Bloomberg Law for HR Professionals is a complete, one-stop resource, continuously updated, providing HR professionals with fast answers to a wide range of domestic and international human resources...
By Tom Azzopardi
Oct. 15—Workers have the right to negotiate labor conditions with the parent company rather than the local subsidiary for which they work, under a ruling issued by a court in the city of Caldera.
The principal union representing its workers took Hipermercados Tottus SA, a unit of the Falabella retail group, and its local subsidiary Servicios Generales de La Calera to court in a bid to show that they constituted a single employer, a view the court supported.
The ruling follows the promulgation of the so-called MultiRUT law (Law No. 20,760) by President Michelle Bachelet in July of this year. The name of the law refers to the practice among large companies of establishing legal entities for each division with individual tax IDs or Rol Unitaria Tributaria (RUT), requiring employees to negotiate on a site-by-site basis rather than with the parent company.
In its ruling, issued Sept. 29, the court held that the two companies constitute a single employer under the Labor Code and are therefore jointly responsible for the fulfillment of legal labor and safety requirements and individual or collective agreements. Employees of both entities can constitute one or more unions and hold collective negotiations with both or either company.
The MultiRUT legislation creates the legal entity of “employer,” which differs from an individual company “by coordinating and directing those who work there, under different models of subordination and dependence.”
“The law establishes that one or more companies constitute the same shared employer when they have common labor and fulfill certain requisites such as providing similar or complementary products or services,” said Labor Minister Javiera Blanco on Sept. 29.
Companies found to have breached the law can face fines of 20 to 300 monthly tax units (1.28 million pesos or $21,800).
Approval of the law represented a long-held desire of Chile's labor movement to increase its negotiating power against large companies.
The law “allows unions that represent employees of several companies . . . to present collective proposals and forces the employer to negotiate with them,” Marcela Salazar, a labor lawyer with law firm Philippi, Yrarrázaval, Pulido & Brunner, told Bloomberg BNA.
In some cases, employees of companies with different owners may be able to have them recognized as a single employer, allowing the creation of intercompany unions and obliging the firms to negotiate collectively, something that does not currently occur in Chile, said Juan Andrés Perry, senior manager in human resources at professional services firm EY.
To have different companies recognized as a single employer, however, requires a report by the Labor Authority to confirm that the companies fulfill the required conditions (shared address, controlling relations and similar or complementary activities) and a court ruling based on that report.
The Labor Authority has created a special investigative unit to deal with sensitive and high-impact investigations, including application of the MultiRUT law. According to Blanco, the unit has so far received 83 requests from the courts to undertake investigations and issued 29 reports.
Investigations to date have been concentrated in a handful of sectors led by construction and real estate (20.3 percent), retail (15.7 percent) and telecommunications and transport (15.3 percent).
To contact the reporter on this story: Tom Azzopardi in Santiago at email@example.com
To contact the editor responsible for this story: Rick Vollmar at firstname.lastname@example.org
For more information on HR law and regulation, see the Chile primer.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)