President Sebastián Piñera enacted the Employment Protection Law, which allows workers to access unemployment insurance under exceptional circumstances in order to protect and secure family earnings in the face of the global coronavirus pandemic.
Under this law, in the event of a partial or total stoppage of work activities or by mutual agreement, work in a company may be temporarily suspended, but the job and contract are retained, along with all the labor rights, including the payment of healthcare and pension contributions by the employer.
“This law seeks to protect the jobs and income of Chilean workers, protect SMEs and boost our economy,” said the President at an event in La Moneda Palace, where he was accompanied by Employment Minister María José Zaldívar and Treasury Minister Ignacio Briones.
The law enables the working day to be reduced by up to 50%, in which case a portion of the workers’ lost wages will be offset by unemployment insurance funds. It also allows the suspension of the labor relationship with household workers, who will be able to access severance indemnity benefits under all circumstances. Furthermore, for a period of six months or while the State of Disaster is in force, the law prohibits employers from laying people off as a result of force majeure because of the COVID-19 pandemic.
This initiative could benefit up to 4.5 million workers eligible for unemployment insurance benefits and, to the extent required, the State will provide financing of up to US$2 billion for the Insurance Solidarity Fund.
Furthermore, the law benefits companies, particularly smaller companies, by reducing their obligations.
“Together and united, we will get through this health emergency,” stated the President.
The law is part of the Government’s plan to protect employment and boost the economy, which involves an unprecedented cash injection totaling US$11.75 billion.