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Labor Reform Summary


One of the emphasis that is making the labor agenda today is determined by the changes being promoted with regards to collective labor law, aimed straight at the topics of workers’ unions, collective bargaining and strike regulation.


Indeed, on December 29th 2014, the Executive Branch sent to the National Congress the “Modernization of the Labor Relations System Draft Bill” which introduces a number of substantive changes that want to be implemented in what refers to the collective labor rights, such as: replacement of striking workers, union representation, “minimum cap” of collective bargaining, among other subjects.

In view of the scale of the changes that have been announced in this area, as a law firm – and in what has become a usual practice-, we are constantly monitoring both the scope of the amendments and subsequent parliamentary discussion.

In that context, and having been almost a year since the start of the processing of this regulatory body (it is currently in the Labor Committee of the Senate, after being cleared by the House of Representatives on June 17th, 2015), through this Newsletter and attachment, we inform on the main emphasis as well as the condition of some amendments presented by the Executive Branch in the month of September this year. The attached document references the official presentations that were discussed during the processing of this project.

The draft bill is large, so addressing all the proposed changes would exceed the purpose of a Newsletter. Therefore, hereafter we will present the fundamental modifications and its current state, in no way referring yet to the final regulation that will be implemented.


  1. Modifications to the Strike

The most significant change for companies, which brings about the draft bill, is in relation to the case of the strike, with the absolute ban on replacing -whether external or internal workers-, workers on strike, granting the Labor Inspectorate the power to require the immediate withdrawal of the replacement workers.

Notwithstanding the foregoing, it was proposed to force the union to provide the staff necessary to meet the company´s minimum services, which would allow the address of the necessary operations to prevent real and irreparable damage to material goods, facilities or infrastructure of the same, or to cause serious harm to the environment or the health of users of an assistential or health care establishment.

The minimum services are determined jointly by the Union and the Company, at any moment, including right before the negotiation. In case no agreement is reached, the Labor Inspectorate shall resolve it.

The project approved by the House prohibited the “replacement of labor positions”. Nonetheless, according to the amendments presented in September it is provided that:

“The strike will not affect the right to work of the workers not involved in it nor the execution of services agreed to in their labor contracts”.


“The workers not involved in the strike can execute the functions agreed to in 
their contracts. The employer in the exercise of his legal powers can make the ne-
cessary adjustments with this object, including adjustments to shifts or work 
schedules, without this constituting unfair practice”.

This may be one of the major modifications over which no consensus currently exists, for which we will have to wait for the final resolution adopted by the parliamentary.


  1. Who can collectively negotiate? The Union as the Main Representative

With the current law, in a company either the Union or a group of workers that gets together to bargain collectively (hereinafter “Negotiating Group”) can negotiate.

The reform stated that if a constituted Union exists in a company, the collective bargaining cannot be made by a Negotiating Group. Consequently, the Union becomes the main subject of negotiation and only in default may the Negotiation Group.

Consensus exists over this matter, with an existing Union, it shall be the only one habilitated to present a collective contract project.


  1. Application of the Collective Contract

With the current legislation, the employer is free to decide whether the collective agreement applies only to workers who participated in the negotiations, or whether to extend its effects to other workers (to whom 75% of union dues must be deducted and paid to the Union).

The draft bill proposes:

  • That the collective contract apply to all members of the Union, whether they joined before the negotiation, during or after it signed the collective contract (with the exception of those that are already subject to another existing collective contract).
  • In order to apply all or part of the Collective Contract to non-unionized workers, an express agreement between the Negotiating Union and the Company is required, as well as acceptance of the worker to whom the collective contract is extended.

According to the latest amendments of the Executive Branch, which alter the decision of the House of Representatives, the employer would be entitled to grant non-union workers the CPI adjustment, without agreement with the union, to the extent that it offers to it the payment of said adjustment in response to the draft contract.

As to the rest of the benefits, the rule that they can only be extended to third parties with union approval is maintained, as was defined in Congress.

Presentation in spanish

The AZ labor area is permanently following up on this legislative process as well as other draft bills, organizing informational meetings for our clients, with the purpose of duly preparing ourselves for these reforms.

To obtain further Information on this subject, please contact:



Jorge Arredondo   

Labor Group Director






Daniela Hirsch

Senior Associate