On July 27, 2020, due to the COVID-19 pandemic, Chile enacted legislation for parents on parental leave and for parents and caregivers of children born in or after 2013 (i.e., seven years of age or younger). Specifically, the law (i) provides parents with an extension of up to 90 days of additional parental leave benefits and (ii) allows eligible parents and caregivers to suspend their employment contract with employers in order to provide childcare and receive unemployment benefits.
Parental Leave Extension Due to COVID-19
Benefit Duration and Eligibility: The law allows employees whose parental leave expired between March 18, 2020 and July 27, 2020 (i.e., the law’s effective date), to extend their parental leave for an initial 30-day period. Thereafter, employees may extend their leave two times (i.e., for a maximum of 90 days), provided that Chile remains in a constitutional state of emergency because of COVID-19 and the law has not been repealed.
Benefit Payments: During the extended leave, eligible employees will receive the same amount of paid parental leave benefits that they received during their initial period of parental leave. The leave is paid either by a private insurer (i.e., las Instituciones de Salud Previsional (“ISAPREs”)) or, if not insured by ISAPRE, through Chile’s national health care system, el Fondo Nacional de Salud (“FONASA”). If both parents made use of the parental leave, one parent (but not both) may apply for the extension of benefits; the mother decides who will take the extended leave.
Suspending the Employment Contract Due to COVID-19 Childcare Obligations
Benefit Duration and Eligibility: The law permits eligible parents and caregivers who wish to be enrolled in unemployment insurance (and are not, for example, eligible for parental leave) to request a suspension of their employment contracts in order to (i) receive unemployment benefits and (ii) care for their child(ren). According to the law, an employee’s option to suspend an employment contract will continue as long as a child’s daycare, kindergarten or school remains closed due to COVID-19. Only one individual per household may receive this benefit.
Application Process: The law requires employees to submit an application for benefits to their employer, which the employer then must submit to the administrator of unemployment benefits in Chile, la Sociedad Administradora de Fondos de Cesantía de Chile (“AFC”). The AFC then will determine whether the employee is eligible for benefits.
Employer Requirements: The law requires employers to continue making social security and pension contributions on behalf of employees whose contracts have been suspended. In addition, employers may not terminate employees who are eligible for this benefit but choose not to apply if such employees take time off to care for a child aged seven years or younger.
Epstein Becker & Green continues to monitor the global impact of the COVID-19 pandemic on employers, and we will provide updates as new guidelines and government directives are announced.