Background
This change represents a crucial step forward in aligning Chile’s labor legislation with international standards and addressing longstanding concerns regarding excessive working.
The new law was introduced in response to the growing demands of employees in Chile to reduce the working week in order to improve work life balance and overall wellbeing and productivity.
Key details
The new changes apply to all jobs regulated by the Labour Code. The most relevant changes include the following:
Reduction of the statutory workweek
The statutory limit on weekly working hours will be reduced gradually to 40 hours by 26 April 2028, without decreasing employees’ wages.
The allocation of the reduction of the weekly working hours must be agreed upon by the parties. If no agreement is reached, the employer must reduce the hours proportionally among the weekly working days.
Flexible distribution of working hours
The new legislation allows for the working schedule to be distributed over four, five, or six days, opening the possibility of an altered workday scheme without the need for authorization from the Labour Inspectorate. This means, for example, that it will be possible (with the agreement of the employees) to implement a scheme of four working days followed by three rest days, with ten hours per working day.
This change will enter into force on 26 April 2028. If an employer decides to reduce the weekly working schedule to 40 hours before that date, the flexible distribution of working hours may be implemented at the same time.
Employees who are excluded from the statutory working time limit
Managers, administrators, attorneys with administrative powers, and all other employees who work without immediate supervision will remain excluded from the statutory working hour limits due to the nature of the tasks performed.
However, employees who work at home or in a place freely chosen by them, commission and insurance agents, traveling salespeople, collectors, and other similar employees who perform their job functions outside the employer’s premises—all of whom were previously exempt—will no longer be excluded from the limits on working hours.
If there is a dispute over the employee’s classification, at the request of any of the parties (or the applicable union), the Labour Inspector will decide whether a particular job falls within an excepted category. This decision may be appealed to a Labour Judge.
This change means that employers will need to review the employment contracts of all employees who are currently exempt from the limits on working hours to confirm whether or not the exception continues to apply.
This change entered into effect on 26 April 2024.
Flexible working arrangements
Under the new law, parents and caregivers of children under age twelve have the right to request an adjustment of their daily working schedule by up to two hours. Those employees may decide to start or end their working day one hour earlier or later. These flexible working arrangements do not apply to employees working in customer service or emergency services professions.
Overtime
The new law also allows the employee and the employer to agree in writing that overtime will be compensated by additional holidays instead of premium pay. In such cases, the parties may agree to up to five additional working days off per year. These days must be taken by the employee within the six months following the cycle in which the overtime hours were incurred, and the employee must provide forty-eight hours’ notice to the employer. For each overtime hour of work, one and a half hours of rest time must be compensated.
This change entered into effect on 26 April 2024.
Next steps
The new law provides that under no circumstances may employers reduce the salaries of their employees in response to the mandated reduction in working hours. This will create challenges for employers, as they will want to ensure that the adjustments to employee working hours do not affect productivity or result in higher economic expenses.
Cooperation and dialogue between employers and employees will be key to agreeing on conditions that allow them to adapt to the new working hours and ways of organizing the work.
Overall, the reduction in working hours is expected to adapt the country to international norms, facilitate the balancing of family life with the work environment, and enhance well-being and work performance.
Written in collaboration with:
Marcela Salazar, Catalina González, Munita & Olavarría
