Extension of the benefit of reduction of employers’ social security contributions

By Decree No. 125/2013, duly published on February 6, 2013 in the Official Gazette, the Government has extended until December 31, 2013 the Tax Adjustment, Employment Promotion and Protection of Registered Employment benefit scheme, established by section 16 of Law No. 26,476.

The benefit involves a reduction of employers’ social security contributions (with the exception of health care and Work Risk Insurer contributions) regarding new employees.

The reduction consists of a discount of 50% of employers’ contributions to the social security system during the first twelve months and 25% during the second twelve months.

However, employers can not use this benefit regarding the following employees:

a) Those who have already been declared in the social security system and continue working;

b) Those who were declared in the social security system and after the termination of the employment relationship, are reinstated by the same employer within twelve months;

c) Those who are hired within twelve months from the termination without cause of a previous employment relationship that was registered at the social security system.

Furthermore, Employers will also be excluded from the benefit if unregistered employment is detected at the establishment and the benefit provided will be maintained as long as the total number of workers does not diminish up to two years after completion of the scheme. Nevertheless, according to Ministry of Employment and Social Security Resolution No. 3/2009, Employers will be able to maintain the benefit by hiring new employees within 90 days.

Likewise, Section No. 23 of the Law establishes that the benefit will be in force for 12 months from Law effective date. However the benefit may be extended by decision of the Government.

In these terms and by publication of Decree No. 125/2013, Government has extended the validity of the benefit, from January 1, 2013 to December 31, 2013.