A new judicial precedent reopens the debate on the limits of nullity of dismissal.

In the Chilean labour law system, the so-called nullity of dismissal is one of the most severe sanctions - in economic terms - to which an employer may be exposed. This is because, if he is sued for this concept and fails to prove that, at the time of termination of the employment contract, he paid the worker's social security contributions in full and on time, he could be obliged to pay all the wages and other benefits accrued between the date of dismissal and the date on which he effectively regularises the totality of the contributions owed.

Our labour courts have consistently upheld an interpretative criterion that, in our opinion, departs from the spirit that inspired the rule that gave rise to this figure (the so-called "Bustos Law"). In effect, it has been held that the consequences derived from the nullity of the dismissal are not subject to a time limit, which has led, in practice, to the imposition of sanctions that, in some cases, are disproportionate to the original social security breach.

Added to this is the current collapse of the Labour Courts, which has meant that dismissal proceedings that used to be resolved in short periods of time now take years to obtain a final judgement. There are cases of "monitorias" (short trials, in theory) whose single hearings are only being set for the second half of 2026.

This means that, if a dismissal annulment trial takes two years to be resolved and the employer is convicted in this respect, it could be obliged to pay more than 24 months of additional remuneration (plus adjustments and interest), with the consequent economic burden that this entails.

In this context, it seems essential to review the current interpretative criterion, so that, without undermining workers' social security rights, it avoids creating legal uncertainty or situations of unjust enrichment.

Precisely for this reason, it is interesting to note a recent judgement of the Labour Court of Copiapó, dated 25 September 2025, which, while accepting the nullity of the dismissal, limits its scope by stating:

"The claim for nullity of the dismissal brought by (...) is accepted, the defendant is ordered to pay the remuneration and other benefits arising from the employment contract and accrued from the date of dismissal until the validation or until the workers register contributions in the name of a new employer, whichever occurs first".

Although this ruling is neither final nor enforceable, it at least establishes a time limit that, although indeterminate, argues for the need to re-establish a time limit for the effects of the nullity of the dismissal. If a change in case law along these lines were to materialise, a more reasonable balance could be struck between the protective purpose of the rule and the proportionality of the sanction applied.