While the now-repealed Article 2 of the Supreme Decree of March 9, 1937, allowed workers to either remain in their position or resign with compensation in the event of a salary reduction, today the concept of salary reduction is treated as a form of constructive dismissal. Supreme Decree No. 3770 of January 9, 2019, explicitly recognizes and prohibits this practice in Article 2:
ARTICLE 2 – (PROHIBITION OF INDIRECT DISMISSAL). All companies or workplaces under the labor regime of the General Labor Law are prohibited from applying indirect dismissal through salary reduction as a way of terminating the employment relationship.
LEGAL REMEDIES FOR UNLAWFUL SALARY REDUCTION
Administrative Procedure: The worker may file a complaint with the Ministry of Labor, Employment, and Social Welfare within three (3) months from the date of the salary reduction.
IS SALARY REDUCTION EVER PERMITTED?
While salary reductions are broadly prohibited, the law does provide an exception. Supreme Decree No. 3770, Article 3, allows reductions in pay only if there is a mutual agreement between employer and employee, and the reason is properly justified—for instance, due to financial restructuring or force majeure events.
In such cases, the worker’s informed and voluntary consent is required, and the employer must continue fulfilling all other labor obligations. Unilateral salary reductions imposed by the employer remain strictly prohibited.
If after reading this article you believe you need legal advice on the matter, contact one of our labor law specialists. We are here to help you.
Frequently Asked Questions (FAQs)
Is my employer allowed to reduce my salary without my consent?
No. Unilateral salary reductions are strictly prohibited under Bolivian labor law and may be treated as constructive dismissal.
Can I agree to a salary reduction if the company is undergoing financial difficulties?
Yes, but only if the reduction is mutually agreed upon, justified, and documented. Your consent must be informed and voluntary.
What should I do if my salary was reduced unlawfully?
You can file a complaint with the Ministry of Labor within three months or pursue legal action in labor court to recover your original salary.
The content of this article does not reflect the technical opinion of Rigoberto Paredes & Associates and should not be considered a substitute for legal advice. The information presented herein corresponds to the date of publication and may be outdated at the time of reading. Rigoberto Paredes & Associates assumes no responsibility for keeping the information in this article up to date, as legal regulations may change over time.
