Nonunion Employees May Negotiate Valid Collective Agreements

In an important decision, the Chilean Labor Inspectorate decided in July 2018 that collective bargaining agreements (CBAs) executed between companies and groups of employees who are not members of a union (known as “negotiating groups”) are valid and therefore enforceable. The decision follows considerable uncertainty among legal practitioners and labor authorities on the issue.

Uncertainty had existed since the labor reform enacted in 2017, which purported to grant unions the exclusive right to enter into valid CBAs, barring nonunion employees from executing any collective agreements. However, although approved by Congress, that proposal was deemed unconstitutional by the Constitutional Court of Chile.

Despite that, statutory language governing the matter remained vague and ambiguous, resulting in debate over its interpretation. There was also political pressure against the constitutional court’s decision from supporters of the 2017 labor reform, in particular the former governing party.

The Labor Inspectorate’s latest decision, which clearly states that non-union CBAs are valid, swept aside these issues.

This may not be the end of the story, as a number of unions have filed constitutional actions before courts of appeal in response.

Comment

In the meantime, nonunion employees would appear to have authority to negotiate terms and conditions of employment under collective agreements.