This article is a summary of the most significant Chilean employment law changes and decisions in 2017.
By: Marcela Salazar
Firm: Munita & Olavarría
Minimum Wage adjustment (Law No. 20.935)
This Law (published in June 2016) established that as of 1 July 2017 the minimum wage for employees between 18 and 65 years old was CLP 270.000 (approximately USD 436). The Law also established that as of 1January 2018 the minimum wage for employees between 18 and 65 would be CLP 276.000 (approximately USD 445).
It is important to note that adjustments to the minimum wage have an impact on labour obligations such as legal profit sharing bonuses, overtime and other benefits agreed by the parties based on it.
Labour Reform (Law No. 20.940).
The main amendments included in the Chilean law reform regarding collective negotiation (published in September 2016 and effective from April 2017) are set out below.
Unions as the ‘principal subject’ of collective negotiation
Before the new law, the existence of a union at a company did not prevent groups of employees, united for the purposes of negotiation, from bargaining collectively with the company. The law does not establish negotiating groups. However, the Chilean Constitutional Court has recently recognised their right to negotiate, in companies, regardless of whether a union exists there or not. Nevertheless, there is still uncertainty in this matter, which is being discussed in our Labour Courts.
Extension of benefits
The law prohibits employers from completely or partially applying or extending the benefits of a collective agreement to employees who did not take part in the collective negotiation process, including those without union affiliation. According to the law, the extension of benefits to non-affiliated employees by the employer, without the consent of the relevant union, is considered an anti-union practice. The law provides that union membership gives all new members of the union the benefits of the collective agreement signed by the trade union as soon as they have communicated their affiliation to their employer. Benefits can only be extended to new union members with the approval of the employer and the union.
Extension of the union’s right to information
The employer must deliver the following information to unions:
- detailed compensation data for each unionised employee;
- compensation by position or function when there are five or more employees in the relevant position;
- balance sheet and financial results of the year;
- the investment plans of the company.
Right to information in companies with fewer than 50 employees
Companies with fewer than 50 employees must inform the unions about their income and expenses annually, in accordance with the applicable tax regime (within 30 days following the income tax declaration). In addition, the unions have the right to require information regarding payroll, benefits under the current collective contract and the global cost of the labour force over the previous two years, within 90 days prior to the termination of the current collective contract. The company will have 30 days to provide the information required by the union.
Minimum service and constitution of emergency teams
During a strike the union’s negotiating committee must enable personnel to carry out the minimum level of service necessary to protect the assets and operations of the company, prevent accidents, ensure the provision of public utility services and the basic needs of the public (including those relating to public health and safety) and ensure the prevention of damage to the environment or to public health. The definition of ‘minimum level of service’ should be agreed upon by the parties in preliminary negotiations. If no agreement can be reached, the matter should be resolved by the labour authority, and the decision will be appealable before a labour court.
Basic minimum for collective negotiation
The law establishes that an employer’s response to collective negotiation must include a basic minimum for negotiation. If a collective agreement is in force, the basic minimum for negotiation constitutes an offer with identical conditions to those established in the current collective agreement, excluding adjustments for inflation, real increases, pacts over special work conditions and benefits granted only as a consequence of the subscription to the collective agreement. If there is no collective agreement in force, the employer’s response may not be less favourable than the benefits that have been granted to the employees represented by the union in a regular and periodic form. If the employer’s response does not comply with this basic minimum standard, the minimum conditions will be treated as being incorporated in the employer’s response for all legal purposes.
Representation of women
The reform also includes provisions with a gender focus, establishing a minimum percentage of representation to promote the presence of women on union boards, as well as requiring the presence of at least one woman on negotiating committees during collective bargaining processes.
Measures to ensure employee security in dangerous and emergency situations (Law No. 21.012)
This law of June 2017 adds a new article to the Chilean Labour Code (article 184 bis). The article places the following obligations on the employer when there is a serious and imminent risk to the life or health of employees in the workplace:
- Immediately inform all affected employees about the existence of such a risk, as well as the measures to be taken to eliminate or mitigate it.
- If the risk cannot be eliminated or mitigated, the employer must take all necessary measures for the immediate suspension of the affected work and the evacuation of the employees.
- If the authority orders the evacuation of the workplace due to an emergency, catastrophe or disaster, the employer must suspend activities in the affected worksite and proceed to evacuate all employees. Work must only resume when the employer can guarantee safe and appropriate conditions for work.
In addition, employees will be entitled to interrupt their work and, if necessary, leave the workplace when they consider, on reasonable grounds, that continuing to work implies a serious and imminent risk to their life or health. In this case the employee must report this fact to the employer as soon as possible. The employer must also notify the appropriate Labour Inspectorate that work has been interrupted.
Regulations on inclusion of the disabled in the workforce (Law No. 21.015)
This law of June 2017 introduces the following new regulations designed to ensure people with disabilities are included in the workforce.
Requirement to hire disabled workers
In companies with 100 or more employees, at least 1% of the total workforce must comprise disabled employees who are entitled to a disability pension under any applicable social security system. This obligation is also applicable to government agencies, state-owned companies and other public institutions listed in the law.
Alternative compliance method
Companies that are not able to comply with this hiring obligation for justified reasons may alternatively adopt any of the following measures:
- execute contracts for the provision of services with companies that employ disabled individuals;
- make monetary donations to projects or to association programmes, or to corporations or foundations referred to in article 2 of Law No. 19,885 (Donations Law), that is those working with the disabled and lower income groups.
‘For justified reasons’ should be understood to mean reasons deriving from the nature of the activities carried out by the company or when there is no disabled individual interested in the position in question.
Companies must not pay mentally disabled individuals less than the legal minimum wage.
Public sector hiring
In hiring processes within government agencies, state-owned companies and the public institutions listed in the law, where there are candidates of equal merit, disabled candidates will be preferred.
The Law states that the Ministry of Labour and Social Security must issue mandatory regulations setting out the procedures to comply with the Law. Two regulations were issued on 1 February 2018 (Regulations N° 64 and 65).
Regulation N° 64 (February 2018)
This mandatory regulation establishes obligations on companies with between 100 and 199 employees and a separate set of obligations on companies with over 200 employees.
From 1 April 2019, companies with between 100 and 199 employees will be subject to a hiring obligation, meaning that at least 1% of the total workforce must be made up of disabled employees or people who are entitled to a disability pension under any applicable social security system from 1 April 2019. This obligation is also applicable to government agencies, State-owned companies and other public institutions listed in the law.
Until 1 April 2021, these companies may comply with the Law through any of the alternative measures stated by the Law, without justified reasons. The alternative measures are the following:
- Execute contracts for the provision of services with companies that employ disabled individuals;
- Make monetary donations to projects or to association programmes, or to corporations or foundations referred to in article 2 of Law N° 19.885 (Donations Law).
For companies with 200 or more employees the hiring obligation applies from 1 April 2018. They will also be able to take the alternative compliance option without justified reasons, but only until 1 April 2020.
In addition, Regulation N° 64 regulates the following matters:
- It defines ‘disabled person’ and ‘person entitled to a disability pension’, indicating how that condition should be evidenced;
- It establishes the calculation process to determine the total number of employees in a Company. Once the number of employees is calculated, companies must notify the Labour Authority of the number of employees with a disability. In addition, the Company must register the employment contracts executed with individuals with disability on the Labour Authority website within 15 working days following its execution, as well as any amendments or subsequent termination. However, during the first year of enforceability of this obligation, companies will have a period of six months to register the employment contracts of disabled employees currently working in the Company.
- It establishes institutions to monitor compliance with the Law and regulates the applicable sanctions.
Regulation N° 65 (February 2018)
Regulation N°65 regulates the recruitment process for disabled workers, ensuring equal merit criteria apply. It also establishes rules to verify the management and hiring of disabled persons or individuals entitled to a disability pension in government agencies.
Paid leave for Civil Partnership ceremonies (Law No. 21.042)
From November 2017, when an employee is entering into a civil partnership, his or her employer must provide five days of paid leave. The employee can start this leave on the date of the celebration of the civil partnership or before or after that date. Previously no paid leave was granted in such cases.
Creation of insurance to finance caring for children with serious illness (Law No. 21.063)
This new law of December 2017 creates mandatory insurance for those caring for children suffering from certain serious diseases. The purpose of the law is to create insurance for parents, who need to support or take care of their children if they are affected by:
- cancer or conditions requiring an organ or bone marrow transplant;
- conditions that are in the terminal stage or phase of life;
- severe accidents with risk to life or of severe and permanent functional disability.
In case of cancer or organ or bone marrow transplants, the law grants parents a leave of absence from work of a maximum of 90 days during a period of 12 months. Parents of children over one and under 18 are entitled to this benefit.
In case of a child in with a condition that is in the terminal phase, the term of the leave of absence can be until the death of the child. Parents of children children over one and under 18 are entitled to this benefit.
In case of children affected by a severe accident causing risk to life or of severe and permanent functional disability, the term of the leave of absence for their parents is 45 days. Parents of children over one and under 15 are entitled to this benefit.
During this period, parents will receive a subsidy that replaces, totally or partially, their remuneration. In addition, the employer is not authorised to terminate their employment contract at will, or based on any company requirements.
To access this new insurance, parents will have to fulfil the following requirements:
- They must have a current employment contract relationship.
- They must have made at least eight social security payments during the 24 months before the leave period begins.
The insurance will be financed by, among other elements, a monthly contribution of 0.03% of the employee’s taxable income, to be paid by the employer. This contribution will be gradually implemented, starting with a 0.01% of the employee’s remuneration until the maximum contribution of 0.03% is reached in January 2020.