PAYMENT OF SALARIES IN FOREIGN CURRENCY IN BOLIVIA: ANALYSIS BASED ON LABOR LAW PRINCIPLES

LEGAL FRAMEWORK AND RELEVANT LABOR PRINCIPLES

GENERAL LABOR LAW AND SUPREME DECREE NO. 7182

• Article 53 of the General Labor Law: States that salary payments must be made in the legal currency of Bolivia, i.e., in bolivianos.
• Supreme Decree No. 7182 (1965): Prohibits foreign currency payments in the public sector but does not explicitly ban them in private companies, as long as they are contractually agreed upon and benefit the worker.

APPLICABLE LABOR PRINCIPLES

• Indubio Pro Operario
• Primacy of Reality: When there is a discrepancy between what happens in practice and what is stated in contracts, the actual situation prevails.
• Most Favorable Condition: When several interpretations of a rule exist, the one most favorable to the worker must be applied.

APPLICABLE LEGAL FRAMEWORK

GENERAL LABOR LAW (LGT)

Article 53 of the LGT establishes that salaries must generally be paid in the legal currency of Bolivia (bolivianos), reinforcing the requirement to use national currency in salary-related transactions.

SUPREME DECREE NO. 7182 (1965)

This regulation prohibits salary payments in foreign currency within the public sector. However, it does not explicitly ban such payments in the private sector, leaving room for legal interpretation.

LABOR RIGHTS GUIDE FROM THE MINISTRY OF LABOR

According to the October 2020 edition of the official guide published by the Ministry of Labor, salaries must be paid in legal tender unless the employment contract explicitly states that the salary will be paid in foreign currency. This implies that, in the private sector, the parties can agree on foreign currency payments, as long as it benefits the worker.

NORMATIVE INTERPRETATION AND LABOR PRINCIPLES

Bolivia’s current economic situation, marked by currency depreciation against the U.S. dollar, directly affects the purchasing power of workers. Prices of imported goods and dollarized services are rising, leaving workers with fixed salaries in bolivianos increasingly vulnerable.

Example: A worker earning a fixed salary in bolivianos may see their ability to afford basic needs such as food, housing, and utilities significantly reduced due to inflation and currency devaluation.

INTERPRETATION OF THE PROHIBITION IN SUPREME DECREE NO. 7182

The decree primarily regulates public institutions. Based on the principles outlined below, this opens the possibility for private companies to pay salaries in foreign currency, provided the agreement is contractual and benefits the worker.

APPLICATION OF THE PRO OPERARIO PRINCIPLE

In cases of legal doubt, Bolivian labor law mandates that rules be interpreted in favor of the worker. Thus, if payment in foreign currency enhances the employee’s economic stability or improves their purchasing power, it should be considered valid and consistent with labor rights.

APPLICATION OF THE PRIMACY OF REALITY PRINCIPLE

Even if the law states that salaries must be paid in bolivianos, the current economic reality demands measures to protect workers’ purchasing power. Payment in foreign currency—or indexing the salary to the exchange rate—better reflects this reality and ensures fair, economically adjusted compensation.

APPLICATION OF THE MOST FAVORABLE CONDITION PRINCIPLE

In this context, paying salaries in foreign currency or adjusting them based on the exchange rate may be the most favorable option for the worker because it:

• Protects purchasing power from inflation and devaluation
• Ensures salary value remains constant despite currency fluctuations
• Promotes economic stability for the worker and their family