What is employment consulting for businesses, and what does it entail?

In a country where labor laws are extensive, complex, and ever-changing, labor consulting is not a luxury but an operational necessity. Companies that operate without professional advice are exposed to risks that can significantly impact their finances and reputation.

Wiseplan offers labor law advisory services and legal representation to companies of all sizes in Chile, combining legal expertise with in-depth knowledge of human resources management.

Areas Covered by Comprehensive Employment Consulting Services

Employment Contracts and Labor Documentation

Properly drafting employment contracts is a company’s first line of legal defense. A poorly drafted contract can lead to unfavorable interpretations in labor courts. Our consulting services cover:

• Drafting and reviewing individual employment contracts (permanent, fixed-term, and project-based).
• Contract addenda regarding changes to job duties, compensation, or working conditions.
• Telework Agreements in accordance with Law 21,220.
• Confidentiality, Non-Competition, and Intellectual Property Agreements.
• Internal Regulations on Order, Hygiene, and Safety (RIOHS).
• Internal policies (code of conduct, travel policy, use of technology resources).

Individual Employment Relationships

Individual relationship counseling includes guidance on:

• Termination Procedures and Grounds for Dismissal.
• Calculation and negotiation of severance pay.
• Management of medical leave and legal leave.
• Imposition of disciplinary measures (warnings, penalties).
• Modification of Contractual Terms (ius variandi).
• Cases of workplace harassment, sexual harassment, and workplace violence (Karin Act).

Collective Labor Relations

For companies with unions or where collective bargaining is expected:

• Consulting services for regulated and unregulated collective bargaining processes.
• Preparation of the employer's response to the draft collective bargaining agreement.
• Strike Management and Minimum Service Requirements.
• Interpretation and application of existing collective agreements.
• Relations with union leaders and union immunity.

Regulatory Compliance

Ongoing monitoring of compliance with current labor regulations:

• Compliance with the Reduction in Working Hours (Law 21,561).
• Implementation of the Karin Act (Law 21,643).
• Compliance with the Labor Inclusion Act (Law 21,015).
• Equal Pay Act (Law 20,348).
• Regulations on Subcontracting and Temporary Staffing Agencies.
• Occupational Safety and Health Requirements (DS 594).

Inspections by the Labor Directorate

Preparation for and assistance during audits:

• Preparing the required documentation in advance.
• Accompaniment during the inspector's visit.
• Response to demands and summonses.
• Filing Appeals Against Administrative Fines.
• Administrative review and judicial appeal of fines.

Labor Law Representation

Legal representation in labor disputes:

• Lawsuits for Unjustified Dismissal.
• Labor protection lawsuits for violations of fundamental rights.
• Lawsuits for workplace and sexual harassment.
• Lawsuits for workplace accidents and occupational diseases.
• Collection of Overdue Employment Benefits.
• Appeals to the Courts of Appeals and the Supreme Court.

When Is It Urgent to Seek Labor Law Advice?

There are situations in which employment advice cannot wait:

Costs of Labor Consulting vs. Costs of Not Having It

Consulting Fees

The most common billing models in the Chilean market are:

• Monthly retainer: $300,000 – $2,000,000/month, depending on the size of the company and the scope of the consulting services. Includes a set number of consultations, document reviews, and regulatory monitoring.
• For a consultation or project: $150,000 – $500,000 for a one-time consultation or $1,000,000 – $5,000,000 for a specific project (e.g., implementation of the Karin Law).
• Legal Defense: Fixed fees + a variable fee based on the outcome. Fixed fees range from $1,500,000 to $5,000,000 per trial, depending on the complexity of the case.

The Costs of NOT Seeking Advice

The financial consequences of operating without labor consulting services can be devastating:

• DT Fines: Up to 60 UTM per violation (approximately $4,000,000). Fines may be multiplied by the number of affected workers.
• Lawsuit for wrongful termination: Severance pay based on years of service (1 month per year, capped at 11 years) + a surcharge ranging from 30% to 100% + court costs.
• Labor protection lawsuit: 6 to 11 months' pay + possible reimbursement + compensation for emotional distress.
• Unpaid Social Security Contributions: Surcharges, Interest, and Possibly Criminal Liability.
• Workplace Accident Due to Noncompliance with Regulations: Administrative Fines + Civil Lawsuit for Damages + Possible Criminal Liability.

Types of Employment Counseling Available

In-house legal counsel (in-house attorney)

Some companies hire an employment lawyer as part of their in-house legal team. This model offers immediate availability and in-depth knowledge of the company, but it comes with a high fixed cost (salary + benefits) and can lead to conflicts of interest when the lawyer must advise on decisions made by the management that employs him or her.

External Consulting on a Retainer Basis

The most efficient model for most medium-sized companies. A law firm or consulting firm like Wiseplan provides ongoing advice for a predictable monthly fee. The external provider brings objectivity, a diverse range of experience (serving multiple clients across different industries), and up-to-date expertise.

One-time inquiry

For companies with occasional needs, on-demand consultations provide access to specialized advice only when it is needed. This is the least efficient model from a preventive standpoint, but it may be sufficient for very small companies or those with low operational complexity.

How to Choose an Employment Consulting Firm

• Specialization in labor law: Make sure the team focuses primarily on labor law and isn't a general-practice firm that "also" handles labor matters.
• Experience in labor litigation: The best preventive advice comes from those who know how disputes play out in court. An advisor with litigation experience can anticipate risks that an advisor who provides only consultative services might overlook.
• Knowledge of People Management: The most valuable labor consulting is that which understands not only the legal framework but also the operational realities of people management. Consulting firms such as Wiseplan combine HR consulting with legal advice, offering solutions that are both legally sound and operationally viable.
• Responsiveness: In labor matters, deadlines are tight and the consequences of noncompliance are severe. Verify that the provider has the ability to respond promptly when the situation requires it.
• Transparency in Fees: Insist on clarity regarding the billing model, the services included, and any additional costs for services not covered by the contract.

Key Labor Laws Every Chilean Company Should Know

Chile's labor regulatory framework is extensive. These are the most relevant regulations that affect the day-to-day operations of companies:

• Labor Code (DFL No. 1): The primary body of law governing individual and collective labor relations.
• DL 3,500: Pension System and Mandatory Contributions.
• Law 16,744: Workers' Compensation Insurance.
• Law 19,728: Unemployment Insurance.
• Law 21,643 (Karin Law): Prevention and Punishment of Workplace Harassment, Sexual Harassment, and Violence in the Workplace.
• Law 21,561: Reduction of the workweek to 40 hours.
• Law 21,220: Remote Work and Telework.
• Law 21,015: Employment Inclusion of People with Disabilities.
• Law 20,123: Subcontracting and Temporary Employment Agencies.
• DS 594: Basic Health and Environmental Conditions in the Workplace.

Frequently Asked Questions About Employment Consulting in Chile

At what company size does it make sense to seek labor law advice?

Starting with the first employee. Chilean labor laws apply regardless of a company’s size. However, at a minimum, every company with 10 or more employees should have ongoing legal counsel, since companies of that size or larger are required to have internal regulations, and the risks of labor-related contingencies increase proportionally.

Can I use my accountant as a labor consultant?

It is not recommended. Labor law is a complex area of law that requires specialized training. An accountant can handle the accounting aspects of payroll, but is not qualified to provide advice on terminations, collective bargaining, workplace harassment, or representation in labor courts.

How long does a labor lawsuit take in Chile?

A labor trial in the lower court typically lasts between 3 and 8 months from the filing of the complaint to the judgment. If appeals are filed with the Court of Appeals, the process may be extended by an additional 6 to 12 months. Cases that reach the Supreme Court may take an additional 12 to 18 months.

What should I do if I receive a fine from the Labor Department?

You have several options: pay the fine with a 25% discount within the first 5 days, request an administrative review from the DT, or file a legal claim with the appropriate Labor Court within 15 business days of receiving the notice. In any case, it is essential to seek legal advice to determine the best strategy.

Does employment consulting include representation in court?

It depends on the plan you choose. Some providers include legal defense as part of the monthly retainer (up to a certain number of lawsuits), while others charge separately for preventive legal advice and legal representation. It is important to clarify this when signing up for the service.

Conclusion

Labor consulting is an investment that pays for itself. The cost of preventing a dispute is always less than the cost of dealing with it. Chilean companies that have access to professional labor consulting make better decisions, minimize their legal risks, and build healthier and more productive labor relations.

If your company needs preventive labor consulting or is facing a labor-related issue, contact Wiseplan for a confidential assessment of your situation.