Nearshore Americas

With Part-Time Employment Outlawed in Honduras, One BPO Gets Creative

It’s been over six months since part-time jobs were effectively outlawed in Honduras. Although short, the time has been rough for BPOs, which to this day find themselves scrambling for ways to stay afloat.

“We had to get creative”, said Michael Nasser, President and Managing Partner at Levanter Group, a BPO with operations in the Honduran cities of Tegucigalpa and San Pedro Sula. 

Like other BPOs in Honduras, Levanter was caught off-guard by the repeal of a law which regulated hourly employment. The law had been standing since 2014 and became a facilitator for businesses and workers in the industrial and services sectors, with call centers being among its major beneficiaries. 

The law was killed in early 2022, months after current President Xiomara Castro began her tenure. Approved by Congress in April and put into effect by the middle of the year, the decree which repealed the law effectively prohibits part-time employment, as well as any firings derived from the law being repealed. 

The decree justifies the repeal by pointing to what it characterized as an erosion of job security, workers’ wages and labor rights overall. It also made mention of “testimony of workers being laid off as full time employees to be eventually rehired under a part-time schedule, or being outright fired and replaced with part-time personnel”. 

Consequences have been severe for the services sector. Restaurants, hotels, retail stores and call centers, all of which depended heavily on part-time workers, found themselves without solid legal footing to justify their hiring practices. 

Call centers in particular have a workforce composed predominantly of students who use part-time employment to pay for their education or even support their families. Without a law that allows for hourly jobs, neither companies nor students have a legal avenue to strike a mutually beneficial agreement.

“It could impact industries such as hotels and restaurants, call centers and businesses which, by their nature, need to operate for more than 12 hours a day”—Jessica Handal, Senior Counsel at Dentons

“This mechanism was very appealing to companies which employed young students. Many call centers and providers of third-party services and BPO providers were using, for the most part, half-time bilingual agents”, Jacqueline Foglia, director of Honduras’ National Investments Council, told the press after the law was repealed. 

The blow goes beyond the talent pipeline. No part-time jobs means that companies have to hire full-time and provide all mandatory employment benefits. This includes paid vacations, building up seniority –which comes with benefits of its own– and salaries that can’t go below minimum wage, which sees yearly mandatory increases

“It could impact industries such as hotels and restaurants, call centers and businesses which, by their nature, need to operate for more than 12 hours a day”, commented Jessica Handal, Senior Counsel at law firm Dentons. “For now, they have no alternative other than paying minimum wage and providing mandatory benefits”.

Twisting in the Air 

The prohibition of hourly employment pushed Levanter Group into a game of creative legal interpretation. 

According to Managing Partner and President Michael Nasser, around 70% of the company’s workforce was employed under a part-time agreement. That is, they were allowed to work 20 hours a week instead of the 44 hour weekly schedule of full-time arrangements. Without a legal avenue for hourly jobs, Levanter had to think fast. 

Micahel Nasser, President and Managing Partnet at Levanter Group

“We converted these employees that were under a per-hour contract to temporary contract workers”, Nasser said in an interview with NSAM. “That’s how we were able to immediately retain those people without changing their schedules or impacting their lives in a significant way”.

Part-time workers were re-hired under a temporary agreement for six months, which allowed for a schedule of 20 hours a week. “But that was a temporary solution”, Nasser explained. Honduran labor law doesn’t allow temporary contracts to run beyond six months. A company can rehire a worker temporarily more than once, but there’s a mandatory waiting period of 90 days. Again, Levanter had to get creative. 

 “We would hire them under a permanent contract but pay them the equivalent of what an hourly rate would be under full time. So they get paid the same amount, but knowing they would work only 30 hours”, said Nasser. “We felt we could do that for anyone that could contribute 30 hours. Below that, the economics would not work”.

Levanter was able to incorporate around 80% of their part-time employees into the 30-hour schedule, according to Nasser. Unfortunately, part of the workforce was unable to accommodate for the new schedule and had to part ways.

In spite of the rocky road, Levanter has been able to stay afloat. Nasser assures, although it had to endure a moment of apparent freefall, the company was able to land on its feet.

“We would hire them [part-time employees] under a permanent contract but pay them the equivalent of what an hourly rate would be under full time. We felt we could do that for anyone that could contribute 30 hours. Below that, the economics would not work”—Michael Nasser, President and Managing Partner at Levanter Group

Dwindling Options

Levanter’s case is not unique. Businesses from all sorts of industries were thrust into similar situations, scrambling for alternatives to absorb their part-time workforce into full-time arrangements without significantly affecting their bottom line.

“In some cases, employers had to resort to alternatives that lead to cost cutting measures in order to cover those new salaries and benefits while avoiding layoffs”, Jessica Handal said. “Nevertheless, many had to let part of their workforce go, and some were even forced to close down for good”.

The layoffs and the lost job opportunities resulting from the outlawing of part-time employment are expected to wreck havoc among the Honduran population and on the country’s economy.

Honduras is the second poorest country in the whole Western Hemisphere. Only Haiti finds itself in a more dire economic situation. It’s no surprise then that Honduran migrants account for a considerable chunk of border detainees and asylum seekers in the US border.

The hourly employment law provided many Hondurans with a chance for bettering their economic situation. Students used it to find part-time jobs which allowed them to support themselves and their families while remaining in school. It must be noted that in Honduras (and in much of Latin America), there’s a direct correlation between school desertion and socioeconomic status. The lower the socioeconomic standing of a student’s family, the higher the probablity of dropping out.

Single mothers also used the job opportunities granted by the law to support their families. Senior citizens, who are among the most vulnerable segments of the Honduran population, benefitted too.

At the time of the law’s repeal, around 70,000 people were contracted under an hourly agreement in the country, according to data by the Honduran Counsel of Private Enterprise. Local economists expect the repeal to show its impact on the national unemployment numbers and the volume of informal jobs.

Still Hopeful for Honduras

Honduras’ hourly employment law was repealed less than a year ago. Yet, entrepreneurs remain hopeful about the possibility of a new law which would allow for part-time work arrangements. 

“I see a great opportunity in cooperation. The Labor Ministry should listen to those entrepreneurs which made use of this mode of employment. They can still find a solution that works under the frameworks of the Labor Code and the ILO while remaining favorable to the unemployed youth”, Jacqueline Foglia stated to the press. 

Entrepreneurs like Nasser see margin for a law that regulates part-time employment differently depending on the sector. Different considerations should be made for manufacturing, for hotels, for call centers; nuance is required, he commented.  

Some fear that, in the long run, the lack of employment alternatives might have a negative impact on Honduras’ prospects for foreign investment. Nevertheless, other characteristics that tend to be appealing to foreign investors might provide a safety net for the country, at least for now.

“Honduras has many incentives for foreign investment, like its geographical proximity to the US, a well-trained workforce, neutral accents and a strong bilingual population”, pointed out Kathia Yacaman, Executive VP at GK Global. “This law did [the Part-Time Employment Law] not exist when call centers began operating 15 years ago. Besides, many companies already offered full-time contracts as a benefit even then”.

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Last year, Honduras’ Liberal Party drafted a new bill that would allow part-time employment in the country. The bill has yet to make its way into Congress. Still, there remains heavy opposition against it among labor groups.

Though hopeful, many BPOs are resigning to the reality that part-time employment is just not a simple proposition any longer. 

Cesar Cantu

Cesar is the Managing Editor of Nearshore Americas. He's a journalist based in Mexico City, with experience covering foreign trade policy, agribusiness and the food industry in Mexico and Latin America.

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