the employer to employees by virtue of the provision of their services for their company or place of work.

It is very common that some companies are not willing to offer high salaries to their employees, but it is more affordable to offer them certain non-monetary remunerations for their services.

For example, a parking space, a cell phone, even family health insurance among other benefits.

This encourages an employee to accept offers of employment where he/she is offered such remuneration in kind and during his/her work performance the employee works more motivated for the benefit of the company or workplace.

The mystery lies in the fact that our labor legislation does not clearly explain what the economic advantages represent, their scope and their consequences, but only limits itself to establishing that they constitute "thirty percent of the amount of the salary earned, unless otherwise agreed".

This means that, if no clarification is made in an individual employment contract or in any collective bargaining agreement, it is understood that what the employee receives in cash represents only 70% of the salary earned and the other 30% represents the so-called "economic advantages".

The foregoing may represent a high risk when a judge makes a settlement on how much should actually be paid to a worker as compensation and damages, in the case of judicial labor proceedings for dismissal without just cause.

Labor judges have full power to decide what does and does not represent an economic advantage.

Although it is up to the employee to prove in court that he/she did enjoy such benefits, judges, having proven that the employer granted benefits in kind, can increase the salary earned by 30%, and thus cause even greater economic contingencies to the employers, originated by the employer's good will to provide such incentives.

This can be better managed by including in an individual contract, agreement or covenant a percentage lower than the 30% recognized by our labor legislation, since such legislation mentions "unless otherwise agreed".

Therein lies the solution, to record this agreement to the contrary and not fail to provide the worker with such benefits that in the end represent an added value to the service provider for his work, improving his performance, increasing his productivity and helping to give the company or workplace a better image so that it can fulfill its purposes.

In conclusion, the economic advantages can be economically advantageous to both the employee and the employer, as long as they can be administered correctly and set real percentages according to each particular case.