The Cuban government has introduced a regulatory change allowing directors of budgeted institutions to engage in direct economic contracts with their own employees for professional services, maintenance work, and similar activities, as outlined in Decree 162 of 2026, recently published in the Official Gazette.
This new regulation, approved by Cuba's Council of Ministers, amends Article 38 of Decree 127 "On Budgeted Institutions" to broaden the authority of the heads of these entities. Now, they have the capability to enter into direct economic contracts with their own staff.
Issued on July 24, 2026, and signed by Prime Minister Manuel Marrero Cruz, the decree took effect this Tuesday following its publication in the Official Gazette No. 91 Ordinary of 2026, on pages two and three.
Expanded Powers for Budgeted Entity Heads
The primary change is the explicit inclusion of the power for the head of a Budgeted Unit to "sign economic contracts for services or similar activities with their own workers, for the execution of professional activities, construction maintenance, and the like."
This new authority supplements those already recognized under Decree 127: efficient utilization of allocated material and financial resources, opening bank accounts, creating cost centers, signing general economic contracts, accessing any legitimate source of financing, and forming associations with other economic actors subject to prior approval.
Nature of Worker Compensation
The compensation received by workers under these contracts is not considered a salary but rather a payment for the agreed-upon service, and any disputes are handled contractually, not as typical labor conflicts.
The decree also clarifies that these contracts do not alter or remove the guarantees stemming from the worker's regular employment relationship with the entity, including health and safety guarantees.
Context and Motivations Behind the Decree
The decree itself explains its motivation: the National Assembly of People's Power approved 176 Economic and Social Transformations on June 18 and 19, 2026. Among these measures is allowing workers from within the entity—both in the business and budgeted sectors—to perform professional and construction maintenance activities through economic contracts.
Decree 162 is part of the legal framework supporting this package of reforms. According to Miguel Díaz-Canel, the government has sanctioned 215 legal norms to provide legal coverage for the 176 transformations; as of the end of October, 97.2% of the measures—171 out of 176—had their legal bases established.
Decree 127, now amended by Decree 162, was initially approved on May 5, 2025, establishing a general legal framework for the approximately 2,443 budgeted units operating in Cuba—hospitals, schools, and central administration bodies, among others—which employ over 50% of the active state sector workforce.
The First Final Provision of Decree 162 instructs the Minister of Justice to publish, within a maximum of 30 days from the decree's enactment, the updated, reviewed, and harmonized version of Decree 127 in the Official Gazette.
Understanding Cuba's Economic Reforms and Decrees
What is Decree 162 of 2026?
Decree 162 of 2026 allows directors of budgeted institutions in Cuba to directly hire their own employees for professional services and maintenance work through economic contracts.
How does Decree 162 affect Cuban workers?
The decree allows workers to engage in additional professional activities through contracts, providing compensation that is separate from their regular salary.
What are the implications of these economic reforms?
These reforms aim to increase economic flexibility and efficiency within budgeted entities, allowing them to better utilize their resources and workforce.