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KenyaChile
7 Chapter Labow Law
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Overview of working environment.
■Overview of working environment.
Chile is working on encouraging innovation, improving the union between education and the labor market. As well the country is promoting the participation of women in the labor market. Chile was host of the APEC 2019 (Asia pacific economic cooperation) were the country has chosen four priority areas, digital society where they want to improve the quality and coverage of telecommunications infrastructure and to create shared regulatory principles that will improve electronic and digital trade flows. Other priorities are the Integration 4.0, women, SMEs and inclusive growth and sustainable growth.
The COES (Centre for Social Conflict and Cohesion Studies) made a study in 2018 of the index of quality of employment in Latin America, where income was measured, and a minimum amount equivalent to six basic monthly baskets was established. They also studied the stability in employment, which is subdivided into the type of contract that the worker has and its duration. The working conditions in terms of affiliation to social security systems and extension of working hours were also added. According to the index, the lower the score achieved by the country, the better the quality of employment since there is the percentage of people who do not reach the minimum thresholds established.
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Working Population.
According to the National Statistics Institute of Chile (INE), in 2018, 2.5 million people worked informally. This means that people performed a job without a contract and without the employer fulfilling the respective obligations such as the payment of contributions. In the following chart you can see the total population by 2019 in and out of the workforce in Chile.
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■Unemployment rate.
Unemployment Rate in Chile averaged 8.05% from 1986 until 2019, since the beginning of 2019 the unemployment rate has been 6.9 %.
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■Wage level.
Wages in Chile increased to 4761.92 CLP per hour in November of 2018, the average from 2010 until 2018 is 3577.83 CLP per hour. In manufacturing there has been an increase in February of 2019 to 113.04 index points from 112.66 index points from January of 2019.
■Minimum wage.
The minimum wage in Chile is $301 thousand pesos
■Inflation rate and wage increase.
The annual inflation rate in Chile rose to 2.0 percent in March 2019, and according to Law 21,112, as of March 1, 2020, salaries will be adjusted based on GDP growth.
■Labor Union.
Unions are common, workers are free to join the union that corresponds them.
There are three types of unions:
Company Union: Groups the workers of a Company.
Intercompany Union: Groups the workers of 2 or more Companies.
Independent Unions: Groups workers that does not depends on any Company.
Transitory or Temporal workers Unions: Groups workers that execute seasonal or cyclic works.
■Workers protection.
Universal healthcare for all type of workers, affiliation to the Labor Security Institute is obligatory.
Unions are responsible for watching the Companies to comply with their legal obligations for their workers, protect the workers’ rights and promoting better life for their members.
■Labor disputes.
Unions negotiations can only take place on private sector, the public sector is considered to be in accordance with all the rules applicable. Labor trials are public, oral and always looking to provide a mediation for the workers, unions and companies. Good faith negotiations is obligatory not only for unions, but for Companies as well.
■Labor Law.The labor law in Chile is the legal area with more debates and proposals for changes, a labor reform is currently planned. Jobs in Chile are regulated mainly by the Constitution and the Labor and employment Code, the secretary responsible for putting these laws into practice is the Labor Directorate. Other important Labor laws are the Law 17,322 on social security payment, Law 16,744 on Occupational Accidents and Diseases; Decree Law 3,500 and its Executive Regulation; Law 20,609 on Discrimination Prohibition, Law 19,799 on HIV treatment; Executive Law Regulation from 1967 on Organization of the Labor Inspection, Law 19,728 on unemployment insurance, and Supreme Decree 594 on health environmental basic workplace conditions.
Individual regulations: working hours resting days, benefits bonuses. The workday is free to be defined in the contract, however the standard time is 45 hours a week for cases of general or normal work, when it comes to specialized work, it can be modified in accordance to the necessities of the Company.
Resting day is Sunday and rest is obligatory on festivities dates, the workdays is divided in two parts, between said part there must be a break of at least 30 mins for the workers meal.
Protection children and female workers.
The legal age for work is 18 years old, however those over 15 years old can execute a labor contract if they have authorization from parents or legal representatives and they can only be hired for light activities that will not interrupt their health and development and has finished or still studying basic or middle education program. They cannot work for longer than 8 hours per day or 30 hour per week.
Married women under 18 years old are free to execute a labor contract.
Maternity rights:
a. Maternity leave 6 weeks before childbirth and 12 weeks after (father will have 5 days)
b. 1 hour lactation break daily, which the worker can administrate.
c. Compensation for the pregnancy.
d. Pregnancy and child medical complications leave if proven by medic certificate.
e. Maternity leave can be used by the father.
f. Worker must replenish the time provided on maternity leave, via overtime or working on festivity days.
Resignation.
If the worker resigns, they must inform the employer with at least 30 days in advance.
Rules of employment contract:
Determined contract: These types of contract work for activities that are for an specific work that will not constitute permanent activities, if the work has phases there cannot be other determined contracts.
Undetermined contract: This is the common type of contract, it is for workers that will perform permanent activities in the Company.
Intern contract: This type of contract cannot last longer than 2 years and includes especial obligations on using the work of the intern.
Farm workers, hip workers, flight crew, ports workers, artist, show business, athletes and house workers have special rules in the law for their contracts. For mining, hiring workers under 21 years old requires them to pass an aptitude exam.
■Social Security.
The components of the current Pension System in Chile are:
I.Pension System: for old age, disability and death.
II.Health System: for illness and pregnancy.
III.Occupational Accident Insurance and Occupational Diseases: for safety and health at work.
IV.Unemployment insurance: as an unemployment contingency.
The agency for the healthcare system is the Fondo Nacional de Salud (FONASA), workers in Chile can choose between private health system by the Instituciones de Salud Previsional ISAPRE and the public health system FONASA. There is a monthly mandatory payment, 7% of the monthly income for FONASA and 9.2% for the private system ISAPRE. There are also contributions for the pension fund, unemployment insurance and the Chilean association of security.
For pension fund contributions all workers can choose between six different private pension companies and they are able to choose between different types of funds. The monthly mandatory payment is approximately 12%. If the worker is self-employed they can decide whether to contribute or not and which amount they want to contribute on a monthly basis.
■Types of Visas.
Tourist Visa: This type of Visa has two types, the simple one that only includes an entry into the country and the multiple that considers various income and departures from the country. It is not allowed to reside or engage in paid activities with this type of visa.
Family Reunification Visa: This type of visa is intended for spouses, civil cohabitants, minor children and adults who study up to 24 years of age, of a Haitian personality residing in Chile with temporary or permanent residence, with the motive of filing in Chile.
Temporary Residency Visa: It is for people who travel to Chile to live in the country, for having family ties, interest in the country or whose residence is useful or advantageous for Chile. It is allowed to work, study and / or carry out commercial activities for a maximum period of one year. There is also a Dependent Temporary Resident Visa, which is granted to the owner's family, but does not allow work.
Permanent Residency Visa: For foreign citizens who wish to live and work indefinitely in Chile, they must apply for this type of Visa.
Student Visa: It is granted for the purpose of studying as a regular student in state educational establishments or private educational institutions recognized for a maximum period of one year. In the case of scholarship recipients, the duration of the visa is the time in which the scholarship lasts.
Work Contract Visa: Foreigners who have been hired by a company with residence in Chile, have a maximum duration of two years. There is also the Resident Visa Subject to Dependent Contract, it is granted to the relatives of the holder, similar duration, does not allow work.
■Wage level.
Wages in Chile increased to 4761.92 CLP per hour in November of 2018, the average from 2010 until 2018 is 3577.83 CLP per hour. In manufacturing there has been an increase in February of 2019 to 113.04 index points from 112.66 index points from January of 2019.
■Minimum wage.
The minimum wage in Chile is $301 thousand pesos
Inflation rate and wage increase.
The annual inflation rate in Chile rose to 2.0 percent in March 2019, and according to Law 21,112, as of March 1, 2020, salaries will be adjusted based on GDP growth.
■Labor Union.
Unions are common, workers are free to join the union that corresponds them.
There are three types of unions:
Company Union: Groups the workers of a Company.
Intercompany Union: Groups the workers of 2 or more Companies.
Independent Unions: Groups workers that does not depends on any Company.
Transitory or Temporal workers Unions: Groups workers that execute seasonal or cyclic works.
■Workers protection.
Universal healthcare for all type of workers, affiliation to the Labor Security Institute is obligatory.
Unions are responsible for watching the Companies to comply with their legal obligations for their workers, protect the workers’ rights and promoting better life for their members.
■Labor disputes.
Unions negotiations can only take place on private sector, the public sector is considered to be in accordance with all the rules applicable. Labor trials are public, oral and always looking to provide a mediation for the workers, unions and companies. Good faith negotiations is obligatory not only for unions, but for Companies as well.
■Labor Law.The labor law in Chile is the legal area with more debates and proposals for changes, a labor reform is currently planned. Jobs in Chile are regulated mainly by the Constitution and the Labor and employment Code, the secretary responsible for putting these laws into practice is the Labor Directorate. Other important Labor laws are the Law 17,322 on social security payment, Law 16,744 on Occupational Accidents and Diseases; Decree Law 3,500 and its Executive Regulation; Law 20,609 on Discrimination Prohibition, Law 19,799 on HIV treatment; Executive Law Regulation from 1967 on Organization of the Labor Inspection, Law 19,728 on unemployment insurance, and Supreme Decree 594 on health environmental basic workplace conditions.
Individual regulations: working hours resting days, benefits bonuses. The workday is free to be defined in the contract, however the standard time is 45 hours a week for cases of general or normal work, when it comes to specialized work, it can be modified in accordance to the necessities of the Company.
Resting day is Sunday and rest is obligatory on festivities dates, the workdays is divided in two parts, between said part there must be a break of at least 30 mins for the workers meal.
Protection children and female workers.
The legal age for work is 18 years old, however those over 15 years old can execute a labor contract if they have authorization from parents or legal representatives and they can only be hired for light activities that will not interrupt their health and development and has finished or still studying basic or middle education program. They cannot work for longer than 8 hours per day or 30 hour per week.
Married women under 18 years old are free to execute a labor contract.
Maternity rights:
a. Maternity leave 6 weeks before childbirth and 12 weeks after (father will have 5 days)
b. 1 hour lactation break daily, which the worker can administrate.
c. Compensation for the pregnancy.
d. Pregnancy and child medical complications leave if proven by medic certificate.
e. Maternity leave can be used by the father.
f. Worker must replenish the time provided on maternity leave, via overtime or working on festivity days.
■Resignation.
If the worker resigns, they must inform the employer with at least 30 days in advance.
Rules of employment contract:
Determined contract: These types of contract work for activities that are for an specific work that will not constitute permanent activities, if the work has phases there cannot be other determined contracts.
Undetermined contract: This is the common type of contract, it is for workers that will perform permanent activities in the Company.
Intern contract: This type of contract cannot last longer than 2 years and includes especial obligations on using the work of the intern.
Farm workers, hip workers, flight crew, ports workers, artist, show business, athletes and house workers have special rules in the law for their contracts. For mining, hiring workers under 21 years old requires them to pass an aptitude exam.
■Social Security.
The components of the current Pension System in Chile are:
I.Pension System: for old age, disability and death.
II.Health System: for illness and pregnancy.
III.Occupational Accident Insurance and Occupational Diseases: for safety and health at work.
IV.Unemployment insurance: as an unemployment contingency.
The agency for the healthcare system is the Fondo Nacional de Salud (FONASA), workers in Chile can choose between private health system by the Instituciones de Salud Previsional ISAPRE and the public health system FONASA. There is a monthly mandatory payment, 7% of the monthly income for FONASA and 9.2% for the private system ISAPRE. There are also contributions for the pension fund, unemployment insurance and the Chilean association of security.
For pension fund contributions all workers can choose between six different private pension companies and they are able to choose between different types of funds. The monthly mandatory payment is approximately 12%. If the worker is self-employed they can decide whether to contribute or not and which amount they want to contribute on a monthly basis.
■Types of Visas.
Tourist Visa: This type of Visa has two types, the simple one that only includes an entry into the country and the multiple that considers various income and departures from the country. It is not allowed to reside or engage in paid activities with this type of visa.
Family Reunification Visa: This type of visa is intended for spouses, civil cohabitants, minor children and adults who study up to 24 years of age, of a Haitian personality residing in Chile with temporary or permanent residence, with the motive of filing in Chile.
Temporary Residency Visa: It is for people who travel to Chile to live in the country, for having family ties, interest in the country or whose residence is useful or advantageous for Chile. It is allowed to work, study and / or carry out commercial activities for a maximum period of one year. There is also a Dependent Temporary Resident Visa, which is granted to the owner's family, but does not allow work.
Permanent Residency Visa: For foreign citizens who wish to live and work indefinitely in Chile, they must apply for this type of Visa.
Student Visa: It is granted for the purpose of studying as a regular student in state educational establishments or private educational institutions recognized for a maximum period of one year. In the case of scholarship recipients, the duration of the visa is the time in which the scholarship lasts.
Work Contract Visa: Foreigners who have been hired by a company with residence in Chile, have a maximum duration of two years. There is also the Resident Visa Subject to Dependent Contract, it is granted to the relatives of the holder, similar duration, does not allow work.
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References
Encuesta Nacional de Empleo-Ene, 2019
https://www.ine.cl/estadisticas/laborales/ene
Annual Inflation Chile, 2019, Trading Economics.
https://tradingeconomics.com/chile/inflation-cpi
Priorities for APEC Chile 2019
https://www.apecchile2019.cl/apec/apec-chile/priorities-apec-2019
Chile lidera en el índice de calidad de empleo en América Latina, PAUTA, 2019.
https://www.pauta.cl/economia/chile-lidera-en-el-indice-de-calidad-de-empleo-en-america-latina
What are the Tax and Accounting Requirements in Santiago, Chile? by Sarah Kraft, Aug 21, 2017 , Chile, LATAM
https://www.bizlatinhub.com/what-chile-tax-accounting/
Código del Trabajo, Dirección del Trabajo Chile, 2019.
https://www.dt.gob.cl/portal/1626/articles-95516_recurso_2.pdf
Seguridad Social como un derecho humano, Subsecretaria de Previsión Social, Gobierno de Chile, 2019.
https://www.previsionsocial.gob.cl/sps/seguridad-social/
Sección consular de Chile en Puerto Príncipe, Tipos de Visas, Ministerio de Relaciones exteriores, Gobierno de Chile, 2019.
https://chile.gob.cl/puerto-principe/sobre-el-consulado/tipos-de-visa
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