The reduction applies to all jobs regulated by the Labour Code. It will enter into force gradually over a period of five years, in an effort to avoid affecting small and medium-sized enterprises and employability.
This change represents a crucial step forward in aligning Chile’s labour regulations with international standards and addressing longstanding concerns regarding excessive working hours.
The working week has long been one of the main demands of employees in Chile, and the demands of modern life make it difficult to reconcile family life or recreation with the 45-hour working week. The new law is a response to the historical demands. It was created to improve employees’ quality of life: it aims to allow them to develop a family life and/or have free time for education or entertainment.
Another reason for passing the new law is that several studies have indicated that European countries with shorter working hours have higher average productivity than those with longer working hours. A longer working week therefore does not necessarily mean enhanced productivity.
However, reduction of weekly working hours is not the sole purpose of the new law. It also contains new rules on flexibility in the distribution of working hours, exclusions from the limits on working hours, and modifications related to overtime compensation. It further establishes rules regarding the reconciliation of work and family.
The most relevant aspects of the Law are set out below.
Reduction of the ordinary weekly working hours
The limit on the ordinary weekly working hours will be reduced from 45 to 40 hours, without reducing employees’ wages. This modification will enter into force gradually: on 26 April 2024, the limit will be reduced to 44 hours; on 26 April 2026, it will drop to 42; and finally to 40 hours as of 26 April 2028.
The allocation of the reduction of the weekly working hours must be agreed upon by the parties. If no agreement is reached, the employer must reduce the hours proportionally among the weekly working days.
Flexibility in the distribution of working days
The new law also allows for the working schedule to be distributed over four, five, or six days, opening the possibility of an altered workday scheme without the need for authorisation by the Labour Inspectorate. This means, for example, that it will be possible (with the agreement of the employees) to implement a scheme of four working days followed by three rest days, with ten hours per working day.
This change will come into force on 26 April 2028. If the employer has already reduced its ordinary weekly working schedule to 40 hours before that date, the change can be implemented from the moment it meets the 40-hour limit.
Employees who are excluded from the ordinary working time limit
One of the most important changes in the new law that employers need to be aware of is the modification of the Labour Code provisions regarding employees who are excluded from the limits on working hours.
Under the new rules, managers, administrators, attorneys with administrative powers, and all other employees who work without immediate supervision will remain excluded from the ordinary working hour limits due to the nature of the tasks performed.
However, employees who work at home or in a place freely chosen by them, commission and insurance agents, traveling salespeople, collectors, and other similar employees who perform their job functions outside the employer’s premises, all of which were previously exempt, will no longer be excluded from the limits on working hours.
If there is a dispute over the employee’s classification, at the request of any of the parties (or the applicable union), the Labour Inspector will decide whether a particular job falls within an excepted category. This decision may be appealed to a Labour Judge.
This change means that employers will need to review the employment contracts of all employees who are currently exempt from the limits on working hours, to verify whether or not the exception continues to apply.
This new modification will come into force on 26 April 2024.
Overtime
The new law also allows the parties to agree in writing that overtime will be compensated by additional holidays instead of premium pay. In such cases, the parties may agree to up to five additional working days off per year. These days must be taken by the employee within the six months following the cycle in which the overtime hours were incurred, and the employee must provide forty-eight hours’ notice to the employer. For each overtime hour of work, one and a half hours of rest time must be compensated.
This modification will come into force on 26 April 2024.
Modifications related to the reconciliation of work and family life
The new law introduces a measure aimed at reconciling the work and family life of employees by providing greater flexibility at the beginning of the working day for mothers and fathers.
Parents and caretakers of children up to twelve years of age will have the right to a time band of two hours total, so that they can vary by up to one hour the time at which they begin and end their working day. The employer can only deny the use of this right in specific cases set out in the law.
Takeaway for Employers
The new law provides that under no circumstances may employers reduce the salaries of their employees in response to the mandated reduction in working hours. This will involve challenges for employers, as they will want to ensure that the adjustments to employee working hours do not affect productivity or result in higher economic expenses.
Cooperation and dialogue between employers and employees will be key to agreeing on conditions that allow them to adapt to the new working hours and ways of organising the work.
Overall, the reduction in working hours is expected to adapt the country to international norms, facilitate the balancing of family life with the work environment, and enhance well-being and work performance.
Discover more about working hours on our Global HR Law Guide
Insights
Chile introduces 40 hour working week
The reduction applies to all jobs regulated by the Labour Code. It will enter into force gradually over a period of five years, in an effort to avoid affecting small and medium-sized enterprises and employability.
This change represents a crucial step forward in aligning Chile’s labour regulations with international standards and addressing longstanding concerns regarding excessive working hours.
The working week has long been one of the main demands of employees in Chile, and the demands of modern life make it difficult to reconcile family life or recreation with the 45-hour working week. The new law is a response to the historical demands. It was created to improve employees’ quality of life: it aims to allow them to develop a family life and/or have free time for education or entertainment.
Another reason for passing the new law is that several studies have indicated that European countries with shorter working hours have higher average productivity than those with longer working hours. A longer working week therefore does not necessarily mean enhanced productivity.
However, reduction of weekly working hours is not the sole purpose of the new law. It also contains new rules on flexibility in the distribution of working hours, exclusions from the limits on working hours, and modifications related to overtime compensation. It further establishes rules regarding the reconciliation of work and family.
The most relevant aspects of the Law are set out below.
Reduction of the ordinary weekly working hours
The limit on the ordinary weekly working hours will be reduced from 45 to 40 hours, without reducing employees’ wages. This modification will enter into force gradually: on 26 April 2024, the limit will be reduced to 44 hours; on 26 April 2026, it will drop to 42; and finally to 40 hours as of 26 April 2028.
The allocation of the reduction of the weekly working hours must be agreed upon by the parties. If no agreement is reached, the employer must reduce the hours proportionally among the weekly working days.
Flexibility in the distribution of working days
The new law also allows for the working schedule to be distributed over four, five, or six days, opening the possibility of an altered workday scheme without the need for authorisation by the Labour Inspectorate. This means, for example, that it will be possible (with the agreement of the employees) to implement a scheme of four working days followed by three rest days, with ten hours per working day.
This change will come into force on 26 April 2028. If the employer has already reduced its ordinary weekly working schedule to 40 hours before that date, the change can be implemented from the moment it meets the 40-hour limit.
Employees who are excluded from the ordinary working time limit
One of the most important changes in the new law that employers need to be aware of is the modification of the Labour Code provisions regarding employees who are excluded from the limits on working hours.
Under the new rules, managers, administrators, attorneys with administrative powers, and all other employees who work without immediate supervision will remain excluded from the ordinary working hour limits due to the nature of the tasks performed.
However, employees who work at home or in a place freely chosen by them, commission and insurance agents, traveling salespeople, collectors, and other similar employees who perform their job functions outside the employer’s premises, all of which were previously exempt, will no longer be excluded from the limits on working hours.
If there is a dispute over the employee’s classification, at the request of any of the parties (or the applicable union), the Labour Inspector will decide whether a particular job falls within an excepted category. This decision may be appealed to a Labour Judge.
This change means that employers will need to review the employment contracts of all employees who are currently exempt from the limits on working hours, to verify whether or not the exception continues to apply.
This new modification will come into force on 26 April 2024.
Overtime
The new law also allows the parties to agree in writing that overtime will be compensated by additional holidays instead of premium pay. In such cases, the parties may agree to up to five additional working days off per year. These days must be taken by the employee within the six months following the cycle in which the overtime hours were incurred, and the employee must provide forty-eight hours’ notice to the employer. For each overtime hour of work, one and a half hours of rest time must be compensated.
This modification will come into force on 26 April 2024.
Modifications related to the reconciliation of work and family life
The new law introduces a measure aimed at reconciling the work and family life of employees by providing greater flexibility at the beginning of the working day for mothers and fathers.
Parents and caretakers of children up to twelve years of age will have the right to a time band of two hours total, so that they can vary by up to one hour the time at which they begin and end their working day. The employer can only deny the use of this right in specific cases set out in the law.
Takeaway for Employers
The new law provides that under no circumstances may employers reduce the salaries of their employees in response to the mandated reduction in working hours. This will involve challenges for employers, as they will want to ensure that the adjustments to employee working hours do not affect productivity or result in higher economic expenses.
Cooperation and dialogue between employers and employees will be key to agreeing on conditions that allow them to adapt to the new working hours and ways of organising the work.
Overall, the reduction in working hours is expected to adapt the country to international norms, facilitate the balancing of family life with the work environment, and enhance well-being and work performance.
Discover more about working hours on our Global HR Law Guide
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