CHILE: An Introduction to Labour & Employment

Practice Area Overview 

Amid the most important Chilean political and economic crisis of the last decade, our practice area has been in the eye of the storm between swift regulatory changes, emergency measures and the intensification of labour problems that we have seen since the so-called ‘Social Outbreak’ in October 2019.

Thus, the main challenge we have faced as specialised labour lawyers has been the acceleration of remote work. Whilst we saw this issue coming, we never expected it to happen so rapidly and by force, such as the change to a remote work modality and/or hybrid working patterns because of the pandemic.

Undoubtedly, clients have had to ask themselves some basic questions: What do the workers want? What does the company need? How can we continue to operate in a constant state of health emergency? The answers to these questions are varied, personalised and probably completely different compared to those from two years ago. Each company has a different reality, specific requirements, and different ways of working, so supporting them in a changing era is one of the main priorities nowadays and will continue to be one in the future.

The first point to note is that remote work versus face-to-face work is one of the contingency issues in vogue. Although some essential companies were not affected by the pandemic and continued to work face-to-face, most companies maintain one or more areas of their organisation under remote and/or mixed modalities of face-to-face and remote work. The risk of an imminent rebound from new variants means that flexibility remains as one of the key words when we talk about the return to face-to-face work. On the other hand, the good results in certain areas have led many companies to evaluate remote work systems on a permanent basis, which entails a detailed analysis of each productive sector to determine the advantages and disadvantages of this type of system, together with the way to regulate labour relations under this modality.

Furthermore, we find ourselves in a politically and economically critical scenario. We have already mentioned that we are going through what in our opinion is one of the biggest crises of the decade. This social and political crisis has been added to an economic crisis derived from the pandemic, which has our country in the midst of more doubts than certainties for now, especially with the imminent possibility of a new constitution. In this sense, without prejudice to the possibility of improvements in our social security system and workers' rights, it is inevitable that the possibility of change clashes with the stability that investors legitimately wish to maintain in their companies.

In line with the above, this crisis is compounded by the factor of unemployment and emergency state assistance, the pandemic economic mitigation measures have caused workers to literally drain their pension fund savings; either by necessity or for fun, thousands of Chileans have withdrawn their funds, reaching more than ten million people for the first withdrawal. This fact is key to the discussion that will take place regarding the change of pension systems, since, although the state has used this resource in the emergency, it will be the same that will have to find the means to support retirees without savings, otherwise, it will be sentencing the pensioner population to poverty.

Now, either for the reasons mentioned above, or because of the rise in informal entrepreneurship that the pandemic has caused, we can see a clear decrease in the workers' interest in primary jobs such as operators, salespeople, customer service, and so on. The supply of jobs far exceeds the demand in these positions, which has led companies to rethink the working conditions offered, the job profiles and the benefits in general that they can offer to new hires.

In addition, we have recently seen a sustained increase in the number of labour lawsuits. There has been an increase since the ‘Social Outbreak’, but the last year has been characterised by an increase in the volume of trials and the overload of work in the courts across the country, in addition to the challenges of virtual hearings.

Finally, another area that we foresee will be the subject of discussion during this period is collective bargaining, since the presidential candidates and members of the constitutional convention have expressed their proposals to modify our Labour Code regarding the incorporation of collective bargaining by branches.