Employment conditions in Chile

Terms & Conditions of Employment in Chile

Probation period

The 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.

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.

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.