Employee relations in Chile are governed by several laws which collectively form what is known locally as the labour code, updated most recently in 2021. The relationship is always formal and must be carried out under a contract of employment which must be signed and in force within a specific time frame. The contract can be indefinite, fixed term or until completion of a specific task or project.
Chilean workers have the right to form or belong to a trade union. Currently about 10% of the total workforce is unionised. Most unionised workers are from industries such as mining, construction, infrastructure, transport, ports, retail, and the public sector including education.
The normal working week is 45 hours spread over 5 or 6 days. Workers are entitled to 15 days paid holiday after completing 12 months in employment. They are also entitled to paid sick leave and paid maternity/paternity leave. A minimum wage is set each year, linked to the inflation level of the previous year. As from 1st January 2022 it was set at $350.000 clp roughly equivalent to £304.00 on that date. Different rates apply for workers aged under 18 and over 65.
Contracted employees have automatic deductions from their pay for health insurance, pension contributions, unemployment, and other insurances. Companies must share a percentage of their profits every year with their employees within a predefined formula.
Another requirement is that at least 85% of a company’s workforce must be Chilean nationals unless the company employs fewer than 25 people.
Are the most common type of contract used in Chile. They can be terminated by mutual agreement between the parties, or unilaterally for instance when an employee resigns.
Can be for any period between a day and a year. Exceptionally they could run for up to two years. Undetermined contracts – are used for specific tasks or projects. They need to be carefully drafted to avoid any misunderstanding when the project or task is finished.
Paid holidays After 12 months working with the same employer, an employee is entitled to 15 days of paid holiday leave. That leave can be accrued for a period of up to two years, which most employers try to avoid as it can mean an additional payment under severance conditions.
There are 16 public holidays per year in Chile
Employees get sick pay for absences due to illness or injury on the provision of a medical certificate within two days from the incident. If the leave is for less than 11 days, they do not get paid for the first three days. However, if the leave is for 11 days or more, they get paid for all of the days off sick. In all cases the sick leave is paid for by the employees’ health insurance. Maternity / Paternity leave the mother is entitled to 6 weeks of paid leave before the birth and 24 weeks after, which is paid for by her health insurance. Fathers are entitled to 5 days paternity leave. However once 7 weeks have passed after the birth, the mother can choose to transfer all or some of her remaining leave to the father.
If a member of the employee’s immediate family passes away, the employee is entitled to 3 days of paid leave.
The following amounts are deducted from the employees wage at source by the employer on a monthly basis:
● Pension 10%
● Health plan 7%
● Unemployment insurance 0.6% The employer pays additional amounts for other insurances:
● Unemployment 2.4%
● Disability and survival insurance 1.99%
The current Chilean constitution gives all workers the right in Chile to form or belong to a collective representative body, with the purpose of being able to collectively defend or negotiate their conditions of employment with their employee. Chilean workers also have a legal right not to belong to the trade unions. Please note that at the time of writing this article, in March 2022, Chile is going through a process to update its constitution.
The trade unions (sindicatos in Spanish), have significant strength and influence, which they frequently use during collective pay negotiations. Strikes are not uncommon in the industries previously mentioned, which at times have caused significant operational problems and costs to their employers.
A Health and Safety committee is mandatory in companies with more than 25 employees and should have three representatives from employers and three from employees. The main role of the H&S committees is to evaluate the risks to employees and agree mitigating actions.
A Biparty Training committee is mandatory in companies with more than 15 employees. The main role is to agree on an occupational training program for the employees.
