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The Evolution of Labor Laws in Chile
The Chilean government has made changes to the Labour Code by lowering the weekly working hours from 45 to 40 hours and allowing for more flexibility in how the hours are scheduled. These amendments became effective on April 26, 2024, and will be implemented gradually over five years.
The 40-Hour Workweek Bill seeks to promote flexibility by permitting the allocation of work hours over a 40-hour weekly average within a cycle of up to four weeks. In the case of unionised employees, a collective agreement must be reached by the company.
The new law stipulates that employers are prohibited from reducing their employees’ salaries in response to mandated reductions in working hours. This presents challenges for employers who need to ensure that adjusting employee working hours does not impact productivity or lead to increased economic costs.
This adjustment marks a significant advancement in harmonising Chile’s labour laws with global norms and tackling persistent issues related to excessive work hours.
The introduction of this new law reflects the increasing calls from Chilean employees to shorten the work week to enhance work-life balance, overall well-being, and productivity.
In this article, we’ve reviewed the key factors of Chile’s new working laws, and the compliance issues your business needs to be particularly aware of.
Core Aspects of the New Working Laws in Chile
Reduction of the Workweek
Under Chile’s new working laws, the standard workweek has been shortened from 45 to 40 hours, allowing for the hours to be spread across a minimum of four days (previously five) and a maximum of six days.
The implementation timeline for the change, is a gradual reduction over a five-year period:
- The weekly limit was reduced by one hour on April 26, 2024, from 45 hours to 44 hours
- The weekly limit will be reduced by a further two hours to 42 hours on the 26 April 2026
- The final reduction to 40 hours per week will take place on April 26, 2028
The legislation prohibits employers from lowering salaries when reducing working hours, posing a challenge for businesses to sustain productivity without increasing expenses. It is crucial for employers to communicate with their employees so all parties can successfully adjust to the new working hours.
Flexibility in Work Schedules
Enhanced Flexibility for Parents and Caregivers
Working mothers and fathers of children up to 14 years of age or disabled up to 18 years of age, as well as those responsible for their care, are entitled to a total of a two-hour timeframe, within which they may anticipate or delay the start of their work by up to one hour. This will also impact the end time of their working day.
If both parents work, either of them, at the determination of the mother, can use this right. The employer can’t refuse this right, except in circumstances where the company operates on a schedule that doesn’t allow the workday to be postponed, or due to the nature of the work provided by the employee. Examples include:
- customer service workers
- emergency services workers
- shift workers
- security guards or similar
Where a dispute arises in these situations, the Labor Inspector will be responsible for resolution, at the request of either party.
Implementation of Flexible Bands for Start and End Times
The bill associated with Chile’s New Working Laws introduces two new rights: time bands of two hours for parents and caregivers of children under 14 to adjust the beginning and/or end of their work hours, and the option to offset overtime hours with up to five extra holidays.
Additionally, employees can request a change on the location they work, being able to request a hybrid or remote work schedule, when their functions allow that and subject to exceptions.
Options for Distributing Work Hours Over Four, Five, or Six days
Chile’s new working laws permit work schedules to span four, five, or six days. For instance, by mutual agreement with employees, a four-day workweek with three days off, involving ten-hour workdays, can be arranged. This increased flexibility is set to start on April 26, 2028, yet employers have the option to adopt it sooner if they have already trimmed the workweek to 40 hours.
Also, with the employee’s agreement, the schedule can be organised based on an average of 40 hours per week over a cycle of up to four weeks. Each weekly schedule should not surpass 45 hours, and there should not be consecutive weeks within the cycle of 45 hours.
Both parties need to create a calendar outlining the daily and weekly hours for the cycle, with various distribution options available. The employer is required to notify the employee of the chosen distribution for the next cycle at least a week in advance.
If there is a union involved, the maximum weekly hours can be increased to 52 hours, but this only applies to union members.
Inclusion and Exclusion of Employees from Work Hour Limits
The law has significantly changed the standards for identifying which employees are exempt from the restrictions on working hours. These include:
- Those serving as managers, administrators, and authorised personnel with administrative responsibilities
- Individuals working without direct supervision due to the nature of their tasks.
All other categories of employees are subject to work hour limits of the new laws.
If a dispute arises, either party can seek assistance from the Labor Authority, with the option to appeal to the Labor Courts if needed.
Overtime Compensation Changes
Overtime compensation has historically been solely in cash. However, Chile’s new working laws allows for overtime to be converted into extra vacation time of up to five working days per year. This equates to one and a half hours of holiday time for every additional hour worked, subject to an agreement between the company and the employee.
The holidays should be taken within six months of the overtime accumulation, with the employee notifying the employer at least 48 hours in advance. If the holidays remain unused after six months, they must be compensated in salary for the respective period.
This modification came into force on 26 April 2024.
Expanding the Core: Addressing Workplace Well-being and Compliance
Mental Health and Psychosocial Risk Management
The significant impact of the pandemic on people’s mental well-being has elevated workplace well-being as a top priority for Chilean employees. Employee satisfaction, a key measure of workplace morale, has now become crucial for ensuring employee well-being and fostering their commitment to the organisation. In response to the heightened focus on managing factors affecting mental health, the Ministry of Health updated a protocol in late 2022 to assess workers’ exposure to psychosocial risk factors.
Although this protocol was established in 2013, the recent revisions incorporate lessons learned and experiences gained since its inception, specifically addressing the impact of the global health crisis on the workforce.
Also, Chile’s new working laws now make it obligatory for employers to address psychosocial risks at work. Employers are required to outline potential psychosocial risk factors in internal company policies, highlight health implications for employees, and propose protective measures.
An additional requirement mandates that employers evaluate the psychosocial risks associated with work and implement preventive measures to minimise, monitor, alleviate, or eliminate identified risks. The new legislation also stipulates that the assessment and management of preventive measures involve active participation from workers, represented through a committee. This collaborative approach emphasises joint efforts between company management and employees to proactively monitor risk factors.
Regulations on Workplace Harassment and Violence
New regulations concerning sexual and workplace harassment, and the inclusion of workplace violence guidelines were introduced amidst the new labour laws in Chile. The relevant changes include:
- Gender perspective as a core principle in labour relations, requiring actions to promote equality and eliminate gender-based discrimination
- Expanded definition of workplace harassment to include isolated incidents
- Introduction of ‘workplace violence’ as a form of behaviour against human dignity by third parties.
Employers need to update internal policies on harassment and incorporate measures for workplace violence prevention. A new internal protocol for prevention, protection, and sanctions is required by all organisations.
Investigation procedures must be revised to ensure confidentiality, impartiality, efficiency, and gender sensitivity. The Ministry of Labor will issue specific guidelines to ensure organisational compliance.
Employers must biannually inform about reporting channels for violations related to prevention, investigation, and penalties for such behaviours.
Balancing Work and Family Life
This new labour law aims to support the balance between personal, family, and work life. It is expected to have a significant impact on work scheduling and talent management.
Some associated key changes introduced by this law include:
- Workers have the right to prioritise vacation time if they have children under 14 years old and wish to take time off during school holidays
- Employees can temporarily adjust their work schedule, provided it aligns with the nature of their job
- Workers with dependents can work remotely if their job allows it
- Temporary shifts or modifications in work hours are allowed during school breaks, depending on job requirements.
In terms of telecommuting, whether fully or partially, the employer reserves the right to decline the request for valid reasons.
Key Takeaways for Employers
As an employer in Chile, you need to be incredibly mindful of these changes to labour laws, now effective and enforceable. In summary:
- Reduction of the working week will gradually take effect: 44 hours in the 2024, 42 hours in 2026, and 40 hours in 2028. These legislative changes may not entail a decrease in remuneration.
- The weekly working schedule may be distributed between four and six days. Previously, it was distributed between five and six days.
- Companies can establish working cycles of up to four weeks, as long as weekly averages are 40 hours (at the completion of the change period)
- Overtime worked by employees can be converted into additional holiday time of up to five working days per year
- The inclusion of mental health protection measures is a mandatory requirement of employers’ internal protocols; it’s now obligatory for employers to address psychosocial risks at work
- New laws regarding harassment, sexual harassment and workplace violence have been introduced. Internal company policies on these issues are to be established as well as measures for the prevention of violence in the workplace
- The laws seek to better support balance between family, personal and work lives of all Chilean workers.
These new laws will introduce substantial, intricate challenges for employers, prompting them to enhance processes related to workplace culture, occupational safety protocols and remuneration. The key issue here, is ensuring your company is compliant.
To address changes in the laws, companies will need to adjust their internal policies to prevent incidents, implement improved monitoring systems for working hours, and ensure that their management, employees, and union representatives are well-versed and trained in all new protocols and procedures, with the mission of fostering a balanced and productive working environment.
To learn more about keeping your workplace compliant with Chile’s new working laws, you can find additional information here.
