Chile Labour Law – Registering Employment Agreements

One of the more common risk for companies operating in Latin America is related to employment laws and obligations.  For better or worse, most companies are focused on growing their business, taking care of customers, and managing little details that arise each day. 

The result is that many companies often find themselves in a situation where they have overlooked an important detail that now poses a liability.  This is particularly true for foreign companies who have little knowledge of Chilean labor laws. 

One of these details is law 21,237, called the “Labor Directorate Modernization Law,” which went into force in 2022. One of the main changes introduced by the law was the registration of employment contracts with the Labor office. Not doing so, can lead to fines for companies who have not complied.

Registering Work Contracts

• Employment Agreements – Employers must register new labor contracts on the electronic site of the Labor Board, within 15 days following the signing.
• Employment Annexes – Annexes signed with current employees must also be registered within 15 days of signing.
• Termination of Contracts – When an employment agreement is terminated, it also must be registered within three, six or ten days of the worker being notified. The cause invoked for the termination determines the specified time frame.
• Finiquitos – is a document that officially ratifies by both the worker and the employer the end of the employment   relationship. This document needs to be uploaded to the online system within 15 days from signing.
• Other Documents – Electronic Remuneration Books, Joint Committee on Hygiene and Safety, Workers Health and Safety Handbook, Sanctions against Workers, Special Pacts of working Conditions, to name a few, need to be uploaded, with each having their own time specific time frames.

Ax Legal Recommendations

• For larger companies, the administration burden of uploading documents to the portal can easily be delegated to the human resources department or another. This process should be reviewed with the department that will be responsible for this new requirement and proper system put in place. 
• For smaller companies who may not have large administrative teams, it will often fall on either a manager or external provider such as an accountant or lawyer.
• It is important for smaller companies to put in place a proper process for all labor documents to be uploaded. This includes speaking with your accountant or lawyer to ensure documents are being sent to them and they are being properly uploaded.
• One of the main issues we are seeing is that external providers are either not receiving the documentation in a timely manner from the company, or the external provider is not doing it within the time frames. In many cases, it is not being done at all. 

Practical Tips for using the Portal.

• You need to have access to the labor office (DT) webpage; this access is granted with the same password that is used for the tax office website (SII).
• Have the employment agreement readily available since you need to complete the process online, therefore, you need to add the information requested by the online form.
• Since the registration requests additional personal information of the worker that may not be in the employment agreement, you need to ask for the workers private email and their personal phone number.
• The registration is a rather simple online process, which can be done by any HR person, accountant or administrative.

 The labor office has provided a step-by-step guide in Spanish which can be found here.

Conclusion

The uploading of documents is an attempt by the labor office to modernize their processes and improve visibility by keeping electronic records. The issue for companies is that it adds an additional administrative burden and oversight. Foreign and local companies will often not even be aware that is a requirement since it is relatively new.

Ax Legal puts in place processes for clients to ensure that they are compliant with the new labor law. Given that we work closely with our clients’ local teams, often this includes being responsible for uploading the documents as part of our scope. As a company grows, we then transfer these new processes and systems to their own internal teams.

Ax Legal is an advisory firm that works with foreign companies in Latin America. Our team of legal and commercial advisors have a distinguished track record of helping foreign technology and services companies to grow and operate in Latin America. Over the years, we have worked with starts up, mid-size businesses, and publicly listed companies. The one common factor that connects our clients is that they are leaders in their field, providing innovative technologies and services to the industrial sectors.

To better understand how we can support you in the Region, please contact Cody Mcfarlane at cmm@ax.legal