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02. Employment Contracts
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02. Employment Contracts

Minimum requirements

Chilean legislation provides three categories of labour contracts: individual labour contracts, collective labour contracts and special contracts.

Individual Labour Contract

This is a written contract between an employer and an employee whereby they are mutually bound, the employee to render personal services under ties of dependence and subordination to the former, whereas the employer to pay compensation for those services.

Article 10 of the Labour Code states the minimum provisions that must be included in the individual labour contract, such as date and place of the contract, the identity of the parties, the position of the employee and job description, the place of work, the remuneration to be paid by the employer, the terms of payment (at maximum 1-month intervals), workday, the duration of employment and the benefits in cash or in kind to be provided by the employer.

Collective Labour Agreements

Collective labour agreements are contracts executed between employers and employees with the purpose of establishing common labour conditions, remunerations or other benefits in kind or money, for a fixed period of time. The collective contract must be agreed in writing and registered before the Department of Labour within 5 days from its execution. Legally, such contracts must be executed for a fixed-term, which cannot surpass 3 years and may not be less than 2 years. Also, the law provides the minimum clauses to be included in these instruments.

The Labour Code also allows for the possibility that the employer and one or more unions, may freely negotiate a collective agreement, without being subjected to the judgment of a legal proceeding, which is also considered a labour collective instrument.

Special Labour Contracts

The law also provides for several other special labour contracts. Each of these contracts have their own characteristics and specifications, e.g. the apprenticeship contract which is restricted to individuals under 21 years of age; farm employees’ contracts; contracts for employees on ships or at sea and temporary dock employees, and contracts for domestic help.

Subcontractor/Temporary Employees

In Chile it is common that large companies subcontract companies to perform specific tasks or render special services such as security and cleaning services, catering, etc. Chilean law provides that if the contractor breaches legal or contractual obligations towards his employees, the main company (usually called client) can be jointly- liable or bear subsidiary liability. This liability is extended to labour and social security obligations, therefore during the term of these contracts the principal must permanently verify that contractors comply with their obligations unto their employees. Temporary employees supply is permitted only for exceptional circumstances provided by law and for a limited time period.

Fixed-term/Open-ended Contracts

The parties may either agree on an indefinite contract or places limits on terms (to the completion of a particular job to be performed by the employee, or else agree on a fixed period of time). In this last case, the contract’s term cannot exceed one year, or two years in the case of managers, professionals and technicians. However, local law allows term extension (which cannot surpass the overall time previously mentioned). If the employee continues rendering services for the same employer after the contract term’s expiration, it will automatically become indefinite.

Regarding contracts for a special job task, the employee undertakes to execute a specific and determined job or work (either material or intellectual). Therefore, its validity is limited to the work itself. It should be noted it provides that different tasks or stages of a specific work may not be individually considered as two different successive contracts for it will be legally presumed as indefinite. Also, any contract engaging permanent services will not be deemed as a contract for a specific job. Lastly, these employees are entitled to vacation and a special kind of termination severance if certain requirements are fulfilled.

Trial Period

The law does not provide for a trial period.

Notice Period

To terminate an employment contract for cause, the employer can produce an immediate termination, without notice requirements. Other terminations require 30 days’ notice. Immediate terminations are allowed as well, if paying a severance in lieu of notice (1 month capped remuneration).

Any questions

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