Reduction of working hours: a global trend reaching Latin America

Below, we present the main updates that this topic has generated in these four countries.

Chile

The reduction of working hours is already a reality in Chile. Law No. 21,561, published in the Chilean Official Gazette on April 26, 2023, established the gradual reduction of the maximum legal ordinary working hours from 45 to 40 hours per week.

Notwithstanding the possibility that employers can implement the reduction to 40 hours per week in advance, the law establishes a progressive application over time, according to the following deadlines:

• The first implementation stage took place on April 26, 2024, when the maximum ordinary working hours were reduced by 1 hour, from 45 to 44 hours per week.
• The second phase will be effective from April 26, 2026, where the maximum ordinary working hours will be reduced by 2 hours, from 44 to 42 hours per week.
• Finally, the third implementation stage will be on April 26, 2028, when the maximum ordinary working hours will reach 40 hours per week.

One of the pillars of this law is that the reduction of working hours cannot affect employees' remuneration, which is why companies cannot reduce employees' wages on the occasion of this new law.

In addition to reducing the maximum ordinary working hours, this new regulation incorporated other modifications, including:

1. The circumstances under which employees can be excluded from the limitation of working hours have been restricted, covering only (i) managers, (ii) administrators, (iii) agents with administrative powers, and (iv) all those employees who work without immediate superior supervision due to the nature of the duties performed.
            
   The Labor Directorate may determine whether a particular task falls within one of the above hypotheses in case of dispute and at the request of either the employee or the employer. The resolution of the Labor Directorate can be challenged in court.
2. Compensation for overtime with additional days of annual rest.
3. A new modality of working hours distribution based on a weekly average of 40 hours in a cycle of up to 4 weeks is established. It is allowed that there are weeks (maximum of two consecutives in the cycle) where the weekly working schedule does not exceed 45 ordinary hours. This schedule does not require authorization from the Labor Directorate but does require a prior agreement with the unions for affiliated employees.
4. Two-hour bands to anticipate or delay the start of work by up to 1 hour for mothers, fathers, and persons responsible for the personal care of children under 12 years old.
5. The possibility of distributing the weekly working schedule over 4 days of the week with 3 days of rest ("4x3").

Given its progressive implementation, companies have prepared to face the challenges presented by this new regulation, analyzing the best possible alternatives to ensure not only compliance with this law but also the continuity of services considering these current legislative requirements.

Colombia

Law 2101 of 2021 established the gradual reduction of the maximum legal working hours in Colombia from 48 hours per week to 42 hours per week. Notwithstanding the possibility that employers can implement the reduction to 42 hours per week in advance, the law provided for the alternative of implementing the reduction gradually, as follows:

• From July 15, 2023, a reduction of 1 hour, leaving the maximum working hours at 47 hours per week.
• From July 15, 2024, a reduction of 1 hour, leaving the maximum working hours at 46 hours per week.
• From July 15, 2025, a reduction of 2 hours, leaving the maximum working hours at 44 hours per week.
• Finally, on July 15, 2026, with the reduction of an additional 2 hours, the maximum working schedule will be 42 hours per week.

This regulation specifically established that the reduction in working hours would not imply a decrease in salary or an impact on employees' rights and guarantees.

In practice, this reduction in working hours translated into an increase in labor costs per hour worked, as employers are paying the same salary for fewer working hours. This, combined with the annual increase in the minimum wage, inflation, and productivity, generates an impact on the profitability and competitiveness of companies, especially small and medium-sized ones, which are the largest employers in the country.

At present, with the one-hour reduction that came into effect in 2023, the impact of increased costs and the challenge of implementing productive practices to adapt the maximum legal working hours to production needs or customer service, among others, is already being felt. In the medium term, the extent of the impacts of this regulation will depend on the adaptability of employers and employees, as well as the planning measures implemented to mitigate negative effects and enhance positive ones.

Mexico

According to data from the Organization for Economic Cooperation and Development (OECD), Mexico holds the record for being the country where the most hours are worked annually. However, this workload also translates into a high level of "burnout" or extreme work-related stress.

Currently, in Mexico, the working hours cannot exceed 8 hours per day for 6 days a week or a total of 48 hours per week. Additionally, it is recognized that employees must enjoy at least one day of rest per week.

During working hours, employees are required to be at the complete disposal of the employer and follow the established working hours, with the possibility of enjoying an intermediate rest period of at least thirty minutes.

To promote social justice rights for all employees, various legislative proposals to reduce working hours in Mexico were presented starting October 20, 2022. These proposals included increasing weekly rest days from one to two and reducing the weekly working hours from 48 to 40. In other words, the goal is for the workweek to comprise 5 working days with 2 mandatory rest days.

On April 25, 2023, a draft opinion to reform the Constitution and reduce working hours was approved with twenty-five votes in favor, none against, and five abstentions in the Constitutional Affairs Committee of the House of Representatives, just before the ordinary session period ended.

However, the legislative process was suspended because, in addition to being a constitutional reform that must be approved by most federal entities, it sought to hear the positions of both employees and employers. On one side, the labor sector supports the approval of the work reduction, while the business sector argues that it could significantly affect the productivity of companies, especially smaller ones.

In December 2023, the Political Coordination Board of the House of Representatives decided to postpone the vote until the next ordinary session period, allowing business chambers to analyze the proposal. Nevertheless, it seems that the initiative will remain "frozen" at least until after the country's general elections in June 2024.

If this reform to the Mexican Constitution is fully approved, it could mark a historic and significant event in employees' lives, as it has been 116 years since the last constitutional reform on working hours.

Peru

In Peru, the ordinary working hours are a maximum of 8 hours per day or 48 hours per week, which might be above the average in the region. This constitutionally established limit allows the employer to set a daily work schedule within the legal maximums, according to their operational needs.

As is clear, under the legal maximum working hours, personnel subject to this schedule must record their entry and exit from the workplace and have the right to an overtime surcharge or to agree on compensation for overtime work. For this, companies must have an attendance control system to provide evidence of compliance with schedules and maximum working hours.

Notwithstanding this, trends toward reducing working hours are not foreign, and several legislative proposals have recently been presented to reduce the length of the workday by incorporating new mechanisms for paid rest. Currently, Congress is evaluating two bills related to working hours and overtime work, which, if approved, could have a significant impact on production and the determination of labor costs by employers.

A first proposal aims to include the employee's break time – at least 45 minutes according to local regulations – as part of the working hours, substantially shortening the effective working time. Including the break as part of the working hours, far from being a minimal cost to the employer (according to the economic analysis of the bill), directly affects employees' productivity and, so, the labor costs assumed by the employer.

If this proposal is approved, the working hours would be reduced by almost 10% without it leading to a proportional reduction in salaries or other associated labor costs.

In the same legislative line, another recent proposal aims to incorporate a "micro break" of at least 20 minutes within the daily working hours during which employees are exempt from performing work-related activities. It is proposed that "micro breaks" could positively impact employees' health by reducing working hours, breaking the monotony of physical and mental tasks, which is considered to directly impact increasing business productivity, according to the proponents of the bill.

However, there are certain "gaps" in its application and possible incorporation into operations, as there is no clarity on whether the "micro break" time can be distributed throughout the workday, whether it can be used in blocks, or what the oversight mechanisms for this figure will be.

As we can see, recent legislative proposals related to working hours aim – although with different implementation mechanisms – to generate an assumption of the costs of employees' "unproductive" time. If this legislative trend materializes, it could significantly impact companies' production, overtime work costs, and even the need to hire additional personnel to meet business objectives.