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Landmark Ruling by the National Court of Justice on Key Elements in an Employment Relationship

Ab. Cristina Guarderas B.

Message from the Head of the Labor Department: Important Legal Update

 

Dear friends and clients,


We hope this message finds you well. We would like to share pertinent information regarding a recent ruling issued by the National Court of Justice's Labor Specialized Chamber on June 9, 2023. The National Court validates the existence of an employment relationship despite a civil contract.


In the case under review, a former employee filed a labor lawsuit to claim unpaid wages, severance pay, and other benefits dating back to 2005. However, the defendant argued that the relationship between the parties was governed by a civil contract established in 2015 and that there was no actual employment relationship.


The National Court of Justice carefully analyzed the evidence presented and established the criteria that determine the existence of an employment relationship in this specific case:

  1. Agreement between the parties: The existence of a bilateral agreement prior to the formation of the civil contract was demonstrated.

  2. Provision of lawful and personal services: The plaintiff provided lawful and personal services in a specific role designated by the employer, carrying out activities in compliance with current regulations.

  3. Subordination and dependence: The employee was subject to specified working hours and was under the direction and control of the employer, fulfilling the duties assigned.

  4. Payment of remuneration: The plaintiff provided evidence of receiving a monthly compensation throughout the entire duration of the relationship, both during the period classified as contractual and the one identified as an employment relationship.

Based on the presence of these essential elements, the National Court concluded that despite the existence of a civil contract, an employment relationship effectively existed between the parties. The consideration of the civil contract as a simulation to avoid employer obligations led to a ruling where the former employer was ordered to pay the sum of US $345,639.37.


We find it important to share this case with you, as the National Court's criteria in this ruling aligns with previous judicial decisions. Therefore, we recommend considering these classic elements that characterize an employment relationship in any future actions related to personnel management.

We remain at your disposal for any inquiries or additional assistance you may require. We appreciate your attention and trust in our services.

 

We are here to help. Reach out to us at info@lmzabogados.com. We will be delighted to provide you with support.

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The content of this blog is provided for informational and educational purposes only and should not be considered legal advice. Regulations in Ecuador are subject to changes and updates that may affect the applicability and accuracy of the content published here. We do not guarantee that the information presented is accurate, complete or current at the time of reading. Therefore, past postings should not be construed as necessarily reflecting current regulations. We strongly recommend that you consult with our qualified attorneys for specific and personalized advice.

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