In December 2025, the Executive Branch submitted to the National Congress a bill proposing several labour law reforms. The President is confident that the bill will be enacted between late 2025 and early 2026.
The bill includes, among others, the following amendments:
Employees and employers may agree to split the vacation period into segments of no less than one week, which may be taken at any time during the year. This differs from the current law, which requires vacations to be taken in a single period and only between October and May each year.
Payments not made on a monthly basis, such as the 13th salary, bonuses, vacation pay, will be excluded from severance compensation calculations. For variable compensation, the average salary earned over the last 6 months will be considered to calculate severance. Only payments accrued for at least 6 months during the last year will be included.
Meal allowances, medical coverage, car allowances, mobile phone expenses, and internet expenses will not be considered salary. Therefore, they will not be subject to payroll taxes nor considered in the calculation of the 13th salary, vacations, or severance compensation.
Employers may pay employees’ salaries in foreign currency.
Employees and employers may agree to part-time contracts without time restrictions. Unlike the current law, which limits part-time work to two-thirds of the regular working hours of a full-time employee.
Companies belonging to the same economic group will only be held jointly and severally liable in cases of fraud.
If companies verify subcontractors’ compliance with labour and social security obligations, they will not be held jointly and severally liable with the subcontractors.
Fixed-term employees dismissed before the expiration of their contract will not be entitled to damages. Under the current law, they are entitled to damages equal to the monthly salaries remaining until the end of the agreed term, in addition to severance compensation.
Employers must contribute to a mandatory severance fund equivalent to 3% of salaries, which they may use at the time of termination of employment. This mechanism does not replace the severance obligation but may be used to cover part of the severance cost.
Labour laws will not apply to gig workers. However, companies must provide training and accident insurance.
Unions must comply with a mandatory procedure before going on strike. In essential industries, a minimum level of service between 50% and 75% of the workforce must be guaranteed.
Obligations such as covering internet and electricity costs as well as providing work tools may be eliminated.
This report should not be considered as legal or any other type of advice by Allende & Brea.
