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News Alert

Main aspects in relation to the Chilean Government’s modifications to the bill that promotes a change of the concept of enterprise for labor purposes (the “Multirut Law”)

On April 21, 2014, the Chilean Government sent new modifications on the pending bill that promotes a change of the concept of Enterprise contained in Article 3, paragraph 3, of the Labor Code.

The first indication incorporates an element of uncertainty in relation to what will be the clear and specific criteria that according to the law will have to be taken into consideration in order to determine if two or more companies altogether constitute one economic unity for labor purposes. Indeed, it is proposed a new fourth paragraph in Article 3 of the Labor Code, which states that “Two or more companies will be considered as a single employer for labor and social security purposes, whenever they have a common labor managing, and concur in their respect conditions such as the similarity and the necessary supplementarity of the products they elaborate or the services they render, or the existence among them of a common controller”.

In addition to this clear requirement (“common labor management”), there are also other requirements. However, the bill refers to them in a vague context by referring to them only as “such as”. Concepts as wide as “having products offered or services rendered that are similar or supplementary”, in an economy that works through the constant interaction of several companies whose products or processes “supplement” each other, can lead to misunderstandings and introduce legal uncertainty.

The proposal gives jurisdiction to the Labor Courts for the resolution of these matters. However, this is already contained in the bill. Notably, there is a relevant amendment contained in the proposal. Before the modifications, the bill referred to a report that the judge had to request from an Expert Committee during the process of determining the existence of an economic unit, however, the report was not binding. The current comment eliminates such reference and instead, states that the judge “will decide after having a report issued by the Labor Board”. There is no reference as to the value of this report or the value that the judge shall give to it. However, Article 23 of Law Decree N°2 of 1967, from the Labor and Social Security Ministry, which “Establishes the Restructuring and Sets the Functions of the Labor Board”, states that:

“The Labor Inspectors will be considered as ministers of faith regarding all actions engaged in the performance of their duties, in which they may take statements under oath.
Thus, the facts uncovered by the Labor Inspectors and from which they should inform in their own initiative or by request, will constitute a legal presumption of truth for all legal purposes, including for the purpose of legal evidence “.

In consequence, the content of the report according to the current legislation may not be considered only as a mere element of a conviction, but may also be coated with a legal presumption of truth. The companies sued as an economic unit will have to overcome such presumption, most likely having to prove negative facts and consequently relieving the burden of proof for those who claim the economic unit declaration.

The modification proposes to remove Article 507 of the Labor Code in its current wording and replace it with an entirely new text. The new proposal entitles “unions or employees who believe that their labor or social security rights have been affected” to file a claim regarding the declaration of an economic unit.

If you have any questions regarding the matters discussed in this memorandum, please contact the following attorneys or call your regular Carey contact.

This memorandum is provided by Carey y Cía. Ltda. for educational and informational purposes only and is not intended and should not be construed as legal advice.

Carey y Cía. Ltda.
Isidora Goyenechea 2800, Piso 43
Las Condes, Santiago, Chile.