On September 4, 2020, Draft Law No. 21.263 was published in the Official Gazette, which temporarily provides greater flexibility to the access requirements and increases the amount of unemployment insurance benefits under Law No. 19.728 and improves the benefits under Law No. 21.227. The most relevant aspects of this law are as follows:

A. It temporarily provides more flexibility to access requirements and increases the amount of unemployment insurance benefits under Law No. 19.728.

1.Law No. 21,263 provides that workers affiliated to the unemployment insurance who are unemployed may have access until October 31, 2020, to the benefits charged to the Individual Unemployment Account and to the withdrawals charged to the Solidarity Fund, if they comply with any of the requirements of the first paragraph of article 2 of Law No. 21,227 on Employment Protection, regarding the number of contributions.

Unemployed workers who meet the requirements set forth in Section 12 and Section 24, first paragraph, of Law 19.728, which establishes Unemployment Insurance, shall also be entitled to benefits under the conditions indicated in this law.

2. This legal amendment improves the benefits to be paid from the funds of the Individual Severance Account, establishing that they will be calculated on the average of the remunerations accrued by the worker in the last 3 months in which contributions are recorded, prior to the end of the contract, as follows: the first month 70%, the second, third, fourth and fifth month 55% and the sixth month or more 50% of the average remuneration. When the resources of the Individual Severance Account are insufficient, the benefits shall be financed from the Solidarity Fund.

3. On the other hand, it is established that the benefits to be paid from the Solidarity Unemployment Fund will include a maximum of 5 benefits in the percentages indicated below, which will be calculated on the average of the remunerations accrued in the last 3 months in which contributions are registered: 70% in the first month, 55% in the second, third and fourth months and 45% in the fifth month. In addition, these benefits will be affected to higher and lower values for each month, as follows: the first month a higher value of $652,956 and lower of $225,000, the second, third and fourth month a higher value of $513,038 and lower of 225,000 and the fifth month a higher value of $419,757 and lower of $225,000.

However, the law determines that a supreme decree issued by the Ministry of Finance, and also signed by the Minister of Labor and Social Welfare, will establish the parameters that will allow, during the effectiveness of this law, to increase the percentage of the average remuneration of the fifth turn, being able to reach a percentage of the average remuneration of 55%, in which case it must also fix the superior value of the benefit, which will be increased proportionally until reaching the value of $513,038, in case the average percentage of remuneration is increased to the maximum limit of 55% of the same. The parameters to be considered will be, among others, the health and labor market conditions, and the regional realities associated with the impact of the COVID-19 disease.

This law also establishes that the beneficiaries who are receiving the fifth line of payment from the Solidarity Fund will be entitled, during the term of this law, to a sixth and seventh line of payment, equivalent to 30% of the average remuneration. Likewise, the percentage of the average remuneration of the sixth and seventh draft may reach a percentage of the average remuneration of 45%, if the parameters established in the Supreme Decree mentioned above are met, in which case the higher value of the benefit must also be fixed, which will be increased proportionally and may not be higher than the amount indicated for the fifth draft according to the table in the second paragraph of article 4 of this law.

4. Unemployed workers who are affiliated to the unemployment insurance, and who do not meet the access requirements of article 12 of Law 19.728, may only apply for the benefits to be charged to their Individual Account for Unemployment, up to the number of months and in the respective percentages that they can finance.

5. During the term of this law and until October 31st, 2020, access to the benefits of the Unemployment Insurance shall be governed by the percentages and values of this law.

B. The benefits of Law No. 21.227 are perfected.

6. During the term of this law and until October 31, 2020, the suspension of contracts regulated by Article 2 of the Employment Protection Law shall be governed by the rules set forth in the preceding points.

7. In turn, the parameters set forth in the third paragraph of article 4 of Law No. 21.263 will allow an increase, during the term of the law, of the percentage of the average remuneration of the fifth line of business corresponding to the workers subject to Law No. 21.227, which may reach a percentage of the average remuneration of 55%, in which case the higher value of the benefit must also be set, which will be increased proportionally and may not exceed $513,038.

8. In case the sanitary conditions so merit and the parameters established in the decree indicated in the third paragraph of article 4 are met, the Minister of Finance, by means of one or more supreme decrees, which will also be signed by the Minister of Labor and Social Welfare, may increase the percentage of the average remuneration of the fifth line of business.

9. Likewise, the parameters indicated in the third paragraph of article 4 will serve to determine the potential extension of the drafts to be carried out by the Solidarity Unemployment Fund, granting a sixth and seventh draft until October 31, 2020.

10. The decree will establish the percentage of the average remuneration to be considered, which may not be higher than 45%, and the higher and lower values of the benefit, which may not exceed the values of the fifth round according to the table in the second paragraph of article 4, being fixed proportionally.

11. In the case of workers who, as of August 2020, are entitled to receive the fifth payment from the Solidarity Unemployment Fund, pursuant to Law No. 19,728 or Title I of Law No. 21,227, the percentage of the average remuneration on which such payment will be calculated shall be 55%, the higher and lower values being adjusted according to the table in the second paragraph of Article 4, without the need to issue the supreme decree referred to in such law and in the third paragraph of Article 7 of this law.

12. It is also established that the agreement for the temporary decrease of working hours may be signed until July 31, 2021

13. Within the term of three months counted from the publication of the present law, and before the term of validity of the norms indicated in the following literals, the Ministry of Finance, by means of one or more supreme decrees, signed, in addition, by the Minister of Labor and Social Welfare, may:

– Extend, as of the date of its expiration, the validity of the benefits and allowances set forth in Title I of Law No. 21.227, and also grant the right to additional drafts charged to the Solidarity Unemployment Fund of Law No. 19.728 in the event described in the first paragraph of Article 1 of Law No. 21.227, under the terms and conditions set forth in this law for a maximum period of five months;

– Extend, as of the date of its expiration, the validity of the benefits and allowances established in Title II of Law No. 21.227, under the terms and conditions set forth in said legal body, for a maximum period of five months; and

– To extend, as of the date of its expiration, the validity of the benefits and allowances established in this law, with respect to Law No. 19,728, for a maximum period of five months.

The aforementioned supreme decrees must be issued in consideration of objective circumstances, among others, the health conditions of the country, labor market conditions or regional realities associated with the impact of the COVID-19 disease.

14. The workers covered by the provisions of Titles I and II of Law No. 21.227, on Employment Protection, may enter into new employment contracts of a transitory nature with other employers, without losing their employment relationship or the payment of benefits from unemployment insurance.

15. It is established that in the event that the effects of the suspension of the labor relationship under the Employment Protection Law cease, the employers at the time of reinstatement of the workers shall not discriminate in the treatment or establish arbitrary differences between those who had their contracts suspended unilaterally by act of authority, and those who suspended their contracts by common agreement.

C. General Provisions.

16. This law shall enter into effect on the date of its publication in the Official Gazette and shall be in force until October 31, 2020. Notwithstanding the foregoing, for purposes of access, calculation and payment of benefits, it shall be understood that it entered into force on August 1, 2020.

In case you require additional information on this matter, you may contact Alfred Sherman (asherman@jdf.cl) and/or Felipe Ovalle (fovalle@jdf.cl)