Labour Reform: Chile’s 40-hour Bill moves forward
The social uprising and the public demand for change catapulted Gabriel Boric’s leftist government to power and sparked a historic shift in Chile, setting in motion a constituent process to draft a new fundamental charter, learn more with Chambers Latin America.
A tumultuous climate in Chile
This first attempt failed when in early September Chileans overwhelmingly voted against the proposed constitution. A tumultuous climate influenced by political, social, and economic factors, further weakened by Chile’s high inflation, sets the wider context for businesses operating in the country today.
We have found that lawyers in the Labour & Employment arena have been especially busy supporting clients through the political and economic uncertainty, which are the main challenges for Chile this year.
The 40-hour Bill in Chile
From a legislative point of view, the 40-hour Bill came up in our conversations with key practitioners in this practice area as one of the main projects of President Boric's agenda. Consequently, clients are increasingly and naturally seeking advice about the specifications of the project and the impact it may have on their businesses, should it become law.
Article 22 of the Chilean Labour Code currently establishes a 45-hour working week divided into a minimum of five and a maximum of six days. As it happens, Chile has some of the longest working hours in the world.
With that in mind, under the slogan “40 hours is quality of life,” Boric’s administration revived efforts to pass the 40-hour Bill in the Senate Labour Committee. The Bill has been stalled in Congress since it was introduced in 2017 during Sebastián Piñera's administration by then-parliament member and current government spokesperson Camila Vallejo, and it seeks to modify the Labour Code and reduce the working week to 40 hours. This is in line with statutory limits established in most OECD countries.
More countries implement 40-hour work week
One of the arguments in favour of implementing a 40-hour week is that it improves work-life balance and employees feel happier and more productive. We have seen examples of this in Spain and the United Kingdom, whose administrations have launched pilot programmes of a four-day working week. Most recently, the state of California changed the standard working week to 32 hours. It is worth noting that productivity, as one of the numbered benefits of the reduction in working hours, acquires greater relevance and raises another point for discussion given that worker productivity levels in Chile are currently low in comparison with other OECD members.
The Executive introduced a set of amendments to the proposal, some of which were unanimously approved by the Committee. The Committee considered a four-day working week and detailed who would be excluded from the reduction, including people holding senior management positions and those who work without direct supervision.
One of the key novelties introduced by this emblematic project, is that the implementation of the Bill will be a gradual process over five years, beginning with 44 hours a week in the first year, 42 in the third year and 40 in the fifth year of its implementation. This gradual reduction seeks to benefit companies as they adapt to the new working hours.
How will the 40-hour Bill affect lawyers?
For many lawyers operating in this field, there is a consensus that progress is being made. However, they stress that the key for this project to be a success is flexibility and highlight the discussion surrounding the adaptability of SMEs to the implementation of the working-hour reduction. Law firms report that, if implemented without being measured, it may significantly affect production costs and efficiency due to the particularities of the industries in which the different companies operate. Discussions include how a reduction in weekly working hours would impact the mining sector and its “jornadas excepcionales.”
Although the Bill still has a way to go before it is passed into law, we have recently seen examples of organisations that are paving the way such as Scotiabank, CMP and Enami, which were the first companies in their respective sectors to implement a 40-hour working week.
Chambers Latin America’s Coverage of the Labour & Employment legal market in Chile
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