• Published in the Supplement to Official Gazette Nº 820, dated August 17, 2016, regulating the Organic Law for the Promotion of Juvenile Work, exceptional regulation of the Work Day, Settlement and Unemployment Insurance, in effect as of March 28, 2016.

JUVENILE WORK

• Juvenile contracts are considered those signed by individuals between the ages of 18 and 26. They must be entered into in writing and registered in the Information System of the Ministry of Labor.
• In order to apply the benefit set forth in Article 34.3 of the Labor Code[1] (hereinafter CT), a first job will be considered for juveniles that have not had more than 6 months of a continuous full-time work relationship; likewise, substitution will be considered, and there will be no ability to apply the benefit in the event of replacement made to occupy the place of workers who have been fired or that have had an authorized exit from work against the employer.
• Companies with less than 50 employees are not subject to control with regards to a minimum percentage of juvenile employees.

Based on the activity, the minimum number of juvenile employees working at each company, with regards to the net increase in workers each fiscal year, is the following:

• Published in the Second Supplement to Official Gazette Nº 825, dated August 24, 2016.
• The aim of the agreement is to govern teleworking as a mechanism for rendering services in the private sector.
• Teleworking is a manner of rendering services from home during ordinary and special workdays, in which the worker performs activities outside of the employer’s facilities, provided the needs and nature of the work allow for this, making use of information and communication technologies for management, administration and control.

Teleworking could be:

• Full-time: when work is always performed outside of the employer’s facilities. The teleworker may go to the employer’s facilities when required by the employer.
• Part-time: Work is performed outside of the employer’s facilities up to a maximum of 24 hours per week, and the remaining hours are fulfilled in the employer’s facilities.
  The application of this form of rendering services is voluntary, and there must be a written agreement between the parties to implement this type of work. Teleworking may be included in the initial description of work, or it may be incorporated subsequently.
  This type of contract must include, in addition to the requirements established in the Labor Code, the following:
• A clear description of the work to be performed, conditions of performance, remuneration and other benefits, and information related to this type of work;
• Identification of the instruments to be used by the employer to supervise and control the work;
• Identification of the instruments to be used by the teleworker and determination of the party responsible for providing, installing and maintaining work equipment;
• The organizational unit that the teleworker belongs to, as well as an indication of the name and position of their immediate superior or other individuals who may be contacted regarding professional or personal matters;
• With regards to part-time teleworkers, the days in which the work will be performed under this regime, or the manner in which this is determined;
• Methods for presenting work reports; and,
• Other specifics regarding teleworking, depending on the work being performed.
• When a worker has become a teleworker, they may return to the modality of work initially agreed upon by agreement of the parties or at the request of one of the parties. In this case, save a contractual provision to the contrary, a minimum of 90 days must be respected for the teleworking commitment, and the communication to return to the initial modality of rendering services must be notified with at least 15 days’ anticipation to the other party.

We are glad to forward herewith the CORPORATE TAX GUIDE, LAWS AND PRACTICE IN ECUADOR, prepared by our firm and published by the prestigious entity Chambers & Partners, as a complimentary reference tool in this specialty.

Should you have any doubts or specific requirements, please do not hesitate to contact us; we will be happy to assist you.

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The Companies Law does not allow limitations to the shareholders’ right to freely negotiate their shares (Article 191)[1]. However, the reform of December 29, 2017, included in the same article an exception to this general rule[2], through agreements or covenants between shareholders (hereinafter “Covenants”).

The reform recognizes the validity of Covenants and expressly allows establishing conditions for the negotiation of shares. There is no other provision in the Ecuadorian legislation on this subject in addition to this norm.

Main points that we must know about the Covenants between shareholders:

* Can neither contravene the Companies’ Law, nor the company’s bylaws, and must have a lawful purpose;

* Can be subscribed by two or more shareholders;

* Are not opposable against third parties, but only for those who signed it;

* Cannot harm minority shareholders;

* Usually contain agreements on:

o Preferential acquisition rights for all or some of the shareholders;

o Obligations to assign or acquire shares when certain conditions are met (tag along, drag along or similar clauses)

o Joint selling right;

o Obligations not to increase participation in capital above a certain percentage,

o No competition with the company;

o Intermediation in the products of the shareholders;

o Composition and participation of the shareholders in the administrative bodies;

o Arbitration for conflicts between shareholders;

o Powers of the administrative bodies, quorums and majorities that are not regulated by the bylaws;

o Ways to exercise the rights of minority shareholders;

The Covenants are increasingly common and necessary for the development of companies in family businesses, new ventures or in companies that receive new shareholders and are ideal instruments that allow clear rules for all shareholders.

[1] “The right to freely negotiate shares does not allow limitations.”

[2] “Agreements between shareholders establishing conditions for the negotiation of shares will be valid, however, such agreements will not be opposable to third parties, without prejudice to the civil liabilities that may arise, and in no case they may undermine the rights of the minority shareholders.”