Chile: Supreme Court Ruling Enhances Employer Rights Against Medical Leave Abuse

A recent ruling by the Chilean Supreme Court (Case Rol N° 49.746-2024) represents a significant shift in labour law, giving companies a stronger legal framework to tackle the misuse of medical leave. The Court has ruled that employees who participate in activities incompatible with their recovery, such as traveling abroad for leisure while on a total bed rest order, can be legally dismissed for a lack of integrity. This allows employers to terminate the employment contract immediately without the need to provide severance or notice indemnity.

This case involved an employee who, while on medically certified total rest, travelled to Argentina on holiday. The company discovered the trip through the employee’s social media posts and proceeded to terminate the employment for cause. Initially, the Court of Appeals ruled in favour of the employee, arguing that the contract was suspended and the conduct occurred in a private capacity.

However, the Supreme Court overturned this decision, establishing that the duty of good faith and loyalty remains in effect throughout the entire employment relationship, regardless of the employee’s medical leave status.

The key takeaway is that the Court clarified that “performing duties” extends beyond physical presence in the office. It also includes maintaining honest conduct towards the employer. Consequently, pretending to be ill in order to gain time off for personal travel is now officially recognized as a serious breach of trust, justifying disciplinary dismissal and setting a strong precedent to combat fraud related to medical leave.

Although this ruling is not a binding precedent, it represents a turning point in the application of this criterion and should be carefully considered in similar circumstances.