For Chile’s lawyers, country’s new labor laws a mystery

By Gram Slattery

SANTIAGO (Reuters) – Two weeks after Chile’s government completed work on a landmark labor reform, leading lawyers in the world’s top copper exporter say the bill is filled with gaping regulatory voids that have replaced many laws with question marks.

The reform, aimed at strengthening organized labor in the South American country, was initially passed by Chile’s Senate in March after a bruising battle that opened up divisions within the governing coalition.

However, key parts of the bill, touted as a central element of leftist President Michelle Bachelet’s broad reform program, were later struck down by a constitutional court.

The government, whose fractured coalition could not produce the votes needed to replace the removed parts, responded by excising the reform’s unconstitutional sections in June, thus letting the unchallenged provisions become law.

The removed parts, however, contained a huge chunk of the laws that define the nation’s collective bargaining framework. Lawyers now say bargaining outside established unions has been left essentially unregulated, meaning the nation’s courts, not its legislators, will establish many of the new rules.

Some see deja vu with the country’s recent tax reform, which had to be simplified last year due to its complexity. All see an uptick in court cases, at least in the short term.

“When morning comes and a company goes to negotiate with a group (of workers outside a union), they’re going to ask, ‘Well, how is it regulated?'” said Juan Vergara, a labor advisor and member of pro-labor group ProSindical.

“What rights do they have? These are the questions that exist, and this is where the uncertainty is.”

Unions worry that the laws could encourage less-formal bargaining units that weaken established organized labor in the long-term.

Business-affiliated lawyers fear that small bargaining units will proliferate as there is no longer an enforceable floor for the amount of workers that can band together to bargain collectively. Questions have also arisen about the enforceability of some contracts, and several pro-labor parts of the original bill, such as restrictions on replacing striking workers, will still go into effect as they were never challenged in court.

Still, while many executives and business lawyers are apprehensive, others see opportunity in the new laws.

“There are many who say this project is very negative,” said lawyer Felipe Saez, who has advised heavy industry group Sofofa. “But for companies with decent labor relations, less regulation might not be the worst thing.”

(Reporting by Gram Slattery; Editing by David Gregorio)