The salary cap established by the Executive Branch in the Budget Law not only generated headaches in various agencies because it was difficult for them to retain some officials, but also forced the State to reach monetary agreements because the workers did not accept the salary reduction imposed by the regulations.
The law established that no natural person who provides personal services to non-state public law persons or state-owned entities in which the State or any public entity has a majority share (…) may receive permanent monthly salary income higher” than the salary of an Undersecretary of State. That’s a nominal $263k.
In any case, the rule itself enables agencies to ask the Executive Power for exceptions to exceed that limit. This empowerment led to the government receiving at least a few 130 salary cap exception requests so far this year.
But beyond the exceptions, some employees did not accept the salary reduction and forced the agencies to negotiate an exit. Both in the National Development Corporation (CND) and in the National Development Agency (ANDE) there were cases in which they had to reach an agreement with officials who decided to leave after the cap imposed by the government. In those cases, not only were they paid the liquidation that corresponded to them for their departure, but other amounts were agreed upon.. The agreements reached were different in each case, according to a survey carried out by The Observer.
At ANDE there were at least three resignations due to the cap imposed and in some of those cases exit agreements were negotiated, while at the CND there was at least one case in which it had to be negotiated.as reported to The Observer the opposition director Alfredo Asti.
In the current labor legislation, if a company decides to reduce the salary of an official, the affected person can accept a partial dismissal -for the amount that is lowered- or can consider a change in the conditions and allege an indirect dismissal, for which the company would be obliged to pay compensation.
After all these inconveniences generated by the cap, the The Executive Branch decided to reverse the imposed cap and included an article in the Rendering of Accounts that is being studied by Parliament in which that limit is increased by $200,000.. The maximum amount will be 60% of what the president receives, which is subject to montepío (about $463,000).
The crossroads of the INIA
The National Institute of Agricultural Research (INIA) was the body that requested the most exceptions, with 31, but never received a response from the Executive Branch. That created a problem for the agency when it came to paying the salaries of those who exceed the cap.
On the one hand, the agency is required to comply with the current cap ($263,000) but on the other hand, so far it has not received a response from the Executive Branch regarding the exception requests.
In this context, the salary receipt of people who are paid above the ceiling has two sections: one with the salary up to the limit and another with the supplement that is computed as an advance of a possible partial dismissal that would materialize in the event of that the government does not accept the exception request.
Namely, officials continue to receive the same salary as in 2021 but with that difference in the salary receipt.
However, in six cases the advance they are paying has already completed the amount that would correspond to the partial dismissal and the INIA does not know how to proceed to continue paying those salaries, according to sources from the agency. The Observer.
In the research institute they are waiting for some signal from the Executive Branch because in the event that the change in the Rendering of Accounts is approved, which would allow them to continue paying salaries in a normal manner, it only begins to take effect from January 2023 .
