M&A In Chile – Labour Matters To Consider

It is essential to distinguish the difference between the purchase of a company and its employees, from the purchase of certain assets or a specific business unit. Simply, it is not the same to move around workers as it is to move around assets.

The Chilean law provides specific guidelines in the case of total or partial modifications to the companies ownership under the 'labour continuity principle' (article 4 of the Labour Code). The reason is that some would argue that continuity applies in cases where only the assets, debts or a specific business unit of a company are purchased. Such labour continuity means that the ownership changes do not affect the employee's rights and obligations arising from individual or collective contracts, which will remain in force with the new employer. It is in general a norm of protection for employees.