Overview Of LATAM Regional Trends With Labor Reform

• Published date: 13 September 2023
• Subject Matter: Employment and HR, Government, Public Sector, Inward/ Foreign Investment, Contract of Employment, Employee Benefits & Compensation
• Law Firm: Biz Latin Hub Group
• Author: Biz Latin Hub Group

If you are up to date with what's been happening in Latin America in the past few months, you will know there has been a trend of labor reforms across the region. Governments are looking to modernize labor markets, and catch up with international standards. The reforms seek to enhance business opportunities and create a working environment more conducive to economic growth.

The recent labor reforms are affecting how new businesses expand into Latin America. That's why it's important to keep them in mind if you, as many others, are interested in Company Formation in Latin America.

The governments of Colombia, Chile and Mexico are all in the process of passing labor reforms. Some have already started implementing them, while others are still discussing them in congress. In this article we'll take a closer look at regulations in each one of these countries and how recent changes may potentially impact your business in the region.

In most countries, the new regulations include a workweek reduction. The standard workweek in most Latin American countries is long compared to the developed world, where the standard is 40 hours. In some countries, the new regulations also include broader protections for workers, entering more deeply into workers' conditions.

In much of the developed world, work time has continued to reduce, with pilots recently given 4-day workweeks in the UK, so seeing Latin America modernize and get up to standard is a good thing.

Chile's labor reform

After a year and a half since Chile's new government vowed to reform working conditions, in July 2023, they approved a law that reduces the legal working week from 45 to 40 hours, while keeping wages constant.

The new law shall be implemented over a period of five years to give businesses time to adapt. With this regulation in place, Chileans will no longer have some of the longest working hours in the world. The 40 hour standard is in line with the majority of OECD countries.

Chile's labor reforms provide much flexibility to businesses. The grace period, ending in 2028, will not be mandatory, so businesses can choose whether to take it or cut hours immediately. Additionally, the bill recognizes a variety of practices that companies and employees can agree upon.

For example, it offers the option of a 4 by 3 work model - consisting of four 10-hour days followed by three days off - as well as many others. Also, parents of children under 12 benefit by being given the option of having different...