Labor Minister Tomás Rau announced the government is analyzing a new labor indemnity system covering all types of contract terminations. The proposal aims to reduce costs for companies through contributions to individual accounts.
Tomás Rau explained on Radio Duna that the system would consist of a monthly employer contribution to a worker’s individual account. This would accumulate market returns to finance indemnity regardless of the reason for termination.
Current Chilean law requires payment of one month’s salary per year worked only in cases of dismissal due to company needs. Rau noted the high cost of this rule discourages hiring and that containing the rise in labor expenses is necessary.
The initiative remains under analysis and would be implemented gradually. Rau acknowledged it is not the best economic moment but stressed that waiting solely for growth to create jobs is not enough.
