10.6092/issn.1561-8048/11173
This work presents the notion of employer in Chilean labour law. It begins with a brief introduction of the context of the Chilean overregulated legislation. Then, it is studied the definition of employer and some basic concepts of the Labour Code. The phenomena of subcontracting, multi RUT and temporary agency of work are analysed. A final section contains some reflections on these aspects.
application/pdf
1561-8048
11173
1
en
Pablo Arellano Ortiz
Italian Labour Law e-Journal
Liability
The regulation of the notion of employer in an overregulated framework: the case of the Chilean labour law
Text.Serial.Journal
https://illej.unibo.it/
13
Theme
2020-07-20
2020-06-16
2020-07-20
2020-09-15
1-12
ILLeJ
Pablo Arellano Ortiz
2020/07/20
10.6092/issn.1561-8048/11173
1
International Labour Office (ILO) and School of Law, Pontificia Universidad Católica de Valparaíso
1561-8048
1
Liability
en
12
The regulation of the notion of employer in an overregulated framework: the case of the Chilean labour law
https://illej.unibo.it/article/download/11173/11362
13
The regulation of the notion of employer in an overregulated                                Italian Labour Law e-Journal
framework: the case of the Chilean labour law                                                      Issue 1, Vol. 13 (2020)
Pablo Arellano Ortiz                                                                                     ISSN 1561-8048
arellano@ilo.org                                                          https://doi.org/10.6092/issn.1561-8048/11173




          The regulation of the notion of employer in an
        overregulated framework: the case of the Chilean
                           labour law
                                             Pablo Arellano Ortiz 


  1. Introduction to the Chilean context. 2. Legal framework of labour relations and
  definitions. 3. Outsourcing regulations: Subcontracting, Multi RUT and Temporary
  employment agencies. 4. Final reflections.



                                                         Abstract

      This work presents the notion of employer in Chilean labour law. It begins with a brief
      introduction of the context of the Chilean overregulated legislation. Then, it is studied the
      definition of employer and some basic concepts of the Labour Code. The phenomena of
      subcontracting, multi RUT and temporary agency of work are analysed. A final section contains
      some reflections on these aspects.

      Keyword: Employer; Overregulation; Subcontracting; Liability.




  1. Introduction to the Chilean context.

     It is quite hard to find one single piece of labour law literature in Chile regarding the
  notion of employer1 from a theorical perspective, although it has been a relevant subject for
  the Chilean doctrine as well as for the jurisprudence. Recent developments take into the
  consideration the evolving notion of employer, from one single person to a more complex
  legal entity2, that at the same time is divided in multiple functions or entities.

  
    Labour Law Specialist, Labour Law and Reform Unit, Governance and Tripartism Department, International
  Labour Office (ILO), and Researcher, School of Law, Pontificia Universidad Católica de Valparaíso, Chile.
  ORCID: 0000-0002-5062-1636. The views expressed are the sole responsibility of the author and do not
  necessarily represent the views of the International Labour Office or of the International Labour Organization.
  The article has been submitted to a double-blind peer review process.
  1 In France it is possible to finds classic publications such as Vacarie I., L’employeur, Sirey, Paris, 1979, and also

  but in a different sense Catala N., L'entreprise, Droit du travail, Vol. 4, directed by Camerlynck G. H., dalloz, Paris,
  1980.
  2 See for example: Pinto Sarmiento Y., Problemáticas en torno a la subcontratación. Análisis a diez años de vigencia de la

  Ley, Editorial Librotecnia, Santiago, 2017, 20, 123; Ugarte Cataldo J.L., El grupo de empresas en el derecho chileno: la
  empresa unitaria en materia laboral, in Revista de Derecho Laboral y Seguridad Social, 2014, II, 3, 79-88; Ugarte Cataldo
Pablo Arellano Ortiz                                                                           Italian Labour Law e-Journal
                                                                                                      Issue 1, Vol. 13 (2020)
                                                                                                             Section: Theme


    In order to better comprehend this proposal, it seems necessary to first resume in a few
lines about the context of labour regulations in Chile. The current regulation has its roots in
the “Labour Plan” adopted in 1975 and the Labour Code from 1987, based on that plan3. In
this context it is important not to forget the major influence of neoliberal ideology on labour
regulation4. After the 1973 coup d’Etat an important group of economists entered the
government with the purpose of reforming the socialist model5. The economists were known
as the “Chicago Boys”6, followers of the economist Milton Freedman’s theories. These
Chilean economists prepared in this period a document called “el ladrillo”7 that contains the
foundations for the economic reconstruction of the country. Their position in the
government was discredited after the economic crisis of 1982 and their incapacity to react in
time. However, it must be clarified that in terms of labour regulations, the Chicago boys did
not participate in the reformulation of legislatives texts. This is because the Labour Ministry
during this period was not from the school of Chicago. The minister was Jose Piñera8 and
he has studied at Harvard University. This is a key to understand how the Chilean model was
reformed, but far away from the sense of what the Chicago boys had proposed.
    During this period a marked preference for individual relations in opposition to collective
ones, affiliation to unions and the right to strike were, and still are, difficult to exercise. This
is meant to be part of the ideology behind the government in this period giving more
relevance to individuals over the collective interest. The definitions and the regulations




J.L., El concepto legal de empresa y el Derecho Laboral Chileno: cómo salir del laberinto, in Revista Laboral Chilena, Febr.-
Mar., 2012, 54-68; Rojas Miño I., La externalización laboral y la cesión ilegal de trabajadores en el sistema jurídico chilenos,
in Revista Ius et Praxis, 2010, 16, 1, 171-196; Rojas Miño I., Evaluación de la nueva normativa legal sobre subcontratación
laboral, Estudios Laborales No. 5, in Revista de la Sociedad Chilena de Derecho del Trabajo y de la Seguridad Social, 2010,
37-72; Gamonal Contreras S., Prado López P., El suministro de trabajadores en la Nueva Ley No. 20.123: acerca de la
calidad de coempleador y la doble subordinación, in Revista Laboral Chilena, 2008, 8, 59; Gamonal Contreras S., Los grupos
de empresa en Chile: tensiones y problemas, in Revista Laboral Chilena, 2006, 9-10, 68; Ugarte Cataldo J.L., El concepto
legal de empresa en el derecho laboral chileno: mucho ruido, pocas nueces, in Revista Laboral Chilena, 2001, 7, 60; Ugarte
Cataldo J.L., Suministro de trabajadores y trabajo temporal en empresas sin trabajadores, in Cuaderno de Investigación, 10,
1999; Tapia Guerrero F., El concepto de Empresa y los derechos sindicales en el Derecho chileno del Trabajo, in Estudios en
homenaje al Profesor William Thayer A., Sociedad Chilena de Derecho del Trabajo y de la Seguridad Social, Santiago,
1998.
3 In this context the position of Chilean doctrine is mentioned in: Gamonal Contreras S. La reforma laboral, la

Constitución & la libertad sindical, in Arellano Ortiz P., Severín Concha J. P., Feres Nazarala M. E. (eds.), Reforma
al Derecho Colectivo del Trabajo. Examen crítico de la ley núm. 20.940, Legge Ediciones Juridica, Santiago, 2016, 31-
62; Ugarte Cataldo J.L., Derecho del trabajo: invención, teoría y crítica, Colección Ensayos Jurídicos, Thomson Reuters,
Santiago, 2014; Caamaño Rojo E. Crítica a las ideas fundantes del actual modelo normativo de negociación colectiva en Chile
y a su reforma, in Revista de Derecho de la Pontificia Universidad Católica de Valparaíso, 2016, XLVI, 381-406; Gamonal
Contreras S., La reforma laboral: interpretación, antinomias y vacíos, in Revista Laboral Chilena, 2016, 73-78; Gamonal
Contreras S., La reforma laboral: un paso adelante y dos atrás, in Revista Laboral Chilena, 2015, 67-70; Narbona K.,
Antecedentes del modelo de relaciones laborales chileno, 2015.
4 Feres Nazarala M. E., Prólogo, in Arellano Ortiz P., Severín Concha J. P. and Feres Nazarala M. E (eds.).,

Reforma al Derecho Colectivo del Trabajo. Examen crítico de la ley núm. 20.940, Legge Ediciones Juridica, Santiago,
2016.
5 Ministers: Sergio De Castro, Miguel Kast, Hernan Buchi, Pablo Baraona, Jorge Cauas, among others.
6 It is the name given to the Chilean students that participated in an exchange program between the University

of Chicago and the Pontificia Universidad Católica de Chile, between 1955 and 1961.
7 “The brick”.
8 Brother of current president of Chile Sebastian Piñera. He was Minister of labour between 1978 and 1980,

and also Minister of mining between 1980 and 1981.

https://doi.org/10.6092/issn.1561-8048/11173                                                                                    2
Pablo Arellano Ortiz                                                                Italian Labour Law e-Journal
                                                                                           Issue 1, Vol. 13 (2020)
                                                                                                  Section: Theme


incorporated at this time remain intact today in the current labour code. This is part of the
legacy from this part of Chilean history: an overregulated labour law9.
   Considering this context, we will present first the basic notions on labour regulation
contained in the Chilean labour code. Once those definitions are explained we will briefly
describe two modes of outsourcing which are extremely detailed in the Chilean regulations:
the subcontracting and the temporary agencies of work. A last section will include some
finals reflexions on the topic.


2. Legal framework of labour relations and definitions.

    As we have pointed out, labour regulation is extremely overregulated, clearly marked by
a tradition of regulating everything in details by legal texts. Hence the Labour Code tries to
consider every possible case within the existing labour relations, individual and collective.
One example of this is Article 3 where the concepts of employee, employer and company
are defined for the purposes of the Code.
    Article 3 defines that for all legal purposes the following terms:
    a) employer: the natural person or legal entity which makes use of the intellectual or
material services of one or more persons under an employment contract,
    b) employee: any natural person who provides personal intellectual or material services
under dependence or subordination and under an employment contract, and
    c) independent worker: who in the execution of his/her activity does not depend on the
employer and does not have employees who are dependent on him/her.
    The employer is considered as an independent worker for the purposes of social security
payments.
    For the purpose of labour and social security legislation the term of company is
understood as any organization of personal, material or immaterial means under the direction
of an employer for the achievement of economic, social, cultural or beneficial goals with a
determined legal personality.
    The last paragraph is the one relevant for the purposes of this work. But, before entering
the discussion around this concept, we will try to present a brief description of the legal
framework of the employment relationship, which will help to understand the problems of
the Chilean notion of employer.
    The Labour Code establishes a detailed regulating standard for employment contracts.
Article 6 of the Code determines that an employment contract may be individual or
collective. For the purpose of this paper we will limit ourselves to the examination of
individual employment contracts, as defined in Article 7.
    An individual employment contract10 is an agreement by which the employer and
employee are mutually obliged, the latter to render personal services as a dependant and
subordinate, and the former to pay a determined salary for such services11. The individual

9 A more detailed work is under revision as part of a collective forthcoming publication, the chapter has for
title: “Chile: The tension between judicial principled interpretation and statutory overregulation”.
10 In relation to the features of the employment contract see: Walker Errazuriz F., Arellano Ortiz P., Derecho de

las relaciones laborales, Volume 1 Derecho Individual del Trabajo, Editorial Librotecnia, Santiago, 2016, 190-192.
11 According to Article 7 of the Labour Code.



https://doi.org/10.6092/issn.1561-8048/11173                                                                         3
Pablo Arellano Ortiz                                                                   Italian Labour Law e-Journal
                                                                                              Issue 1, Vol. 13 (2020)
                                                                                                     Section: Theme


labour right is embedded within this conceptual framework, as well as the consensual
character of the employment relationship.
   The consensual contract is understood such that in order to exist the contract it solely
requires the agreement between the contracting parties, the employee and the employer.
More explicitly this means that if both sides agree upon the services to be rendered and the
remuneration to be paid for such services, an employment contract exists. However, in view
of protection, the legislator requires a certain structure of contract in order to provide
protection for the employee and also to safeguard the agreements concluded under the
contract.
   The formalities for concluding an employment contract are established in Article 9 of the
Labour Code, indicating that the contract is consensual and must be laid down in written
form in two copies, each signed by both parties of the contract. The employer must produce
the written contract within a period of fifteen days after recruiting the employee, or within
five days in the case of contracts regulating determined services for less than thirty days.
Non-compliance on behalf of the employer will be subject to a fine from the Labour
Inspection Office.
   In case the employee is unwilling to sign the written contract, the employer must send the
contract to the corresponding Labour Inspection Office in order to request the employee´s
signature. If the employee insists in his/her unwillingness, he/she can be dismissed without
any right to compensation, unless he/she can prove that he/she had been recruited under
circumstances which differ from the ones established by the written document.
   The most relevant aspect related to the concept of consent has to do with the
nonfulfillment of the employer´s obligation to produce a written employment contract.
Without a written document the law assumes that the conditions of the contract are the ones
declared by the employee. In other words, the contents of the contract are defined by the
employee. This is considered as a manifestation of the principle of primacy of reality12.
According to the Uruguayan author Américo Plá, this principle means that, when there are
differences between what is established in the documents and what is happening in reality,
eventually what happens in practice prevails. This principle has been widely recognized by
the Chilean doctrine and is also found in other legislations13. This principle has also
international recognition in ILO’s Employment Relationship Recommendation, 2006 (No.
198), in particular in its paragraph 9.14
   The concept of consent is of utmost importance within the Chilean system of labour
relations. It is common that the employer does not formalize the employment contract in a
written document. This has several reasons, as for example to avoid paying taxes or social
security contributions or to avoid registering employees under his/her responsibility. In these
cases, the courts have the competence to determine if the contract was notarized within the
legal timeframe, or on the contrary apply legal sanctions according to the content indicated
by the employee. In any case, the contract is considered as existing as soon as there is consent
between the parties.

12 Primacy of reality is used as a synonym of primacy of facts.
13  See Arellano Ortiz P., Chile: The tension between judicial principled interpretation and statutory overregulation,
forthcoming publication.
14 The full text of the Recommendation can be consulted in the following link:

https://www.ilo.org/dyn/normlex/en/f?p=NORMLEXPUB:12100:0::NO::P12100_ILO_CODE:R198.

https://doi.org/10.6092/issn.1561-8048/11173                                                                            4
Pablo Arellano Ortiz                                                                          Italian Labour Law e-Journal
                                                                                                     Issue 1, Vol. 13 (2020)
                                                                                                            Section: Theme


   Going back to the concept of employer, Chilean doctrine is not unanimous on the
meaning and role of the elements of the current definition, it exists even a great debate aiming
for a reform of the notion. However, when subcontracting and temporary employment
agencies, and also recently with the Multi RUT reform, were introduced the definition
remained almost untouched. The main problem raised by the doctrine was the element of
“individual legal entity”, which it was considered that leaded to the undermining of individual
and collectives rights by the eventual abused of division of the employer in many entities
(different RUTs) or by juts simple absorption, merging or division of the companies15.
   In the next section we will revise the regulation introduced that tried to tackle this
controversy and at the same time adapted the labour code to the current development
regarding the notions of employer and it responsibilities.


3. Outsourcing regulations: Subcontracting, Multi RUT and Temporary employment
agencies16.

   Under the regulations contained in the Chilean Labour Code it is possible to organize
business activities in a way that production is structured on the basis of outsourcing, be it
through contracting services or the execution of certain works by a third person, as in
subcontracting, or be it through the provision of labour by a third person. Both cases
correspond to the concept of outsourcing and hence productive decentralization. In general
outsourcing corresponds to works and activities which do not form part of the main business
activities of the main company, like transitory or temporary functions17.
   The subcontracting arrangement is defined under Article 183-A. The definition identifies
three categories of parties: the Principal company (main company) the contractor or
subcontractor and the employee who is dependent on the contractor or subcontractor. This
provision establishes that subcontracting is the activity performed under an employment
contract by an employee for an employer, who is denominated as the “contractor” or
“subcontractor”, who through a commercial agreement, executes works or performs services
at his own expense and risk for a third natural person or legal entity that is the owner of the
work and denominated as “Principal company”. The relationship between the Principal
company and the contractor (or the contractor and the subcontractor) is regulated by a civil

15 See the debate in: Ugarte Cataldo J.L., El concepto legal de empresa y el Derecho Laboral Chileno: cómo salir del laberinto,
in Revista Laboral Chilena, Febr-Mar, 2012, 54-68; Gamonal Contreras S., Los grupos de empresa en Chile: tensiones y
problemas, in Revista Laboral Chilena, 2006, Issue 9/10, 68; Ugarte Cataldo J.L., El concepto legal de empresa en el derecho
laboral chileno: mucho ruido, pocas nueces, in Revista Laboral Chilena, 2001, 7, 60; Ugarte Cataldo J.L., Suministro de
trabajadores y trabajo temporal en empresas sin trabajadores, in Cuaderno de Investigación No. 10, Dpto. de Estudios
Dirección del Trabajo, junio de 1999; Tapia Guerrero F., El concepto de Empresa y los derechos sindicales en el Derecho
chileno del Trabajo, in Estudios en homenaje al Profesor William Thayer A., Sociedad Chilena de Derecho del Trabajo
y de la Seguridad Social, Santiago, 1998.
16 Law No. 20.123, from October 16, 2006, introduces a new regulation related to this matter, drastically

modifying existing standards. Formally Articles 64 and 64a of the Labour Code, which formed part of Chapter
VI Book I Title 1 on the protection of compensation payments, were repealed and a new Title 7 on the
subcontracting of work and services and on the supply of temporary labour in temporary employment agencies
was added.
17 For a revision of these two concepts from a Latin American perspective see: Ermida Uriarte O., Colotuzzo

N., Descentralización, Tercerización, Subcontratación, OIT, Proyecto FSAL, Lima, 2009; Sanguineti Raymond W.,
Carballo Mena C. (eds.), La tercerización empresarial en América Latina, Palestra, Lima, 2019.

https://doi.org/10.6092/issn.1561-8048/11173                                                                                   5
Pablo Arellano Ortiz                                                                  Italian Labour Law e-Journal
                                                                                             Issue 1, Vol. 13 (2020)
                                                                                                    Section: Theme


or commercial agreement, the relationship between the contractor or subcontractor and the
employees by an employment contract18.
    When analysing the phenomenon of subcontracting it may be interesting to explain the
problem of multiple RUT identification numbers19, which is a very particular issue in the
Chilean context. In terms of labour law it can be observed that a company appears for all or
for some purposes as different legal entities with different RUT numbers. Hence employees
of one company may have different contracts depending on the services they deliver. For
example, cleaning staff is hired by a legal entity with a different RUT than the principal
company, and other employees of the same company under a different contract may have a
better regulation of their labour relationship with wider benefits. However, all employees,
independent of the legal identity of their employer, contribute to the principal company´s
business activity.
    This phenomenon of multiple RUT identification has different impacts, as a company
may deliberately divide itself and thus its staff in order to avoid the formation of unions. On
the other hand, individual rights may be affected as for example in the case of calculating
benefits based on profits.
    In order to reduce the negative effects of this multiple RUT identification phenomenon,
a reform of the regulation regarding the definition of a company was made 20 and
incorporated a series of rules, considering the scenarios when employees are recruited by
different companies which are themselves associated - as for instance in the case of retail
business - and this affects labour rights, induvial and collective rights, and the right to social
security benefits. The new provisions aim at identifying the actual employer, thus protecting
the individual or collective rights of the employees and ending the practice of multiple RUT.
The employer in the facts will be the responsible and not necessarily the one that appears on
the individual labour contract, thus another manifestation of the principle of primacy of facts
previously mentioned.
    The new paragraph 4 of Article 3 indicates that two or more companies will be considered
as one single employer for the purposes of labour rights and social security, when they share
one common management and when the products they sell or services they provide are similar
or complementary, or when they are under the same controlling institution. Consequently,
from this new paragraph 4 it can be concluded that it is not enough to have one common
management, but it is also necessary to fulfil at least one more additional requirement such
as the similarity or complementarity of the business activities of the different legal entities
that recruit the staff or the existence of a common controlling body. Interpretation of the
first requirement is rather flexible, so in certain cases a court ruling may be necessary in order
to clearly define this matter. In the case of the common controlling body, the range of
possible interpretation is narrower, as Law No. 18.045 on stock market regulations defines
the condition of a controlling body of a corporation. The same paragraph 4 of Article 3 also


18 This paragraph does not apply to works or services which are executed or provided sporadically. This means
that under the principle of subcontracting the services have to be permanent, habitual, and periodical or
following a certain time pattern which is neither brief, nor specific, nor transitory. Hence, in Chile it is possible
that the main business activity of a company is subcontracted when the requirements of a permanent, habitual
and periodical activity are met.
19 RUT (Rol Único Tributario) is the tax identification number of any natural or legal person in Chile.
20 Law Nº 20.760, from July 9, 2014, modified Article 3 of the Labour Code.



https://doi.org/10.6092/issn.1561-8048/11173                                                                           6
Pablo Arellano Ortiz                                                                  Italian Labour Law e-Journal
                                                                                             Issue 1, Vol. 13 (2020)
                                                                                                    Section: Theme


provides that the mere circumstance of participating in the ownership of a company does
not as such constitute an element of the condition identified in the above section, meaning
that participation constitutes only a possible indication of a common management, and as
such does not necessarily constitute a determining factor for the definition as one single
employer.
    One important feature is the one of paragraph 6 of Article 3 which points out that
companies complying with the provisions of section four will have joint liability for the
compliance of labour law and social security obligations stipulated by the law in relation to
all individual or collective contracts. According to this, the law expressively establishes
solidary responsibility of companies with a determined legal identity, which form one actual
employer, so that a possible creditor may claim either of them or all of them as responsible
for the complete fulfilment of one or several obligations, in this case those of labour or social
security nature.
    The solution against possible fraud through the use of multiple RUT identification is
mainly provided by the rule contained in paragraph eight of the same provision, which
indicates that the employees of all the companies which are considered as one single
employer may form one or several unions or maintain their existing organizations; they may
furthermore bargain collectively with all or any of the companies which have been considered
as one single employer. These multi-company unions, which exclusively comprise dependent
employees of companies which have been declared one single employer, may present a draft
of collective agreements, and the employer has the obligation to discuss with these unions.
    Matters resulting from the application of the provisions regarding the misuse of RUT
numbers shall be decided by a labour judge who shall resolve the matter upon informing the
Labour Inspection Office. Labour Court judges have the right to request information from
other public institutions in order to do so. The exercise of judicial action derived from the
application of paragraph 4 of article 3, as well as the definite court decision, must furthermore
consider the provisions contained in Article 507 of the Labour Code21.
    In this context Chilean labour legislation sanctions these fraudulent practices22, which aim
at evading the obligations resulting from the employment relationship through determined
actions, and become relevant when identifying the employer as part of this relationship, or
when exercising the rights provided under the employment contract. These principles of
simulation and subterfuge are sanctioned as illicit labour practices. The paragraph 3 of the
Article 507 determines the content of the judge’s decisions, when the latter totally or partially


21 The law provides that judicial action derived from the application of section four of Article 3 of the Labour
Code may be exercised by the unions or employees of the respective companies who consider that their labour
or social security rights have been violated. Moreover, it is established that these actions may be undertaken at
any time, except during the periods of collective bargaining as mentioned in Chapter I Title II Book IV of the
Code, and when the court procedure exceeds the deadline of collective contract presentation, when the date of
presentation of the project for collective contract, the terms and effects of the collective bargaining process
must be suspended while the aforementioned action is pending resolution. Due to the latter, it will be
understood that the effectiveness of the collective instrument in force is extended until 30 days after the judicial
resolution is firm, day in which the negotiation shall be resumed in the manner determined by the court and
the law.
22 Non-compliance with labour obligations previously regulated in Article 478 is currently contemplated by

Article 507. This article was first modified by Law 20.123 from 2006, establishing severe sanctions for cases of
contract simulation. More recently Law 20.760 from July 9, 2014 substitutes the previous text in accordance
with the new definition of the Company contained in Article 3.

https://doi.org/10.6092/issn.1561-8048/11173                                                                           7
Pablo Arellano Ortiz                                                              Italian Labour Law e-Journal
                                                                                         Issue 1, Vol. 13 (2020)
                                                                                                Section: Theme


relates to the actions taken by the employees of unions, in cases of fraudulent practices. The
judge’s decision recognising the employment relationship shall contain the following:
     1. Identity the companies which are considered as one single employer for the purpose
         of labour and social security matters, in accordance with the provisions of section
         four of Article 3 of the Code.
     2. Indicate concrete measures to be taken by the employer in order to comply with
         his/her obligations as such, in terms of compliance with labour and social security
         law and the payment of all corresponding benefits, under penalty of 50 or 100
         monthly tax units23, which may be repeated until obtaining due compliance with the
         decision.
     3. Determine whether the alteration of the individuality of the employer is due to
         contract simulation by a third party, or to the use of any subterfuge in order to hide
         or alter identity or property, and whether this has resulted in the non-compliance of
         labour and social security obligations as established by the law or convention. In case
         the Labour Court determines such circumstances, it must precisely indicate the
         actions which constitute such simulation or subterfuge and the labour and social
         security rights thus violated, and apply a penalty of 20 to 300 monthly tax units. In
         these cases, the penalties established in section five of Article 506 of the Labour Code
         will be applicable.
    For the purposes of this study it may be interesting to add that paragraph 4 describes what
is to be understood within the concept of subterfuge:
    a. any malicious alteration performed through the establishment of different company
names;
    b. the creation of legal identities;
    c. the division of the company, and other actions whenever these imply the diminution
or loss of employees´ individual labour rights (specially profit sharing and severance
payments per years of service) or collective labour rights (specially the right to unionization
and collective bargaining).
    Article 507 also provides that the judge’s final decision must applied to all employees of
the companies which are considered one single employer for all labour and social security
purposes. This provision is of utmost importance for employees, as the results of the
sentence are automatically transmitted to all employees of the companies declared as one
single employer, even to those employees who have not taken court action and those who
have any kind of legal relationship with the companies for the purpose of providing personal
services under dependence and subordination.
    Furthermore, Law No. 20.123 introduces the concept of regulating the supply of
employees by means of temporary employment agencies, which constitutes our third
example of development regarding the notion of employer. The purpose of this regulation
is to allow for certain frequently occurring qualified cases24 in the companies where the
availability of temporary workforce is convenient in order to comply with different changing


23 The monthly tax unit (Unidad Tributaria Mensual, UTM) is an account unit which is updated according to
inflation used in Chile for tax purposes and fines. Its value is set on a monthly basis and varies depending on
the inflation rate. As an example, in March 2018 its value was 47.301 CLP (78USD).
24 These cases are explicitly established in Article 183-Ñ of the Labour Code.



https://doi.org/10.6092/issn.1561-8048/11173                                                                       8
Pablo Arellano Ortiz                                                  Italian Labour Law e-Journal
                                                                             Issue 1, Vol. 13 (2020)
                                                                                    Section: Theme


production events. In this context the supply of transitory employees is considered to be
exceptional and the only way for intermediation on the labour market for a private company,
under the belief that an adequate regulatory framework benefits job opportunity for the
unemployed. Under this concept a specific contract for the provision of transitory services
is established, where the employment relationship is clearly determined, with the disciplinary
power remaining with the user company and the contractual relationship, including the
payment of salaries, with the temporary employment agency.
    This type of arrangement considers 3 parties25: the user company, the temporary
employment agency and the temporary services employee. The first, which can be a natural
or legal person, agrees with a temporary employment agency (which must be a registered
legal entity with a determined company purpose) upon the supply of workforce to carry out
transitory or occasional services or tasks in the user company under the circumstances
defined by the law. A supply contract regulates the relationship between the user company
and the temporary employment agency, while the relationship between the temporary
services employee and the temporary employment agency is ruled by a transitory services
employment contract, which is a special contract with certain particularities. The user
company is entitled to exercise certain powers in relation to the employee within the limits
of the employee’s basic rights.
    One of the particularities of this contract is that on one hand it must have the same
content as the employment contract; on the other hand, it is also an agreement which
establishes mutual obligations. However, in this case the underlying formality is not
consensus, but the contract has to be concluded in written form in order to exist26.
    The supply of workforce in the case of the temporary employment agency is a situation
which is conceived as exceptional. This type of contract may only be concluded under the
conditions exhaustively indicated in Article 183-Ñ of the Labour Code, that establishes that
a contract to supply transitory services employees may be celebrated under the following
circumstances in the user company:
     a) suspension of the employment contract or the obligation to provide services, as
         applicable, of one or several employees due to medical leave, maternity leave or
         holidays;
     b) extraordinary events, such as the organization of congresses, conferences, trade fairs,
         expositions or other events of similar nature;
     c) specific new projects of the user company, such as the construction of new facilities,
         the enlargement of existing facilities or the expansion to new markets;
     d) the initiation period of activities in new companies;
     e) occasional or extraordinary increases, be they periodical or not, of the activity of a
         determined section, department, project or establishment of the user company; or
     f) urgent, precise and undelayable activities which require immediate execution, such as
         repair works on the facilities and services of the user company.
    Furthermore, the supply of transitory workforce is not permitted in the following cases27:



25 Article 183-F of the Labour Code.
26 According to Article 183-R.
27 Article 183-P.



https://doi.org/10.6092/issn.1561-8048/11173                                                           9
Pablo Arellano Ortiz                                                               Italian Labour Law e-Journal
                                                                                          Issue 1, Vol. 13 (2020)
                                                                                                 Section: Theme


        a) To perform tasks that entail the representation of the user Company, such as
            general manager, assistant manager or legal representative;
        b) To replace employees under legal strike declared during the collective bargaining
            process;
        c) To assign employees to other temporary employment agencies.
   In the case of infringement of this provision, the employee will be considered as
dependent in relation to the user company and his/her contract will become a contract of
indefinite duration. Moreover, the user company will be subject to administrative sanctions
on behalf of the respective Labour Inspection Office, corresponding to a fine of 10 monthly
tax units for each employee recruited without compliance to the provision.
   In addition to this rule, some others have been adopted in order to avoid abuse - the rules
transform this type of temporary contract into an indefinite labour contract in the following
cases:
    - When the employee continues providing his/her services after termination of the
        scenario which originated his/her recruitment (Article 183-T28)
    - When the assumption under which the employee is recruited differs from the
        provisions contained in Article 183-Ñ or when the recruitment has the purpose to
        conceal a permanent labour relationship (Article 183-U29)
    - When the user company hires transitory services from companies which are not
        registered as temporary employment agencies with the Labour Office (Article 183-
        AA30).


     4. Final reflections.

   In these lines we have tried to briefly described the regulations regarding the notion of
employer under the Chilean labour law. As it can be observed, that the phenomenons that
are present globally can also be found in the Chilean regulations.
   Overall, the Chilean regulation has an overdetailed regulations regarding the liability of
employer, as single employer or as one of the multi-employer structures, as explained

28 Article 183-T establishes that in the case that the employee continues to provide services after expiration of
the duration of his/her employment contract, this contract automatically turns into a contract of indefinite
duration and the user company turns into his/her employer. For all legal purposes labour seniority starts to
count from the date of the initiation of services provided for the user company.
29 Article 183-U establishes that employment contracts celebrated under different assumptions than the ones

justifying the contracting of transitory services according to Article 183-Ñ, or which have the purpose to
disguise a permanent labour relationship with the user company, will be regarded as fraudulent practice under
the law and will exclude the user company from the application of the standards of the second paragraph.
Consequently, the employee will be considered as dependent on the user company, and his/her relationship
with the company will be governed by the standards of common labour law, without prejudice to any
corresponding sanctions.
30 Article 183-AA establishes that any user company which recruits any transitory services employee from

companies which are not registered with the Labour Office will be excluded from the application of the
standards of the second paragraph. Consequently, the employee will be considered as dependent on the user
company, and his/her relationship with the company will be governed by the standards of common labour law,
without prejudice to any corresponding sanctions. Moreover, the user company will be subject to administrative
sanctions from the Labour Office, corresponding to a penalty of 10 monthly tax units for each employee
recruited.

https://doi.org/10.6092/issn.1561-8048/11173                                                                        10
Pablo Arellano Ortiz                                                                Italian Labour Law e-Journal
                                                                                           Issue 1, Vol. 13 (2020)
                                                                                                  Section: Theme


subcontracting and temporary agencies of work. The case of the Multi RUT regulations
clearly shows an abuse of the law to undermine individual and collective labour rights, as
well as social security law.
    Taking into account the context here presented the role of Labour Inspectorate Office
and Labour Courts is vital to the effectiveness of the labour regulations. They can also bring
certainty to the interpretation of elements which today are necessary to define the concept
of employer, such as common management or economic unit. Certainly, administrative or
judicial jurisprudence is key to understand how the development here presented are
implemented and understood in practice by employer and employees in Chile. A study of the
jurisprudences exceeds the purposes of this work but it can definitely complement what we
have analysed.
    As it may be observed the Chilean labour market is quite fragmented31, not only due to
the existence of an important number of non-standard forms of employment contract but
also by the diverse forms that the employer may take. The arrival of new business models
using digital or other new technology may cause further changes to the regulatory
frameworks as well as to the rights and benefits of employees. At present, it seems difficult
to assess these effects, but they must be studied in detail in order to develop new regulations
and/or policies to protect workers under these employment relationships.




                                               Bibliography


Arellano Ortiz P., Chile: The tension between judicial principled interpretation and statutory
overregulation, forthcoming publication.
Caamaño Rojo E. Crítica a las ideas fundantes del actual modelo normativo de negociación colectiva en
Chile y a su reforma, in Revista de Derecho de la Pontificia Universidad Católica de Valparaíso, 2016,
XLVI, 381.
Catala N., L'entreprise, Droit du travail, Volume 4, directed by Camerlynck G.H., dalloz, Paris,
1980.
Ermida Uriarte O., Colotuzzo N., Descentralización, Tercerización, Subcontratación, OIT, Proyecto
FSAL, 2009.
Feres Nazarala M. E., Prólogo, in Arellano Ortiz P., Severín Concha J.-P., Feres Nazarala M.-
E., Reforma al Derecho Colectivo del Trabajo. Examen crítico de la ley núm. 20.940, Legge Ediciones
Juridica, Santiago, 2016.
Gamonal Contreras S. and Prado López, P., El suministro de trabajadores en la Nueva Ley
No. 20.123: acerca de la calidad de coempleador y la doble subordinación, in Revista Laboral Chilena,
2008, 8, 59;
Gamonal Contreras S., La reforma laboral, la Constitución y la libertad sindical, in Arellano Ortiz
P., Severín Concha J. P., Feres Nazarala M. E., Reforma al Derecho Colectivo del Trabajo. Examen
crítico de la ley núm. 20.940, Legge Ediciones Juridica, Santiago, 2016, 31.

31 For a longer explanation on the structure of the Chilean labour marker see: Arellano Ortiz P., Chile: The
tension between judicial principled interpretation and statutory overregulation, forthcoming publication.

https://doi.org/10.6092/issn.1561-8048/11173                                                                         11
Pablo Arellano Ortiz                                                            Italian Labour Law e-Journal
                                                                                       Issue 1, Vol. 13 (2020)
                                                                                              Section: Theme


Gamonal Contreras S., La reforma laboral: interpretación, antinomias y vacíos, in Revista Laboral
Chilena, 2016, 73.
Gamonal Contreras S., La reforma laboral: un paso adelante y dos atrás, in Revista Laboral Chilena,
2015, 67.
Gamonal Contreras S., Los grupos de empresa en Chile: tensiones y problemas, in Revista Laboral
Chilena, 2006, 9-10, 68.
Narbona K., Antecedentes del modelo de relaciones laborales chileno, 2015.
Pinto Sarmiento Y., Problemáticas en torno a la subcontratación. Análisis a diez años de vigencia de la
Ley Nº 20.123, Editorial Librotecnia, Santiago, 2017.
Rojas Miño I., Evaluación de la nueva normativa legal sobre subcontratación laboral, Estudios Laborales
No. 5, in Revista de la Sociedad Chilena de Derecho del Trabajo y de la Seguridad Social, 2010, 37.
Rojas Miño I., La externalización laboral y la cesión ilegal de trabajadores en el sistema jurídico chilenos,
in Revista Ius et Praxis, 16, 1, 2010, 171.
Sanguineti Raymond, W. and Carballo Mena, C., La tercerización empresarial en América Latina,
Palestra, Lima, 2019.
Tapia Guerrero F., El concepto de Empresa y los derechos sindicales en el Derecho chileno del Trabajo,
in Estudios en homenaje al Profesor William Thayer A., Sociedad Chilena de Derecho del Trabajo
y de la Seguridad Social, Santiago, 1998.
Ugarte Cataldo J.L., El concepto legal de empresa en el derecho laboral chileno: mucho ruido, pocas nueces,
in Revista Laboral Chilena, 2001, 7, 60.
Ugarte Cataldo J.L., El concepto legal de empresa y el Derecho Laboral Chileno: cómo salir del laberinto,
in Revista Laboral Chilena, Feb.-Mar., 2012, 54.
Ugarte Cataldo J.L., El grupo de empresas en el derecho chileno: la empresa unitaria en materia laboral,
Revista de Derecho Laboral y Seguridad Social, 2014, II, 3, 79.
Ugarte Cataldo J.L., Suministro de trabajadores y trabajo temporal en empresas sin trabajadores, in
Cuaderno de Investigación, 10, Dpto. de Estudios Dirección del Trabajo, 1999.
Ugarte Cataldo, J.L., Derecho del trabajo: invención, teoría y crítica, Colección Ensayos Jurídicos,
Thomson Reuters, Santiago, 2014.
Vacarie I., L’employeur, Sirey, Paris, 1979.
Walker Errazuriz F., Arellano Ortiz P., Derecho de las relaciones laborales, Volume 1 Derecho
Individual del Trabajo, Editorial Librotecnia, Santiago, 2016.




Copyright © 2020 Pablo Arellano Ortiz. This article is released under a Creative Commons
Attribution 4.0 International License




https://doi.org/10.6092/issn.1561-8048/11173                                                                     12
