Labor Ministry prepares safeguards to define use of Hourly Contracts, Regulate Advance Notice and Cancellations
For Rodrigo Ugarte, partner at Aninat, the bill’s main innovation lies not in the number of working hours, but in how those hours can be organized. He explained this in an article for Diario Financiero.
The government’s labor flexibility agenda is beginning to take shape. Labor Minister Tomás Rau went into further detail this Tuesday on the Executive’s decision to sponsor the parliamentary motion seeking to enable hourly contracts in the country, currently making its way through the Senate.
“This is a motion before Congress that we have sponsored,” the Cabinet secretary said, explaining that the idea is to recognize that there are activities where demand fluctuates and there is no ongoing, permanent employment relationship, as occurs in part of the restaurant sector.
In these cases, Rau said, current options favor the existence of “informal arrangements”.
“This, in a way, gives it a legal framework, regulates these hourly relationships, and will make it possible to formalize [these arrangements] and also provide more opportunities for those who need them, especially given a 9.1% unemployment rate,” he said.
Safeguard Measures
The initiative has drawn criticism from some sectors, which warned of the risk of job precarity under this arrangement.
In response, the Labor Minister stated that the goal is precisely to avoid that scenario.
“What matters is that this doesn’t happen, which is why it needs to be properly regulated,” he said, adding that “there are also larger hour-compensation provisions and, of course, we need regulation that guarantees all labor rights while also allowing for greater labor adaptability”.
In the Executive’s view, this new arrangement must move forward with adequate safeguards. According to sources familiar with the ministry, these are considered to include clarifying the situations in which hourly contracts may be used, keeping clear advance-notice rules, regulating potential shift cancellations, and preventing workers from being available for free.
Additionally, the goal is to ensure compatibility with other jobs when sufficient guaranteed hours are not available, and to establish mechanisms to adjust the contract to reflect hours actually worked.
“The debate over this bill is an opportunity to reconcile flexibility and labor protection. The goal is to allow new forms of work organization to develop within a formal framework, with clear rules, contributions and appropriate pay,” a source familiar with the matter noted.
In his remarks to Congress, Rau reiterated that the Executive is working on other initiatives aimed at introducing greater flexibility in certain economic sectors.
Among these, he highlighted the future Tourism Labor Statute, announced by President José Antonio Kast in his June 1 State of the Nation address, and noted that the government is evaluating changes to how the 40-hour average workweek is calculated.
“We are also looking at other measures we will be announcing soon, such as making the calculation of the 40-hour average more flexible. We are already working on that,” he said.
The Takeaway
Among specialists, there is consensus that the initiative opens up flexibility options not currently contemplated by law.
Luis Lizama, founding partner of Lizama Abogados, noted that the proposal regulates an “on-call” contract: the employer calls in the worker according to production needs, with advance notice (24 hours), and work is scheduled “as needed” rather than on a predetermined basis.
He explained that the bill under discussion “guarantees payment of 75% of agreed hours even if the employer does not use them, and sets a cap of 30 hours per week and 120 hours per month”.
For Rodrigo Ugarte, partner at Aninat, the bill’s main innovation lies not in the number of working hours, but in how those hours can be organized.
“The difference is that current part-time arrangements require a fixed schedule, which must be communicated to the worker at least one week in advance; whereas the proposed hourly contract allows for variable shifts, with notice that can be given with as little as 24 hours’ advance warning, depending on the form and timeframe the parties agree on,” he said.
More cautiously, Marcelo Albornoz, partner at Albornoz & Cía., welcomed the introduction of this arrangement, but argued that some aspects still need to be strengthened, such as extending the advance-notice period for workers, more precisely defining the sectors where it may be used, and establishing mechanisms to facilitate a transition toward more stable employment relationships. The expert added that while the International Labour Organization (ILO) has not rejected this type of contract, it has said that the effects of highly variable or unpredictable income need to be regulated, as well as the difficulty of planning family and financial life, and excessive dependence on the employer’s unilateral decisions regarding hour allocation.
“That’s why the ILO mainly proposes establishing minimum guaranteed hours in the contract or ensuring a predictable base income,” he said.”
Published in Diario Financiero.
