The labour reform bill that is under discussion in Congress will be revised to facilitate its approval. The bill will introduce several amendments to the Labour Code concerning collective bargaining and unions. Objections have been raised during the legislative procedure by the business sector in the context of the existing economic climate (ie, low economic growth, low investment, the depreciation of the Chilean peso and the low price of minerals, especially copper).

The aim of this initiative is to strengthen the collective bargaining power of unions and simplify and improve bargaining procedures. Hitherto, Chilean law has considered negotiations as procedures that can take place only within a company. The original bill also considered the possibility of intercompany negotiations. The minister of finance, who has been entrusted with the task of improving the country's economy, has proposed to intervene in the legislative process to ensure that the bill secures broad approval.

Among other issues, the reform addresses the following:

  • Categories of employee excluded from collective bargaining – the categories of employee that cannot engage in collective bargaining will be reduced. As a result, apprentices, temporary workers and employees in managerial positions will be entitled to engage in collective bargaining.
  • Bargaining power of unions – the reform aims to centralise the right to engage in collective bargaining in unions, excluding the possibility of non-unionised employee negotiating groups. Further, the possibility of engaging in intercompany bargaining (with more than one employer at a time) will also be recognised. This is one of the reform's most hotly contested issues.
  • Right to benefits negotiated by a union – the results of a collective bargaining process benefit union members and those who join the union after the process has been finalised. Non-unionised employees can benefit from the results of the collective bargaining process only if the union and the employer agree to extend such benefits to them and the employees who will receive these benefits accept the full deduction of union membership fees. If the employer extends the benefits in question without fulfilling the above conditions, the extension of benefits will be considered an anti-union practice, subject to penalties.
  • Information rights – the employer's obligation to provide timely, complete and up-to-date information about the status of a company for the purposes of collective bargaining will be expanded. The employer will be obliged to provide periodic information such as an annual tax return, a balance sheet, financial statements or audited financial statements and information that the company must make available to the securities regulator and the general public under law, if applicable.
  • Collective bargaining procedure – the procedural rules of collective bargaining will be simplified, with increased use of mediation and arbitration.
  • Negotiation tools – the consequences for parties in the event of strikes will be revised. At present, the employer has the right to hire replacement employees under certain conditions when employees go on strike. In another controversial provision, the bill eliminates that possibility, but provides that unions will be obliged to provide the staff needed to meet minimum service requirements through emergency teams.
  • Negotiable matters – matters that can be subject to collective bargaining will be expanded (eg, working hours and time off, overtime, welfare services and training).
  • Other matters – the bill also considers gender equality measures - in particular, the obligation to provide information regarding differences in pay between male and female employees and the participation of women in collective bargaining.

The government has stated that the more controversial aspects of the bill will be subject to review as well as new proposals in order to achieve consensus among members of Congress.

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

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