1. In case of business closure and termination of the employment relationship, can the business schedule the payment of the severance agreement?

A: Employers and employees can agree on a liquidation payment plan beneficial to both parties, but employers cannot impose it unilaterally. It is important that the arrangement is made in writing and executed by both parties.

Furthermore, the severance payment is usually made in one, sole payment within 10 days following the termination of the labor relationship. If this payment is fractioned and scheduled, then it should be agreed and accepted in writing by the employee, and not unilaterally imposed by the employer, to reduce risks of future claims from employees.

  1. Is there a legal statute that allows businesses to suspend operations for a period?

A: Yes. After accrued vacations have been consumed, both parties may agree on the temporary suspension of the labor contract´s execution, which may be total or partial with respect to the basic contractual obligations, and individual or collective in connection with the number of employees involved. If partial, the suspension agreement may establish the minimal hours of work, if total then no hours may be agreed during the suspension. The suspension does not terminate the labor relationship.

There are several causes leading to a collective suspension, and all require the Labor Ministry´s previous approval, excepting a force majeure scenario which only requires to be duly demonstrated and a mutual agreement, between employer and employee, should be sought via a bipartite commission.

The current Covid-19 situation may be considered a force majeure case and given the lack of governmental orders or restrictions on this respect, employer and employees may organize the commission and agree on the suspension. All agreements should be in writing.

There is not a specific timeframe within which the business should remain suspended, but it is advisable that the suspension is effective only while the cause of suspension remains active, in this case, only while the Covid-19 crisis is ongoing.

  1. How can we support staff who choose not to work for now for fear of contamination?

A: The temporary suspension may be agreed by both parties, establishing an advance payment corresponding to a portion of the employee´s wage, to be discounted from the complete wage once the regular contract´s execution is resumed, or from the liquidation amount in the event of termination.

  1. Can the business send their employees on vacations? 

A: Yes. As a first option, employees can take their accrued vacations, Once the vacation period is over, then the temporary suspension could follow.

  1. Can the business reduce the employee’s salary or modify the payment structure?

A: Employee´s salaries are specially protected by the Nicaraguan labor law; therefore, any reduction of the salary or modification of the payment structure should be agreed and accepted by the employee in writing. In no event unilaterally amendment to the salary can be imposed by the employer.


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