Sunday, August 1, 2010


Changes to employment law in Chile

By Pauline Miranda

Carey y Cía

Recent and future changes to employment law in Chile As in other countries, change has been always a key feature of Chilean employment law. Over the years, and particularly the last few ones, lawyers and clients have got used to even more frequent changes and adjustments to the employment law, both in minor and in material issues.

In many matters, these changes have brought better labor conditions, albeit at the expense of an increasing inflexibility in the labor market. We, as Chilean lawyers, have made up our minds that in labor matters long term planning is getting more and more difficult, since the law may change at any time.

Among the most significant recent changes in our labor system is the new labor law procedure. This new procedure dramatically changed the form in which the trials are conducted: from a mostly written to a mostly oral system. The new system has meant a significant reduction in the duration of the trials: from approx. 2 years to 2-3 months. Reduction in the duration of trials have implied in its turn, an increase in the lawsuits against employers, especially for unlawful termination under “business necessities”, a matter in which litigation was rather rare in the past if the employer was willing to pay the basic severance inherent to such termination.
A brand new procedure was also introduced: the Tutelage Procedure, designed to protect employees against violations by the employer of their “fundamental rights” meaning certain key constitutional and civil rights. Lawsuits for discrimination almost did not exist in Chile one or two years ago. Now it is one of the most frequent grounds for lawsuits against employers under the new Tutelage Procedure.

But that is not everything: New equal pay between women and men and the full week benefit (1/6 salary) for employees receiving salary and commissions are other examples of how labor conditions have changed in only a couple of years.

Current discussions on matters such as collective bargaining and the role of the unions, and the change in the definition of “employer” in order to expand its current scope so that all the companies forming part of a holding group can be deemed as one employer, are among the several significant changes that Chile may expect in the near future.

With the constant changes in the law, planning in employment law matters is becoming a significant matter for the clients, to whom the visionary role of the experienced employment lawyer is crucial.