The Puerto Rico Senate refused to give in to an Oversight Board demand on labor regulations, the latest episode in a struggle over policy measures intended to pull the territory out of recession and help in the payment of its debt.

The Senate on Wednesday voted 22-9 for a measure that would introduce at-will employment only for employees entering the workforce in the future. The Oversight Board had demanded a repeal of Law 80 — which since 1976 has allowed Puerto Rico employees to appeal terminations — for all of the island's workers.

The repeal of the law was part of a May 20 compromise between the board and Gov. Ricardo Rosselló over the board’s April-approved fiscal plan. The board agreed to drop the plan’s elimination of the Christmas bonus and reductions to mandatory vacation and sick days. In exchange, the governor agreed to introduce at-will employment on the island.

Puerto Rico Oversight Board President José Carrión III and board member Ana Matasantos.
Oversight Board Chairman José Carrión, left, said approval of "at-will" employment in Puerto Rico would improve economic growth.

In the agreement with the board, the governor said that he would approve at-will employment on or before June 27 and that the new status would become effective on Jan. 1, 2019.

Senators from the governor’s New Progressive Party voted in favor of the watered down termination law change. Members of the Popular Democratic Party, one member of the Independence Party, and one unaffiliated Senator cast the opposition votes.

“We said that we were not going to repeal Law 80 and we did not repeal it, we said that we were going to protect the workers and we are doing it, this remains clear,” said Senate President Thomas Rivera Schatz, a member of the NPP with the governor.

On Thursday the board said that the Senate’s action is “inconsistent with the understanding reached with the government and with the revised Fiscal Plan.”

It remains to be seen how the conflict over the employment laws plays out.

However, on Thursday, board Chairman José Carrión, said, “The [fiscal plan’s] fiscal and structural reforms, including the changes proposed by the governor which are contingent on the approval of legislation by the end of this fiscal year to make Puerto Rico an ‘at-will employment’ jurisdiction (repeal of Law 80) for current and new employees, will help return growth to our island’s economy.”

On Thursday the board released a re-certified fiscal plan with changes to labor reforms and other sections from the April-approved plan. If Puerto Rico’s government were not to repeal Law 80, the board could conceivably try to force the local government’s hand on the matter and also return to the April plan’s stricter approach on other labor policies.

The board said it agreed to the new re-certified fiscal plan by unanimous written consent.

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