practice area articles


January 25, 2021

By Paulina Miranda

Back to International Employment Law




New Teleworking Act

A new law came into effect on 1 April 2020 providing legal protection to employees who work from home or from places other than the employer's premises. It includes the following provisions:

  • a definition of telework;
  • telework should be agreed in writing (either as part of an employment contract or in an addendum to the employment contract) and any relevant addendum may be terminated by the employer or the employee on at least 30 days' notice;
  • employees should have the flexibility to arrange their working day;
  • the right to disconnect for at least 12 continuous hours per day;
  • employers cannot force an employee to provide their own teleworking devices; and
  • employers are under an obligation to bear the operation, functioning, maintenance and repair of any teleworking equipment.

Employers were given a three-month period to adjust to these conditions in respect of any employees who are already teleworking.


Proposals to reduce weekly working time and increase pension contributions

New legislation to reduce weekly working time from 45 hours to 40 hours was in discussion when the COVID-19 pandemic started. It proposes to reduce the working week to 40 hours a week without a salary reduction. New legislation to increase pension contributions by 6% was also being discussed before the start of the COVID-19 pandemic. This 6% increase would be financed exclusively by the employer.


Protection of Employment during the COVID-19 Crisis

In order to protect employees and employment during the COVID-19 crisis, new legislation is being considered for the following matters:

  • suspension of the employment contract in the event of a mandatory lockdown without teleworking: this would permit the suspension of an employment contract by mutual agreement, in which case the employer will only be obliged to maintain the payment of social security contributions while the employee has access to benefits associated with unemployment insurance; and
  • temporary reduction of the working day: this would permit a reduction in the working day (and a proportionate reduction to employees' salaries in light of any benefits received by employees from unemployment insurance) if the employer is in serious financial distress.




Universal day care Bill to be introduced

Currently, mandatory day care is payable by the employer but is only available to dependent female workers with children of up to 2 years of age and in companies with 20 women or more. A Bill currently in Congress proposes to make this benefit available to both female workers (if they have a child under the age of two) and male workers that exclusively care for a child under the age of two, whether they are dependent or self-employed. The costs will be financed through an additional social security contribution from the employer of 0.1% of the monthly remuneration of every employee.


Reform to pensions system Bill

The Bill proposes employers pay a contribution of 4.2% towards retirement savings, (currently employees pay 10%, plus commissions). This proposal will result in an increase of the Company’s cost of employment. The Bill is still in very early stages of discussion, however, there is a general perception that the monthly contribution for retirement should be increased to provide employees with higher retirement pay.


Bill that sets a severance pay for project based contracts

Currently project based contracts do not grant severance pay upon termination. This Bill proposes a payment equal to 2.5 days salary for each month of service. This Bill has been debated for the past two years and there is still no certainty on whether it will be finally approved or not.

With thanks to Paulina Miranda of Philippi Prietocarrizosa Ferrero DU & Uría for her invaluable collaboration on this update.




Minimum Services in Case of Strike

A number of changes have been introduced as a result of Labor Reform, including restrictions on employers to substitute employees during a strike, and controversially the definition of minimum services. Minimum services are those functions or processes of a company that must be taken care of by the union during a strike. Minimum services must be agreed between the employer and the union before the collective bargaining process. If an agreement is not reached, the final decision lies with the Labor Board. The Labor Board has been very restrictive in its resolutions allowing only a small number of services in favor of the company.


Quotas for Disabled

Employers with 100 or more workers must hire or retain at least 1% of persons with disabilities or who are entitled to a disability pension under the social security scheme.

Companies who cannot comply due to the nature of the work or lack of people interested in the job, must take alternative action, including:

  • entry into contracts for the provision of services with companies that hire people with disabilities; and
  • monetary donations to projects or programs which provide training, rehabilitation and promotion for job creation, hiring or job placement of persons with disabilities.


Labour Reforms under New Government

A right/centre wing government under President Sebastián Piñera will assume power in March 2018 following on from the leftwing government of Michelle Bachelet. It is uncertain whether or not there will be material changes to legislation under the new government.




New labour reforms in relation to bargaining

All bargaining processes initiated from April 2017 will be subject to the new regulations.


Additional bills currently under discussion

In addition, there are a number of new bills currently under discussion which cover the following:

  • A proposed 1% quota of disabled employees in companies with more than 200 employees.
  • Special severance pay in case of termination of fixed term or project-based contracts: 2.5 times their daily salary per month worked if more than 15 days.
  • Legal severance in case of termination due to death of the employee.
  • Multiple functions: a company hired to perform any function must only perform functions of that kind and not any other.
  • Outsourcing: prohibition on outsourcing the main function of the company.




Enactment of labour reforms impacting the unions and the collective bargaining process

There was a new prohibition on employers replacing employees on strike (even with in-house employees) and the requirement of an agreement between the employer and the union to extend the CBA’s benefits to non-unionized employees.


Increase in employment litigation claims for discrimination and infringement of fundamental rights

Following the introduction a few years ago of a special procedure claims in relation to the infringement of fundamental rights and discrimination have increased greatly.

With thanks to Paulina Miranda of PMV Abogados for her invaluable collaboration on this update.


Image: Suzanne Horne
Suzanne Horne
Partner, Employment Law Department

Image: Kirsty Devine
Kirsty Devine
Associate, Employment Law Department

Image: Aashna Parekh
Aashna Parekh
Associate, Employment Law Department