During the discussion of the Labour Reform Bill in Congress and following its approval by both chambers, a group of Congress members filed a constitutional complaint before the Constitutional Court.(1)

The court's decision was made public on May 9 2016. The court ruled that two of the bill's core provisions (union entitlement and the extension of benefits of collective bargaining agreements) were unconstitutional.

Under union entitlement:

  • non-unionised negotiating groups are excluded from collective bargaining;
  • each union negotiates collectively on behalf of its members;
  • employees may join and leave unions freely; and
  • employees who are subject to a collective bargaining agreement negotiated by a union may leave the union, but remain linked to the agreement until it expires and must continue to pay union dues during that time.

The rationale behind the decision to find union entitlement unconstitutional was that, in the court's view, the right to engage in collective bargaining belongs to employees and not exclusively to the union. As the union is authorised to engage in collective bargaining, the provision was found to be contrary to the legal principle of:

  • equal treatment;
  • freedom of association; and
  • freedom to participate in unions.

The court stated that "a legislative development cannot transform a constitutional right guaranteed to all individuals apart from in exceptional cases". This argument points to the fact that, in practice, non-unionised employees will lose the right to engage in collective bargaining and will thus be forced to become unionised in order to benefit from collective agreements.

The automatic extension of the benefits of collective bargaining agreements merely due to union membership was also found to be unconstitutional on the grounds that it violated the constitutional provisions on freedom of association, freedom of work and the right to develop economic activities.

Other provisions of the bill that were challenged included the obligation to provide information regarding the financial condition of a company and the possibility of engaging in inter-company bargaining; however, the court rejected these additional objections.

For further information on this topic please contact Germán Segura at Montt y Cia SA by telephone (+56 22 233 8266) or email (gsegura@monttcia.cl). The Montt y Cia SA website can be accessed at www.monttcia.cl.

Endnotes

(1) For further information on the Labour Reform Bill please see "Status of labour reform bill".

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