Chile: Misuse of Medical Leave and Disciplinary Dismissal

Recent decisions from Chilean Courts of Appeal show conflicting interpretations regarding the misuse of medical leave and whether it justifies dismissal under Article 160 No. 7 of the Labour Code. While Antofagasta Court approved the dismissal of a worker who travelled to Easter Island during medical leave, considering this a serious breach of contractual obligations and of the duty of good faith; Santiago Court rejected the dismissal of a worker who travelled to Spain during medical leave, on the basis that the employment relationship was suspended during the leave, therefore, no breach of contract can be claimed.

 

Diverging Interpretations of “Serious Breach”

Scope of Article 160 No. 7

Antofagasta applies a broad interpretation, viewing the misuse of medical leave as a violation of ongoing ethical and legal duties—such as loyalty, probity, and good faith—that persist even when the employee is not actively working.

Santiago adopts a restrictive view, limiting “serious breach” to obligations enforceable only during active service. It considers that during medical leave, the employment contract is suspended, therefore, disciplinary dismissal is not applicable.

 

Ethical-Juridical Content of the Employment Contract

Antofagasta emphasises that the employment relationship includes implicit duties derived from law, custom, and the nature of the bond. These duties—such as diligence and fidelity—remain in force during medical leave.

Santiago treats the contract as a framework of reciprocal obligations that are inactive during suspension. It does not recognise the persistence of ethical duties during medical leave.

 

Employer’s Disciplinary Power

Antofagasta affirms the employer’s right to discipline employees for conduct that undermines trust, even during suspension.

Santiago restricts disciplinary power to periods of active service, suggesting that misconduct during medical leave should be addressed administratively, not through dismissal.

 

Legal and Practical Implications

These divergent interpretations affect how employers may respond to questionable conduct during medical leave. The Antofagasta approach allows for disciplinary dismissal based on ethical violations, while the Santiago approach limits employer action to administrative remedies. None of the sentences is firm by now, so it is highly probable they will be recurred before the Chilean Supreme Court.