Employment law in Chile
Employment Law in Chile is governed by a combination of statutory regulations, labor codes, and international labor standards. The Labour Code (Código del Trabajo) is the primary source of employment law in Chile, regulating all aspects of the employment relationship, including contracts, wages, working conditions, termination, social security, and dispute resolution. Additionally, Chile is a member of the International Labour Organization (ILO) and adheres to its conventions, which influence the country’s labor laws and standards.
Key Aspects of Employment Law in Chile:
1. Legal Framework:
Labour Code (Código del Trabajo): The Labour Code, enacted in 2002 and updated several times, provides the main legislative framework for employment in Chile. It regulates contracts, working hours, wages, benefits, termination, labor unions, and dispute resolution.
Social Security Laws: Chile has a private pension system governed by the Pension Fund Administrators Law (AFP Law), which mandates contributions from both employers and employees to individual retirement accounts. The Health Insurance Law (FONASA and ISAPRE) also governs contributions for health insurance.
Occupational Health and Safety Law: This law, together with regulations from the National Safety and Health Service (Superintendencia de Seguridad Social - SUSESO), ensures workplace health and safety standards.
Trade Union Laws: The Constitution of Chile and laws governing Trade Unions and Collective Bargaining protect workers’ rights to organize and engage in negotiations with employers.
2. Employment Contracts:
Types of Employment Contracts:
Indefinite-Term Contracts (Contrato de Trabajo a Plazo Indefinido): This is the most common type of employment contract in Chile. It does not specify an end date and is considered permanent unless terminated by either party.
Fixed-Term Contracts (Contrato de Trabajo a Plazo Fijo): These contracts specify a fixed duration, typically for temporary or seasonal work. Fixed-term contracts are limited to one year but may be renewed. If the contract exceeds one year, it automatically converts into an indefinite-term contract unless the employee is laid off.
Part-Time Contracts: These contracts involve fewer working hours than a standard full-time contract and may have different provisions for wages and benefits, depending on the working time agreed.
Probationary Period: New employees may be subject to a probationary period of up to 30 days, during which either party can terminate the contract with shorter notice.
3. Employee Rights and Benefits:
Minimum Wage: Chile has a national minimum wage, which is reviewed and set by the government every year. The current minimum wage, as of 2025, is set at CLP 500,000 per month (subject to change).
Working Hours: The standard working week is 45 hours over five days (typically 9 hours per day). Employees can work a maximum of 10 hours per day under special conditions if agreed upon in the employment contract.
Overtime: Employees are entitled to overtime pay for any hours worked beyond the standard 45 hours per week. Overtime pay is generally 1.5 times the regular hourly wage.
Rest Periods: Employees are entitled to at least 30 minutes of rest for a working day longer than 5 hours.
Annual Leave: Employees are entitled to 15 working days of paid annual leave for each year of service. After a 5-year period of continuous employment, the entitlement increases to 20 days. Leave must be taken at a time agreed upon between the employee and the employer.
Sick Leave: Employees who are sick or injured are entitled to sick leave with a medical certificate. The first 3 days of sick leave are unpaid, but after that, the employee is entitled to receive payments from the National Health Fund (FONASA) or their private health insurer (ISAPRE).
Maternity Leave: Female employees are entitled to 18 weeks of paid maternity leave (6 weeks before the expected date of delivery and 12 weeks after), with the right to return to the same position. Maternity leave is paid at a rate determined by the social security system, and contributions to the pension system continue during maternity leave.
Paternity Leave: Male employees are entitled to 5 days of paid paternity leave following the birth of their child.
Public Holidays: Chile recognizes several public holidays. Employees are entitled to a paid day off on these holidays. If employees are required to work on a public holiday, they are entitled to receive compensation at double their usual rate of pay.
4. Termination of Employment:
Dismissal: An employer may terminate the employment contract for just cause or for economic reasons. Just causes include severe misconduct, such as theft or violence in the workplace. In the case of economic reasons, employees may be laid off due to the employer’s financial difficulties.
Notice Period: The required notice period depends on the length of employment:
Less than 1 year: 30 days' notice.
1 to 5 years: 45 days' notice.
5+ years: 60 days' notice.
Severance Pay: Employees who are dismissed without just cause are entitled to severance pay, which includes:
Compensation: This includes one month’s salary for each year of service, with a maximum of 11 months.
Resignation: Employees may terminate their employment at any time with notice. If an employee resigns without notice, the employer can deduct the equivalent of the notice period from the employee’s final wages.
Redundancy: Employees who are laid off due to redundancy (company closure, downsizing) are entitled to severance pay, as outlined above.
Unfair Dismissal: If an employee believes they were unfairly dismissed, they can file a complaint with the Labour Court (Tribunal Laboral).
5. Workplace Health and Safety:
Occupational Health and Safety Law: Employers are required to provide a safe and healthy working environment. The National Safety and Health Service (SUSESO) monitors compliance with safety regulations and standards. Employees should receive training on safety protocols, and appropriate protective equipment must be provided where necessary.
Workplace Injuries: Employees injured in the course of their work are entitled to workers' compensation, which includes medical care, rehabilitation, and compensation for lost wages.
Workplace Accidents: Employers are obligated to report any workplace accidents to the relevant authorities.
6. Anti-Discrimination and Equal Opportunity:
Non-Discrimination: Chile's Labour Code prohibits discrimination based on gender, religion, ethnicity, disability, or other personal characteristics. Employees must be treated fairly and equitably in terms of salary, hiring, and promotion opportunities.
Equal Pay for Equal Work: Employees must receive the same pay for performing the same job, regardless of gender.
Sexual Harassment: Chile has laws prohibiting sexual harassment in the workplace. Employees who experience harassment have the right to file complaints with the Labor Courts or relevant authorities.
7. Trade Unions and Collective Bargaining:
Trade Union Rights: Workers in Chile have the right to form and join trade unions to collectively bargain for better wages, working conditions, and benefits.
Collective Bargaining: Unions engage in collective bargaining with employers on behalf of workers. Collective bargaining agreements may include terms for pay increases, working hours, job security, and other conditions of employment.
Strikes: Employees are allowed to go on strike, but the Constitution of Chile limits the scope of strikes in certain sectors, such as health and public services. A strike must follow certain legal procedures and be approved by the union.
Labour Courts: Workers or employers involved in a dispute can take the matter to the Labour Court (Tribunal Laboral), which resolves disputes between parties, including disputes over unfair dismissal, wage claims, and working conditions.
8. Social Security and Benefits:
Pension System: Chile has a private pension system (Administradoras de Fondos de Pensiones, AFP). Employers and employees both contribute a percentage of the employee's monthly salary to an individual pension account.
Health Insurance: Employees must also contribute to health insurance, either through the National Health Fund (FONASA) or a Private Health Insurance (ISAPRE). Employers are required to deduct the corresponding contributions from the employee’s wages.
Unemployment Insurance: Chile has an unemployment insurance system. Employees contribute to this insurance, which provides income support in case of job loss. The employer is also required to contribute to the fund.
9. Dispute Resolution:
Labour Courts: Employees or employers may bring disputes to the Labour Courts, which have exclusive jurisdiction over labor-related cases, including claims of unfair dismissal, wage disputes, and discrimination.
Conciliation and Mediation: Before filing a lawsuit, parties are encouraged to resolve disputes through conciliation or mediation. The Labour Directorate (Dirección del Trabajo) offers these services to help resolve conflicts between employees and employers.
Arbitration: In some cases, disputes may be referred to arbitration, where a third-party neutral arbitrator makes a binding decision.
10. Recent Developments:
Labor Reforms: Chile has introduced several labor reforms over the years to improve workers' rights, including proposals to strengthen union protections and address wage disparities.
Gender Equality: Chile has been focusing on addressing gender inequality in the workplace, particularly in terms of pay, promotions, and access to opportunities for women.
Remote Work: The rise of remote and flexible work arrangements has led to updates in labor law to accommodate changing work patterns and ensure fair treatment of telecommuting employees.
Summary:
Employment law in Chile is primarily governed by the Labour Code and other related regulations, which protect workers' rights regarding contracts, wages, working hours, social security, and termination. Employees are entitled to benefits such as minimum wage, annual leave, sick leave, maternity and paternity leave, and public holiday pay. Disputes between employees and employers can be resolved through conciliation, mediation, or the Labour Courts. Workers have the right to organize in trade unions, and collective bargaining is an important feature of
the Chilean labor market. The law also emphasizes workplace health and safety, anti-discrimination, and equal opportunity principles.
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