A Global Guide for In-House Counsel: Doing business in a rapidly changing world

Employment – Transient Workers

Are you seeing a shift in employee/workforce expectations in your jurisdiction, when it comes to flexibility, length of contract, remote working, hours of work, etc? How can clients both reflect this and protect their business interests in employment contracts?

Yes, we do see that shift, especially in regard to workplace flexibility since Covid-19. Before the pandemic, the only regulation regarding remote work was related to the limitation of working hours, in the sense that employees who rendered their services preferably outside the company´s premises were not subject to the statutory maximum of work hours; and, consequently, they did not have to record attendance and working hours and did not have the right to be compensated for overtime.

As a consequence of lockdowns and mobility restrictions decreed during the pandemic, legislative discussion concerning remote work was accelerated. On 26th March 2020 under act No. 21,220 on remote work and teleworking was advertised in the official gazette. This act regulates issues related to working time, the right to disconnect, supervision and control mechanisms, the employer’s obligation to provide employees with the equipment, tools and materials for the work (assuming the respective operating costs) and the employer’s hygiene and safety obligations with respect to remote working employees. Nowadays mobility restrictions are no longer in force, but the majority of the workforce has formally asked to maintain the flexibility that teleworking allows and has agreed on alternatives on workday distribution order to reconcile work, personal time and family. It is relevant to consider that our labour legislation does not allow flexible working hours for those employees subject to fixed and limited hours. Additionally, Congress is currently discussing a regulation that seeks to reduce the maximum weekly work hours from 45 to 40 hours.

Regarding the duration of the employment contract, in Chile the principle of employment stability prevails. Accordingly, the general rule is that the contracts are of indefinite duration and the rules on termination of the employment relationship are strict. Thus, Chilean labour legislation is structured in contracts that seek indefinite relationships, contemplating legal hypotheses by virtue of which fixed-term contracts become indefinite and restricting temporary employment relationships to special companies with a specific line of business consisting in temporary personnel supply. Additionally, fixed term employment contracts and contracts subject to specific tasks are limited to certain exceptional cases and for limited periods.

In Chile, the execution of a written employment agreement between the parties containing the terms and conditions of the employment relationship is mandatory. Therefore, the way in which clients can reflect these trends together with protecting their businesses interests is to analyse – based on objective criteria – which positions can be performed flexibly and the terms and conditions under which the company wishes to implement such flexibility. Then, addendums to the respective employees´ employment contracts must be executed, reflecting the regulations of the policy that modify the current contractual terms, ideally in temporary terms.

What is the biggest benefit, and the biggest risk, to businesses facilitating a more transient workforce?

The biggest benefit to businesses facilitating a more transient workforce is that teleworking allows them to access employees that otherwise may not have been able to work, thus attracting new talent.

From a labour law perspective, the biggest risk to businesses facilitating a more transient workforce is being exposed to lawsuits (especially for work related accidents and professional illnesses) and/or fines based on the breach of the employer´s legal obligation to adopt all necessary measures to effectively protect the life and health of employees. Clearly, it is more difficult to adopt these kind of measures with respect to employees that render services outside the company’s premises.

Additionally, from a general perspective, other risks to be considered are those related to potential information security and confidentiality breaches. The first related to being prepared to avoid potential security breaches derived from remote access or the use of uncontrolled storage devices in the company’s network. The latter relates to the existence of potentially confidential information in uncontrolled environments, both of which need to be addressed in advance.


Preserving company culture and retaining staff in flexible working arrangements

  • One of the most important things in a work environment with an increasingly transient workforce is to foster a sense of belonging. While on the company’s premises there are many ways to do this: corporate colours, stationery products, merchandising material, company events and what not. How to preserve this sense of belonging is key to retain and attract talent and yet “traditional” means to achieve this have to be revisited in an increasingly digital work environment. While there is no “one size fits all” way to do this, it is key to: compartmentalise personal time with company productivity; respect disconnection times rationalising the hours and frequency of use of emails and instant messaging; generate instances for employees to meet and interact with each other; provide them with teleworking kits using the products customarily available at the office; and preserving communication channels with their teams and team leaders in the transition. It is also essential to provide training to mitigate risks and assist in adapting to the new work environment. Not an easy task, but a necessary one.

How are you helping your clients to manage legislative and taxation issues around their transient workforce? For example, are there bi-lateral agreements with other jurisdictions or tax provisions to be aware of?

We are always reviewing administrative and judicial labour case law regarding these matters, keeping our clients updated on any relevant information.

Please note that Chilean teleworking legislation only applies to transient workforce that renders its services within national territory, not abroad. Indeed, by virtue of the territoriality principle, Chilean teleworking regulations are not applicable to services rendered through technological means from foreign countries. By virtue of the foregoing, the labour legal consequences/applicability associated to employees rendering services to a Chilean company from abroad must be analysed in accordance with the regulations of the country in which the services are being rendered. Additionally, bear in mind that the risk from a tax perspective is the creation of a permanent establishment in the country from which the transient workforce renders services. Should that happen, they will need to file for tax returns in the said country. From the employees´ perspective, the nature of these services may trigger the obligation to pay taxes both in Chile and in their country of residence. Both issues are usually ruled by tax bi-lateral tax agreements executed by and between Chile and certain countries.