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Labor Reform – Amendments to the Labor Code

Law modernizing Labor Relations

Act 20940 “modernizing the System of Labor Relations” was published in the Official Gazette on September 8, 2016.  The main amendment by this act to the Labor Code was in connection with collective bargaining, and it will enter into force on April 1, 2017.  Some of the major provisions in this amendment are:

Workers who cannot bargain collectively

Once this law enters into effect, the prohibition on bargaining collectively applicable to piecework workers or temporary workers will be eliminated and they may negotiate pursuant to law.

Extended benefits

Extending benefits to workers not involved in the negotiations must be agreed in a specific clause in the collective bargaining agreement.  This eliminates the employer’s power to extend the benefits in a collective bargaining agreement to non-union workers.

Collective bargaining of a contractor

If a contractor’s workers go on strike, the principal can perform the subcontracted services directly or through another contractor.

Survival of a collective bargaining agreement

The clauses of an expired collective bargaining agreement will continue in force as part of the individual employment contracts of the relevant workers, except as concerns salary adjustments; cash benefits; real increases; rights and obligations that can only be enforced or performed collectively; and agreements on special working conditions.

A change to the periods for regulated collective bargaining

The periods were changed by which a draft collective bargaining agreement had to be presented and answered.  In fact, the period was extended for unions to present a draft collective bargaining agreement when there is already one in place:  from no earlier than sixty days to no later than forty-five days prior to the agreement’s expiration date.  The employer’s time to respond to the draft proposal was reduced to ten days after it is presented.  That period may be extended for another ten days by mutual agreement.

Right to Strike

It is now forbidden to replace striking workers.  Employers can change work shifts or working hours and make the necessary adjustments to ensure that non-striking workers can perform the duties agreed in their employment contracts.

Minimum services and emergency brigades

The union bargaining commission will be obligated, without affecting the right to strike, to provide staff to provide the minimum services strictly necessary to protect corporeal assets and the company’s facilities,  to prevent accidents during strikes, to guarantee services of public utility, the basic needs of the population, including related to the life, safety or health of individuals, and to guarantee the prevention of environmental or sanitation damage.

Collective bargaining of workers affiliated to intercompany unions

Workers who are members of intercompany unions may bargain with their company following the regulated collective bargaining procedure, with the changes indicated in the law.

Microbusinesses and small businesses may decide at their discretion whether or not to bargain with intercompany unions.

The intercompany union will handle the collective bargaining of its members with mid-sized and large companies.  The union bargaining commission will be comprised of the union leaders and representatives working in the company with which negotiations are being held.

Collective bargaining of temporary workers, seasonal workers, piecework workers or workers in temporary operations

These workers may negotiate directly or according to the regulated procedure in applicable law if the job or temporary operation lasts more than twelve months.

Piecework workers or workers in temporary operations will have no immunity from severance or any right to strike.  The union may present a draft collective agreement once the job or temporary operation begins.

Agreements on special working conditions

Unions in companies where union members represent more than 30% of all workers may agree to special working conditions with employers


Please contact Francisco Schenke at for further information on this subject.