During 2025, companies in Chile were forced to comply with numerous labour laws that required them to raise their regulatory compliance standards, increase their cost structures and anticipate the implementation schedules established in those laws in order to comply with the new regulations.

These changes were the result of various regulations that were already anticipated by our firm in its contributions to this guide in 2023 and 2024. These regulations, in addition to forcing companies to rethink the adequacy of their organisational structures, have had a profound impact on their commercial operations in Chile. On the other hand, an unanticipated regulation arose as a result of fraud detected by the Comptroller General of the Republic, which found that 25,078 public officials left the country between 2023 and 2024 while on medical leave (which by law requires mandatory rest at home, save exceptions), creating the need for legislation on the matter.

While these new regulatory requirements emphasise prevention and ongoing employee training by employers, they also reaffirm the employer’s management and command powers, especially the power to impose sanctions when serious breaches by employees are detected, a situation that was recognised and addressed by Chilean courts in various rulings during 2025.

Among the main changes to the Chilean legal framework, the following stand out.

1. Law No. 21.755 (and Law No. 21.561)

As reported in 2023 and 2024, the government proposed a gradual reduction in working hours, with a planned reduction from 45 to 40 hours per week over a period of five years, scheduling gradual reductions every two years from the publication of Law No. 21.561 (“40-Hour Law”). The first reduction to 44 hours per week took effect on 26 April 2024, while the second reduction, this time to 42 hours per week, will be enforceable for companies in Chile from 26 April 2026.

On 11 July 2025, more than a year after the 40-Hour law came into effect and following misinterpretations about how to reduce working hours in the absence of an agreement between employers and their employees, Law No. 21.755 was published, introducing an amendment to the 40-Hour Law to the effect that, in the absence of an agreement between the parties or with the unions on how to distribute the reduction in working hours, the reduction shall be made on the day determined by the employer and may not be made proportionally over the five days of the week. In other words, in the absence of agreement between the parties on the reduction of the working week, it must be reduced by one hour or 50 minutes of the working day, as appropriate, on the day determined by the employer.

This will undoubtedly have repercussions for companies within a few months, as weekly working hours following this new reduction may not exceed 42 hours. This prospect should encourage companies to anticipate the upcoming weekly reduction by evaluating the productivity of their work teams, identifying the weeks with higher work peaks within a month, and analysing the different alternatives that the 40-Hour law offers employers to comply with this regulation. One of those alternatives is new cycles of up to four weeks with weekly averages of 40 hours (42 hours until 25 April 2028):

• Two non-consecutive weeks of the four-week cycle can be as long as 45 hours.
• A “menu” of weekly alternatives can be agreed. The company may choose one of the alternatives one week in advance.
• Company union(s) must accept the proposed alternative when it affects unionised employees.
• Overtime plus regular hours cannot exceed 52 hours per week.
• With union agreement, two non-consecutive weeks of the four-week cycle can reach up to 52 hours.

This alternative is intended for companies that have higher peaks of work in some weeks of the month and not throughout the entire monthly cycle – for example, accounting firms with a higher workload during the last two weeks of the cycle when they must close payment processes.

2. Law No. 21.746

In May 2025, the Comptroller General of the Republic detected that more than 25,000 public officials had travelled outside the country while on medical leave between 2023 and 2024. As a result, Law No. 21.746 was enacted, with the aim of strengthening the powers of regulatory and supervisory bodies in the granting and use of medical leave and establishing administrative and criminal penalties. Among its main aspects, the following stand out:

• Requirements for issuing leave: Only surgeons, dental surgeons or midwives who are duly registered and licensed in the National Registry of Individual Health Providers may issue medical leave. Physicians who received their degrees after 19 April 2009 must also pass the national medical knowledge exam. This exam is now a requirement for granting medical leave and will evaluate content on sanctions.
• Electronic medical leave authorisation: As a general rule, priority should be given to the issuance of medical leave authorisation in electronic format. Medical leave granted on paper will be exceptional due to lack of technological means or connectivity, or for authorised professionals. There will be an information system for its granting and processing, supervised by the Social Security Superintendency (SUSESO).
• Administrative sanctions for professionals:
1. The Preventive Medicine and Disability Commission (COMPIN) may request background information. Failure to provide the requested information, providing insufficient information, or failing to attend summonses without justification may result in a fine of between 10 and 50 UTM (USD800 to USD3,900). In certain cases, the authority to grant medical leave may be suspended for up to 30 working days, renewably.
2. SUSESO will investigate the granting of medical leave without medical justification or without associated healthcare. Penalties that can be imposed by SUSESO include suspension of the authority to grant medical leave from the National Registry of Individual Health Providers and fines for tax purposes. Penalties increase for repeat offences.
3. Granting medical leave during a period of suspension carries additional fines (50 to 300 UTM/USD3,900 to USD23,420).
• Penalties for medical controllers: An ISAPRE (private health insurance company) medical controller who rejects or modifies a medical leave authorisation without justification may be reported to SUSESO. Penalties range from fines to suspension of the authority to approve medical leave (30 days, 90 days or one year). The ISAPRE is jointly and severally liable for the payment of the fine.
• Public registry: SUSESO will maintain an anonymous reporting system on its website and a public registry of the sanctions applied and the average number of medical leave authorisations issued per provider. Sanctions will be recorded in the National Registry of Individual Health Providers.
• Criminal penalties: Penalties for issuing false medical leave authorisations are increased, and malicious use of false documents is penalised. If a history of falsification is proven, the case will be referred to the Public Prosecutor’s Office.
• Statute of limitations: Medical leave authorisations issued more than five years ago cannot be investigated or penalised.

This law came into effect on 24 May 2025.

3. Law No. 21.735

On 26 March 2025, Law No. 21.735 (“Chilean Pension Reform”) was published, creating a new mixed pension and social security system in the contributory pillar, increasing the amount of the guaranteed universal pension, and establishing certain regulatory changes. Although this Law will enter into force on 1 April 2027, rules have been established that took or will take effect before that date. One of the obligations that has been enforceable on companies since August 2025 is the increase in the employer’s contribution.

It should be noted that this law modified the pension system as it was known, moving from an individual capitalisation system in which employees’ pensions depended exclusively on their years of service and personal savings in the various pension fund administrators, to a mixed capitalisation system with a solidarity contribution.

To this end, the law created a new employer contribution of 7% of taxable income. This contribution is in addition to 1.5% that companies must now contribute to Disability and Survivorship Insurance (SIS). To achieve the 8.5% increase, the law established gradual increments over nine years (which may be extended for two more years), with the first increase in the employer contribution of an additional 1% having come into effect on 1 August 2025. A further increase is expected this year, bringing to the contribution up to 3.5% on 1 August 2026.

As a result, the total contribution to be paid by the employer will gradually increase to 8.5%. This 8.5% will be distributed as follows:

• 4.5% will go to individual capitalisation.
• The remaining 4% will go to Social Security, managed by the Social Security Institute (IPS), according to the following breakdown:
1. 2.5% to cover SIS contingencies (disability and survival) and compensation for women for their longer life expectancy.
2. 1.5% to finance the benefit per year contributed.

However, this obligation to contribute 8.5% will cease in any of the following three cases (whichever occurs first):

• When the employee retires due to old age or total disability.
• If the employee has taken advantage of the exemption from the obligation to contribute.
• Upon reaching 65 years of age (men or women).

Thus, these increases – although gradual – will influence the cost to companies of this higher tax (an additional 2% in August 2026) on employees’ remuneration. As with all remuneration, these amounts are not provisioned, so we are not talking about an effect on the company’s liabilities, but rather on the budget (cash effect).

4. Audit Procedure of the Labour Authority

In November 2025, the Labour Authority updated the “Inspection Procedure Manual”. Then, on 22 December 2025, the Ministry of Labour and Social Welfare issued a general regulation approving the Inspection Procedure of the Labour Authority, which came into force in January 2026. The document establishes a comprehensive regulatory framework based on principles of transparency, efficiency and probity to oversee compliance with labour and social security laws. Its content details the powers, duties and prohibitions of inspectors, as well as the rights and obligations of employers and employees.

It also details the powers, duties and prohibitions of inspectors, as well as the rights and obligations of employers and employees. A key aspect is the implementation of the Inspection Management System (SGI), a digital platform designed to modernise and automate the calculation of penalties. Among the most important provisions are the following:

• Inspections may be initiated on the authority’s own initiative or at the request of a third party.
• Generally, inspections must be conducted on-site and must be completed in a single act. Only in exceptional cases may an inspection be conducted remotely or may the inspector request the employer to submit documents at a date after the inspection.

In practice, this means that employers must have readily available and easily accessible at their premises all information that an inspector may request. If a company has authorisation to centralise documents, such authorisation (which is valid for one year) must be valid at the time of the inspection. Given these requirements, it is advisable to check whether you have such authorisation, especially if you have different branches, sites or establishments in Chile. In addition, it is advisable to have a strategic response plan in place in the event of an inspection by the Labour Authority, with the aim of reducing the risk of fines and penalties, clearly identifying those responsible for receiving and managing the inspector’s requests and conducting the process on behalf of the company.

5. Recent Case Law

Recent case law includes the following:

• Judicial Case Law from the Court of Appeals of Iquique regarding dismissal for serious misconduct upon detection of drugs in employees at their workplaces (Ruling No. 22-2025, dated 19 May 2025): The Court issued a replacement ruling in the controversial SQM case, relating to dismissals for serious misconduct following the detection of drugs in the bodies of employees inside mining operations. The Court held that the employer had a legitimate objective in implementing drug testing, considering the high risks inherent in mining and its legal duty to protect the safety and lives of employees, in accordance with Article 184 of the Labour Code and the Mining Safety Regulations. The Court considered that drug testing at the beginning of the shift or upon entering the workplace is an appropriate, necessary and proportionate measure, especially when the results show significant levels of substances in the body. Likewise, after analysing the results of the urine tests performed on the plaintiffs, it concluded that the levels detected showed a significant presence of drugs in their bodies. On that basis, it examined the necessity and proportionality of the measure, determining that there was no infringement of privacy or fundamental guarantees, even though the consumption had taken place outside working hours. Finally, it specified that what was being penalised was the presence of drugs and not their immediate influence, determining that the measure fell within the employer’s power and obligation to ensure a safe working environment.
• Judicial Case Law from the Court of Appeals of Valparaíso regarding an appeal for protection against the Valparaíso Labour Authority for exceeding the maximum investigation period of 30 days established in Law No. 21.643 (Ruling No. 2134-2025 dated 12 June 2025): A company filed an appeal for protection against the Valparaíso Regional Labour Authority because an investigation initiated against it based on a complaint under Law No. 21.643 (“Karin Law”) and communicated by the authority extended beyond the legal deadline of 30 days. The Labour Authority argued that the appeal was inadmissible because it replaced ordinary procedures under Law No. 19.880 and justified its failure to respond to the company by citing the use of an unauthorised email address. It also argued that the increase in complaints following the entry into force of the Karin Law and the lack of additional resources prevented it from meeting the deadlines, which were not fatal. The Court rejected these arguments and held that Article 211-C of the Labour Code establishes a peremptory deadline of 30 days for these investigations, given the seriousness of the conduct reported. It concluded that the authority’s omission generated uncertainty and harm to the parties, upholding the appeal and ordering the investigation to be closed within the legal deadline and a ruling on the validity of the precautionary measures.
• Judicial Case Law from the Supreme Court of Appeals of Chile regarding on sexual harassment (Ruling No. 4075-2024, dated 8 August 2025): The Supreme Court, in accepting the appeal for unification of jurisprudence, determined that conduct constituting sexual harassment is inherently serious and does not require additional consideration of proportionality to justify dismissal. The ruling holds that these actions are incompatible with human dignity and violate the physical and moral integrity of employees, affecting legal rights of the utmost importance. The Court established that, in accordance with Article 160 No. 1 (b) of the Labour Code, proof of sexual harassment is sufficient to constitute grounds for termination of employment without entitlement to compensation. The Court clarifies that the legislation has already predetermined the seriousness of these acts, so it is not appropriate to grade the penalty or consider external factors, such as the offender’s previous work history, since such elements have no bearing on the harmful nature of harassment. Finally, the highest court emphasised that employers have a duty of care under Article 184 of the Labour Code, which obliges them to protect the honour and integrity of their employees. Consequently, dismissal is validated as a legitimate and necessary measure when a transgression of this nature is verified, as it constitutes a proportionate response to conduct that the legal system seeks to eradicate from the workplace.

6. What’s Coming: Labour-Related Bills

Labour-related bills due to be considered include:

• Postnatal extension (bill Bulletin No. 17049-13, dated 30 May 2024): This bill proposes to increase the length of postnatal parental leave for mothers and fathers. In Chile, postnatal parental leave extends until the child is 12 weeks old (84 days). Immediately after that, postnatal parental leave continues for a total of 12 weeks, another 84 days, or 18 partial weeks if the mother returns to work part-time. Once the mother has made full use of her postnatal leave, she must return to work when her child is five-and-a-half months old. On the other hand, the father’s special paid leave of five days must be used within the first month of the newborn’s life, in order to bond with the newborn. The bill proposes:
1. Replacing the current five-day paternity leave, which can be taken continuously from the date of birth or spread out over the first month after birth, with 30 days, ten of which must be taken continuously from the date of birth and 20 during the child’s first year of life.
2. Female employees will be entitled to 40 weeks of postnatal parental leave (instead of the current 12 weeks, or 18 weeks if they return to work part-time), following postnatal leave, receiving a subsidy equivalent to 100% of the maternity leave subsidy during the first weeks (first eight months), then 80% of the allowance (months nine and ten) and, finally, 60% of the allowance (months 11 and 12) for the last few weeks. Female employees are allowed to return to work full-time from week 13 of postnatal parental leave, if they so wish. Otherwise, the allowance will be maintained in proportion to the corresponding period.
3. If both parents are working, either parent, at the mother’s discretion, may take postnatal parental leave. The father may take leave starting in the last 24 weeks, for the number of weeks indicated by the mother, during the final period of leave, and will be entitled to a subsidy calculated based on his earnings. If the mother decides neither to transfer the last weeks of leave to the father nor to use them herself, she may return to work, giving her employer at least 30 days’ notice of her return date. This bill is currently undergoing its first constitutional review.
• Bill amending the Labour Code regarding transparency in the use of medical leave (bill Bulletin No. 17680-13, dated 3 July 2025): This bill proposes to amend Article 160 of the Labour Code to address the fraudulent use of medical leave and violations of rest periods. This initiative arises from the media coverage of an investigation by the Comptroller General of the Republic, which uncovered multiple cases of public employees travelling abroad during periods of medical leave and the lack of tools available to private sector employers to monitor such conduct. In short, it seeks to make the presentation of false medical leave or non-compliance with rest periods a serious breach of integrity, justifying dismissal without compensation in the private sector. It also proposes to empower employers to request information from health institutions about the validity of leave, while maintaining the confidentiality of employees’ personal data. This bill is currently undergoing its first constitutional review and is being considered by the Labour and Social Welfare Committee.