The law provides new powers to the Labor Court to moderate the application of such sanction, both in its duration and in its imposition.
On December 12, 2024, Law No. 21,634, which modernizes Law No. 19,886 of Bases on Administrative Contracts for the Supply and Rendering of Services, will enter into force.
This new regulation has important labor consequences. Currently, an additional sanction is contemplated for those companies that are condemned for violating the fundamental rights of their employees or for having incurred in an anti-union practice.
Indeed, the current Article 4 of Law No. 19,886 on Public Procurement provides for the prohibition of entering into contracts with public administration agencies for companies that have been convicted in the last two years for union practices or violations of fundamental rights of workers.
This sanction is materialized in the form of an inscription of ineligibility in the Public Market Suppliers Registry.
It is important to mention that once Law 21.643 comes into force, as from December 12, 2024, new elements will be incorporated that will allow controlling and regulating the application of this sanction, which, until now, was applied by the courts in any event when the prerequisites were met.
In effect, Article 35 septies of Law No. 21,634 provides new powers to the respective Labor Court to moderate the application of such sanction, both in its duration and in the very fact of its imposition.
Thus, in order to determine the duration of the disqualification from contracting with the State, the judge must consider especially in the grounds of his sentence the legal good or right violated, the seriousness of the infringement, the impact on third parties, the repetition of the conduct, the public interest involved and the proportionality of the economic effect, both for the person directly affected and for those to whom the disqualification is extended.
On the other hand, as to the very fact of imposing the sanction of disqualification, the court may not apply it when it may cause serious social and economic consequences or serious damage to the community, or be detrimental to the State.
In order to assess the impact on the public interest and the possible economic consequences, the court must request a reasoned opinion from the Public Procurement and Contracting Directorate.
This is an extremely transcendental regulation, as it includes considerations that will moderate the consequences of this sanction and introduce elements of proportionality to its application, which different litigants in the sector have sought to introduce on other occasions by resorting to the Constitutional Court, generating inconsistent jurisprudence. Today, this scenario is unified through this new legislative amendment.
For more information on how this new law will work, please contact our Labor – Public Law and Regulated Markets Groups:
Jorge Arredondo | Partner | jarredondo@az.cl
Antonio Rubilar | Partner | arubilar@az.cl
Jocelyn Aros | Senior Associate Labor Group | jaros@az.cl
Felipe Neira | Senior Associate Labor Group | fneira@az.cl
Gonzalo Bravo | Senior Associate Public Law and Regulated Markets Group | gbravo@az.cl
Francisco Alarcón | Associate Public Law and Regulated Markets Group | falarcon@az.cl
Palmira Valdivia | Associate Labor Group | pvaldivia@az.cl
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