Dismissal: A cost or a power that must be limited? Some notes on the shortcomings of the dismissal regime in Chile

Abstract

The primary objective of this paper is to critically analyze the shortcomings of the dismissal system in Chile. One issue arising from the design of the governing regulations is the view of dismissal as a cost rather than a power subject to limitation. In this regard, the essentially fixed nature of severance payments and the irrevocability of the employer’s decision to terminate employment are identified as key factors. Our thesis is that the combination of these elements creates a rigidity that results in a form of protection that is weak, non-reparative, and essentially monetary in nature. In response to this framework, the paper argues for the relevance of reinstatement as a useful mechanism to foster a shift toward enhanced protection—at the termination stage of the individual employment contract—that strikes an appropriate balance between the competing interests at stake: namely, job stability and the employer’s power to terminate employment.