Chile: Termination of employment

Original author: Andres Valdes, Baker & McKenzie

Updating author: Agustin Alcalde, Clyde & Co

See the legal services provided by the author of International > Chile, including any discounts/offers for subscribers.

Summary

• Employment contracts may be terminated only on grounds specified by statute. (See General)
• In the event of dismissal on certain specified grounds (such as redundancy), the employer must give the employee at least 30 days' notice, or one month's pay in lieu of this notice, while an employee must generally give at least 30 days' notice of resignation. (See Notice periods)
• Employees may be dismissed because of "business necessities" (broadly, this means redundancy), while certain types of employee, notably managerial and similar staff, may be dismissed "at will" (that is, without the employer having to cite any particular reasons). In both cases, an employee who has at least one year's service is entitled to receive service-related compensation from the employer. (See Dismissal with compensation)
• Employees may be dismissed without compensation if they commit various acts of serious misconduct or breaches of contract. (See Dismissal without compensation)
• Employees receive special protection against termination of employment at certain times (such as during maternity leave and for one year afterwards) and if they engage in various trade union or similar activities. Where an employee is covered by this special protection, the employer can terminate the employee's contract only with the prior authorisation of a court. (See Special dismissal protection)
• The permitted grounds for dismissal include "business necessities", which broadly means redundancy, but there are no special rules relating to collective redundancies. (See Redundancy)
• An employer must observe certain procedures when an employment contract terminates, notably drawing up a "final settlement" within ten working days of termination, which confirms the end of the employment relationship and that the employee has received all payments due from the employer. (See Termination procedures)
• In certain circumstances (such as where the employer has seriously breached the employment contract), an employee may terminate the employment and bring a court case seeking compensation from the employer. This is known as "indirect" (that is, constructive) dismissal. (See Constructive dismissal)
• If the termination of an employee's employment contract is found by a court to have been unjustified, unfair or without legal grounds, the main remedy available to the employee is compensation. (See Unfair/unlawful dismissal)