The main amendments of the original bill are the following:
- Unions as the “principal subject” of collective negotiation: Currently, the existence of a union at a company does not prevent groups of employees, united for the purposes of negotiation, from bargaining collectively with the company. The bill of law restricted the right of employees to establish negotiating groups, allowing them only in companies where a union exists and preventing them from negotiating in a regulated manner. Thus, in companies in which a union exists, employees who do not form part of the union may only bargain collectively by either affiliating with the existing union or creating a new one.
- Extension of benefits: The reform bill proposed to prohibit the employer from completely or partially applying or extending the benefits of a collective instrument to employees who did not take part in the collective negotiation process, including those without union affiliation. According to the original bill, the extension of benefits to non-affiliated employees by the employer, without the consent of the respective union, was considered an anti-union practice. The bill also provided that union membership gives all new members of the union the benefits of the collective agreement signed by the trade union, as soon as they have communicated their affiliation to their employer.
- Prohibition of the replacement of striking employees: The bill of law eliminates an employer’s ability to replace striking employees. The prohibition covers both internal and external employees. It will therefore not be legal to replace the job or functions of a striking employee with another employee of the company, or with external personnel. Violation of this prohibition constitutes a serious anti-union practice, enabling the labour inspectorate to require the immediate removal of the replacement employee from the striker’s job. In the case of employer’s refusal to withdraw the replacement employee, the labour inspectorate must sue the employer before a labour court. The union may initiate this action or become part of the complaint filed by the labour inspectorate. Likewise, the striking employee’s choice to be individually reincorporated to their role from the 15th day of the strike onwards are implicitly derogated. It should be noted that the prohibition on replacing striking employees, combined with the indefinite duration of the strike as already established in Chilean law, in practice gives the unions a right to interrupt indefinitely the operational continuity of the company.
- Extension of the union’s information rights: According to the bill, in the context of a collective bargaining process, the employer must deliver the following information to unions:
- detailed compensation data of each unionised employee;
- compensation by position or function (only when there are five or more employees in the relevant position);
- balance sheet and financial results of the year;
- and the investments plans of the company.
- Minimum services and constitution of emergency teams: In accordance with the law bill, during a strike the union’s negotiating committee must enable personnel to carry out the minimum level of service necessary to: protect the assets and operations of the company; prevent accidents; ensure the provision of public utility services and the basic needs of the public (including those relating to public health and safety); and ensure the prevention of damage to the environment or to general public health. The definition of “minimum level of service” should be agreed upon by the parties in a preliminary negotiation. The absence of an agreement should be resolved by the labour authority, and the decision will be appealable before a labour court. Notwithstanding the above, it should be kept in mind that neither the labour inspectorate nor the labour courts are competent to assess whether an emergency team is qualified to maintain the specific functions of the company, taking into account the complexity and diversity of each company’s processes.
- Basic minimum for the collective negotiation: The bill of law establishes that an employer’s response to the collective negotiation must include, at least, a basic minimum for negotiation. If a collective agreement is in force, the basic minimum for negotiation constitutes an offer with identical stipulations to those established in the current collective agreement, excluding adjustments as per inflation, real increases, pacts over special work conditions and benefits granted only as a consequence of the subscription of the collective agreement. If there is no collective agreement in force, the employer’s response may not be less than the benefits which, in a regular and periodic form, have been granted to the employees represented by the union. If the employer’s response does not comply with this basic minimum standard, it will be understood as incorporated for all legal purposes. This proposal of the bill of law limits the company’s administrative powers by restricting the potential to reformulate, change or remove incentives and agreed benefits, as established by the collective agreements in force.
The labour reform bill was subject to countless modifications by way of amendments, filed by the executive and the members of congress, during its legislative process. The most relevant changes proposed are the following:
- Violence in strikes and prevention of abuse by unions: a series of articles penalising violence in strikes, sanctioning such behaviour as an unfair practice of unions, were eliminated, notwithstanding eventual criminal responsibilities.
- Dismissal as retaliation for participating in collective bargaining: employees involved in a collective bargaining process are currently protected from dismissal by a dismissal protection privilege lasting up to 30 days following the conclusion of the collective bargaining process. The amendment establishes that a dismissal in retaliation for participating in collective bargaining shall be invalid; it also extends the aforementioned dismissal protection period to 90 days.
- Minimum services: The amendments by the Executive restrict even further the concept of minimum services that must be provided by the union to the employer during the strike. Those minimum services would be now those “strictly necessary” to avoid serious, present and irreparable harm to the company, harm or damage to the environment, or harm or damage to customers of a health establishment, without affecting the essential right to strike.
- The last part of the bill discussed a company’s ability to use employees to perform the tasks of those on strike (ie, an internal replacement). As the scope of this is unclear, it is our understanding that this ability will be restricted by the labour courts and labour authority.
It should be noted that the labour reform has been subject to huge national debate, with strong criticism coming from various quarters – particularly entrepreneurs and associated parties.
Once the bill was approved by Congress, on 6 April 2016, a group of parliamentary senators and deputies submitted to the Constitutional Court a request to declare certain rules of the labour reform as unconstitutional.
First, the right to collective bargaining for unions only was challenged by the constitutional requirement, because the bill infringed the right of non-unionised employees to collective bargaining. In fact, this modification deprived the employee’s right to freedom of association, because they will be forced to join a union to in order to bargain collectively.
Another challenged matter was the extension of benefits to unaffiliated employees and new union members. This modification, introduced by the bill, was objected to because it infringes the freedom of association. Indeed, an employee’s decision not to join a union creates the negative consequence that, as a non-member, he or she is not privy to the benefits obtained in the negotiation – non-membership is thus punished. Also, it is unconstitutional to deny unaffiliated employees access to the benefits agreed in collective instruments, unless it is authorised by the union and affects the employer’s right to manage the company.
Also challenged was the extension of the union’s right to information, specifically regarding the the employer’s obligation to reveal employee remunerations. This rule was objected to because it infringes the constitutional right to privacy and the private life of employees.
Finally, it was stated that regulations regarding collective bargaining with inter-company unions infringed the Constitution, which considers collective bargaining to lie within the scope of the company; negotiation outside that area must be carried out with the consent of the parties. Under the labour reform, the employer must negotiate with employees who have no employment relationship with the company, and have different interests and needs of the company’s business; imposing an absolute equality between enterprises (medium and large) without considering their different realities, working conditions, negotiating capacity and resources.
On 27 April 2016, the Constitutional Court informed the agreements reached with respect to the requirement of unconstitutionality, and the final judgment was released on 9 May of this year. The Court adopted the following agreements:
The rule stating only unions could negotiate collectively in regulated collective bargaining was declared unconstitutional; negotiating groups will have the same capability as unions to participate in regulated collective bargaining.
As for the extension of benefits to unaffiliated employees and new union members, the objection was partially approved with regard to new union members; all other considerations were rejected. Therefore, benefits can only be extended to new union members with the approval of the employer and the union.
Regarding the union’s access to employee-remuneration data, the objection was dismissed. The company shall therefore provide this information to the union.
Finally, as for the obligatory nature of collective inter-company bargaining, the claim of unconstitutionality was rejected by the Court. This enables inter-company unions to negotiate in accordance with the procedure of regulated collective bargaining.
The Constitutional Court’s judgment was strongly criticised by the government, which has indicated that the Court has eliminated the “heart” of the labour reform promoted by the president, by modifying one of the key aspects of the reform – the rule that seeks to limit the freedom of employees to form negotiating groups – and by delivering the monopoly of collective bargaining to the union.
In the current context, the government has exercised “the presidential right of veto” (submit a bill again to a legislative discussion). The final law is expected to be enacted during the second semester of 2016.
It would be appropriate for the government to recognise the errors of a reform that, despite the Constitutional Court’s warnings, still contains elements that alter the balance of negotiations between employees and companies. It also promotes a backlash against the flexibility that some of the world’s most developed economies are incorporating into their labour laws.