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Employee Rights in Chile

Employment contract

Companies must provide employees with a written employment contract, which must be signed by both parties at least 15 days before the beginning of employment. Each party should be given a copy of the contract for their records. The contract can be in a language that both parties are familiar with, but the official copy should always be in Spanish.
The following provisions should be included in the employment contract:

  • Name, nationality, and birthdate of the employee
  • Name of the employer
  • Description of services to be performed by the employee
  • Type of work
  • Place of work
  • Duration and distribution of the working day
  • Salary in Chilean peso, and any bonuses if applicable
  • Method and period of remuneration
  • Start date
  • Type and term of contract
  • Additional benefits, if applicable
  • The date and place of the contract execution

It is common for companies to add provisions regarding non-disclose, exclusivity, and post-employment restrictive covenants on non-solicitation and non-compete.

Mandatory holidays

On specific dates that are mandatory holidays, employees cannot be made to work, inclusive of retail establishments. The only exceptions are for clubs, restaurants, places of entertainment, or selling fuel and emergency pharmacies; however, employers must still give an alternative day off within the next week.
The following are mandatory holidays:

  • 1 January
  • 1 May
  • 18 September
  • 19 September
  • 25 December

Failure to comply with the mandatory holidays makes an employer liable to a fine of up to 5 to 20 monthly tax units (UTMs), equal to CLP 1,056,840 for each employee affected.

Probation period

Probationary period is not recognized in Chile. Instead, it is common for companies to hire employees on a fixed-term contract for a maximum of 12 months and use that time as the probationary period before turning that contract into a permanent one.

Pregnancy rights

Companies with more than 20 female employees must provide adjoining facilities where mothers can feed their children under the age of two or leave their kids while working.

Equal pay

Companies must pay employees the same salary if the same work is performed, and cannot discriminate or pay less because of the employee’s gender.

Anti-discrimination

Employees are entitled to anti-discrimination protection in the workplace, based on their colour, age, religion, gender, sexual orientation, civil status, race, union membership, political opinion, origin and nationality. Employees must be given an equal opportunity and treatment in every stage of the employment cycle.

Payslip

It is mandatory for companies to provide employees with a monthly payslip. Online payslips are acceptable, but employees must expressly consent to have their payslip processed and submitted electronically.

Removal of benefit

Employers are not allowed to change or discontinue any voluntary benefits without the employee’s consent. Moreover, if an informal benefit becomes common practice, it may create an acquired right and part of the employee’s compensation that the company may not unilaterally change.

Childcare

Companies with more than 20 female employees are required to provide adjoining facilities where mothers can feed their children under the age of two or leave their kids while working.
Companies have different options to meet this requirement:

  1. By establishing its own crèche adjoining, but independent of, the workplace.
  2. By establishing a crèche jointly with other companies in the same geographical area.
  3. By paying for the services of a childcare centre recognized by the National Board of Nursery Schools (JUNJI).

Right to feed

Mothers are entitled to take at least one hour each day for the purpose of feeding children under the age of two. This right can be exercised in different ways:

  1. At any moment during the working day, subject to agreement with the employer
  2. Dividing this period into two on the request of the mother
  3. Delaying or bringing forward by half an hour or an hour the start or end of the working day

Legal gratification

It is mandatory that companies provide all employees with a statutory bonus annually in addition to the employee’s base salary. There are two methods that employers can choose to employ regarding the gratification:

  1. Divide 30% of the total net income of the company among all the employees, proportionate to their income.
  2. Pay the employee 25% of wages earned during the year, regardless of the total net income obtained by the company. This bonus is capped at 4.75 times the minimum wage, which corresponds to a maximum bonus of CLP 1,600,750 per year for the year of 2021. Companies may also lower the employee’s base salary stated in the work contract to compensate for the addition of the legal gratification (as a way not to increase the total costs for the employer). However, if the base salary is already agreed on in the employment contract, it cannot be lowered without the employee’s consent.

Workers compensation insurance

Known as “accident and occupational disease insurance” in Chile.Every company must contribute to the insurance to fund the risk of the employment activity. The amount of contribution borne by the company varies according to the risk level of the activity, with a maximum rate of 3.4% of the employee’s salary.

In industries considered to be heavy work, where the level of accident risk is high, there may be an additional contribution paid by both employers and employees of 2% of the employees’ salary.

Covid individual health insurance

Companies must provide a compulsory individual health insurance associated with COVID-19 for employees carrying out work completely or partially in person. They should also implement an occupational health safety protocol that must include at minimum daily temperature testing, safe physical distancing measures, water and soap availability, sanitization, etc. Until the company has put such a protocol in place, employees cannot resume in-person work activities. It’s expected that this legislation will be in place as long as there is health emergency.

The insurance must cover expenses related to hospitalization, rehabilitation, and death after a confirmed COVID-19 diagnosis. Employers must purchase the COVID-19 insurance within ten days from the day employees are starting employment or moving to in-person operations.

The insurance policy is for 12 months initially and should be renewed if following that the COVID-19 health emergency is still in force. The insurance premium is paid as a one-off instalment for a maximum of UF 0.42 (plus VAT) per employee per year.

Employers who do not purchase this insurance face fines and may also be ordered to close their physical premises until they comply. In addition, employees who have been infected with COVID-19 can bring legal action for damages and compensation against employers that did not comply with the new obligations. In addition, employers will also have to pay anything that would have been covered under the COVID-19 policy.

Right to disconnect

Distributed employees who are free to choose how to distribute their working hours, and teleworkers not subject to working hour restrictions have the right to disconnect and should not be contacted nor made to work by the employers for at least 12 uninterrupted hours in any 24-hour period.

In this period, employers are not allowed to expect the employee to respond to communications, orders, or other requests. In addition, employers are not allowed to communicate or make orders or other requests on days falling within these employees’ rest, leave, or annual vacation periods

Business transfer

Upon a business transfer, employees are automatically transferred to the new employer along with all their labour and collective rights and agreements (unless both parties agree to the changes in the terms and conditions of employment). Companies are not required to inform nor consult with employees prior to a business sale.

Employees cannot be dismissed simply because a business transfer occurred; however, if the employee’s position is eliminated or is subject to relevant change, then the termination is acceptable. The dismissal must be justified and comply with the requirements of articles 161 and 162 of the Labour Code, which regulates dismissal for “business necessity”. Dismissal cannot be arbitrary

Non-compete clause

The Chilean courts recognize non-competition and non-solicitation clauses if they meet the following criteria although they are not a statutory right:

  1. The employee gives their written consent to it.
  2. There is a legitimate reason to protect the business interest.
  3. It is imposed for a limited scope and time.
  4. The employee receives compensation during the time the non-compete clause is effective. The closer to the employee’s normal pay, the more enforceable the clause will be.

Protection against dismissal

Pregnant employees; those on sick leave; and those on maternity, paternity, parental, childcare and bereavement leave; as well as the president of the health and safety committee and union directors — all enjoy additional protection against dismissal. Companies may terminate the employees in the following circumstances only:

  1. Gross misconduct such as physical aggression, harassment, unjustified absences or abandonment of work, conduct affecting the safety of others, serious breach of employee’s obligation, and wilful act to damage anything related to their job
  2. Company’s reorganisation such as modernisation, decrease in productivity, and changes in the market

If an employee has special protection, the employer can terminate the employee’s contract only with the prior authorisation of a court.

Inclusion of persons with disability

Employees have a right to be provided with reasonable accommodations in the workplace by their employers. Companies with more than 100 employees must adhere to the law regarding labour inclusion of individuals with disabilities, which requires 1% of the workforce to be employees with disabilities. This hiring quota can be met in one of the following ways:

  1. By directly hiring people with disabilities
  2. By directly hiring people with an assigned disability pension from any social security system
  3. Through one of the alternative compliance options the law provides:
    1. Sign service agreements with companies that have hired people with disabilities
    2. Make monetary donations to projects, programs, corporations, or foundations that are referred to in Article 2 of Law No. 19.885

Companies may use alternative measures only if they have a valid reason such as what the company does or the lack of individuals interested in the offers of employment.

When an employee with a disability is hired, companies must register the employment contract online with the Labour Directorate, as well as the modifications and terms of the contract. This must be done within 15 working days from the date the employee is hired.

Every January, companies must inform the Labour Department electronically about the following: how many employees were hired in each month; how many employees have a disability or a disability pension; and how effective it has been to comply with the law, either directly or through an alternative measure.

Reasonable accommodation

Companies are required to make the necessary adjustments to adapt the mechanism, procedures, and practices of selection in all pertinent matters that are required to safeguard equal opportunities for employees with disabilities.

By 2022, all companies with more than 100 workers will be obliged to require that at least one of the workers in human resources functions must have specific knowledge in matters that promote the inclusion of persons with disabilities in the labour market. It will be understood that the workers who have a certification in this respect, granted by the National System of Certification of Labour Competences established in the law N° 20.267, have this knowledge.

The companies mentioned in the previous paragraph shall promote internal policies on inclusion, which shall be reported annually to the Labour Directorate. They should also develop and implement annual training programmes for their staff to provide them with tools for effective labour inclusion within the company.
Workers who agree with their employers to telecommute or telework, at the beginning or during the employment relationship, shall have the same rights and obligations in terms of safety, health, inclusion, and non-discrimination at work as any other worker.

In accordance with the employer’s duty of protection, the employer must always inform the telecommuter or teleworker in writing about the risks involved in their work, the preventive measures, and the correct means of work in each particular case, in accordance with the regulations in force.

In addition, prior to the start of the worker’s telecommuting or teleworking, the employer shall train the worker on the main health and safety measures to be taken into account when carrying out such work.

The employer shall be obliged to take all necessary measures to effectively protect the life and health of workers who provide services in the form of telecommuting or teleworking, for which purpose the employer shall manage the occupational risks that, due to the agreed form of provision of services, are present in the worker’s home or in the place or places other than the company’s establishments, facilities, or workplaces, which have been agreed upon for the provision of such services.

Health and safety

Employers have the duty to provide a healthy and safe workplace to employees, which includes drawing up a policy on “internal regulations” regarding health and safety. Employees are automatically insured against occupational illness and injury through the statutory insurance included in the social security program.

Companies with more than 25 employees are required to create a Permanent Safety, Hygiene, and Risk Prevention Committee (comité paritario de higiene y seguiridad), which should have representatives on both the employee side and the employer side. This committee must help adopt all necessary measures to avoid work-related accidents and should also recommend any use of safety gear. Employees sitting on this committee cannot be dismissed without authorisation by the labour courts.

Data protection

The Chilean Data Protection Regulation requires all data to be processed in a manner consistent with the law only for purposes permitted by the legal system or with the subject’s consent while observing the fundamental rights to privacy of the data subject. The law defines neither what consent nor what authorization of the data subject means, but it must be in writing. Personal data can be used for the collection purposes only except if it was collected from publicly available sources. However, companies still need to apply due diligence when handling the data, and they are liable for damages.

When data has been collected from sources that are not public,companies and employees that have access to it must maintain confidentially. This is an obligation that remains in place after the function or activity for which the data was collected in the first place is completed. Sensitive personal data such as facts concerning an individual’s private life cannot be processed unless the law authorizes it, the data subject expressly consents to it, and it is needed for the provision of health benefits.

Companies are required (1) to destroy any personal data when the purpose of its storage has no legal basis or its validity or accuracy is doubtful or when it has expired and (2) to modify the data when it’s incorrect, misleading, or incomplete.

Employees (and anyone whose personal data is being processed) have the right to access the data and information regarding the source of the data and the purpose it was collected for and to request a list of individuals and companies that such information is transmitted to. Data subjects also have the right to request modification on inaccurate, incomplete, misleading, and outdated data concerning them. Subjects can also request that their personal data is deleted when there is no legal basis for storing it, when it has expired, or when they no longer wish for that information to be available.

It is important to highlight that the Chilean law does not regulate processing by third parties and does not restrict transfer of personal data abroad. The person or public body responsible for the personal data bank must compensate for the pecuniary and moral damage caused by the improper processing of the data, without prejudice to proceeding to delete, modify, or block the data as requested by the data subject or, where appropriate, as ordered by the court.

Unions

Employees have the right to join, not to join, or to leave a union whenever they wish. They cannot be forced to join a union to perform a job or to develop an activity. Their employment cannot be conditional on being members of a union. Employees cannot belong to more than one union for the same job.

Company obligations

Mandatory committees

Companies are required to set two different work councils, depending on the number of employees in the company.

More than 25 employees – health and safety committee, which oversees, adopts, and proposes healthy and safety prevention measures to the company.

More than 15 employees – bi-partite training committee, which agrees and evaluates the company’s training programmes for the company.

Both work councils are constituted jointly by representatives of the employer and the employees, who are directly chosen by the company and the employees.

Companies with more than 100 employees must also establish a risk prevention department, which is directed by a risk prevention expert.

Foreign employees limitation

Companies with more than 25 employees must respect a ratio of Chilean citizens to foreign employees in the company. At least 85% of the employees must be Chilean citizens. The following are considered Chileans for the purpose of this requirement:

  1. Foreigners whose spouse, civil partner, or children are Chilean, including widows or widowers of a Chilean spouse
  2. Foreigners who have resided in the country for more than five years

Specialized technical personnel — any worker who renders services that are the result of the application of knowledge or technique that requires a significant level of specialization or study — are excluded from this ratio. In addition, Article 20 also requires that the technical specialist personnel cannot be replaced by the national personnel.

Handbook

Companies with more than ten employees must draw up an Internal Rule of Order, Hygiene, and Safety. The employer may establish the rules according to its needs but must cover the following:

  • Times at which work begins and ends
  • Shifts and breaks
  • Types of remuneration
  • Place, date, and time of paying remuneration
  • Employees’ obligations and prohibitions
  • Appointment of an executive or a person of trust to whom employees can address their requests, complaints, questions, and suggestions
  • Special rules regarding different kinds of work according to employees’ age and gender
  • Necessary adjustments and support to enable disabled employees to carry out their work properly
  • The manner to check compliance with the social security payments, compulsory military service, identity card identification, and, in the case of underage persons, schooling duties
  • Rules and instructions about prevention, health, and safety to be observed on company premises
  • Applicable sanctions for violation of obligations set forth in the internal regulations (which may consist of only a verbal or a written warning and a fine of up to 25% of the daily salary)
  • The procedure for application of the sanctions referred to above
  • The procedure, measures, and sanctions to be applied in cases of sexual harassment complaints
  • Procedures in case of mobbing
  • Procedures intended to control alcohol and drugs abuse
  • The procedure applicable in case of claims for violation of the remuneration equality principle between men and women who carry out equal functions

Any other subjects on regulations deemed necessary by the employer to guarantee a safe working environment may be included in the Internal Rules Code. Issues related to employee’s health and safety, regarding the employer obligation to inform of possible hazards, must be covered according to the nature of each activity such as proper use and care of personnel protective equipment, rules and instructions for using tools and working items, measures to avoid occupational disease and accidents, prohibitions (e.g., operating machinery or equipment without authorization), etc.

In terms of implementation, the Internal Rules Code must be published for 30 days in two places on company premises so as to give employees the opportunity to read it and make comments. After that, a copy of the Internal Rules Code must be sent to the Health Minister and Labour Authority within five days from the date on which it has entered into force.

This page was last updated on 
22 September, 2022,
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