Legal Challenges and Future of eSports Employment in Chile

Introduction

The esports industry in Chile, mirroring the global surge in digital sports, has seen substantial growth but not without its share of legal complexities in the field of esports employment law. A significant ruling by the Second Labor Court of Santiago on 30 March 2021, under case file Nº-O-4046-2020, challenges the traditional understanding of employment relationships within this field, being significantly different from what the French courts ruled in 2024. This ruling has denied the existence of an employment relationship between an esports team and its players based on the criteria of subordination and dependency, sparking wide discussions in the legal and esports communities across Chile and Latin America.

Background of the Case

The case arose from a dispute over whether esports players should be considered employees of the esports teams they play for, entitled to corresponding labor protections and benefits. The court’s decision hinged on the lack of sufficient evidence of subordination and dependency, key elements that characterize an employment relationship under Chilean labor law. This judgment has significant implications, as it contrasts with the growing trend in other jurisdictions to recognize such relationships within the esports context.

Legal Framework of Esports Employment and Court’s Rationale

In Chile, the labor context is governed by the principle of the primacy of reality, which aims to address discrepancies between the formal contractual arrangement and the actual practice. In the esports industry, where specific regulations are lacking, teams often engage players under Service Provision contracts. However, even with such contracts, an employment relationship can be established if the conditions of subordination and dependency, as outlined in Article 7 of the Labor Code, are met.

Article 7 of the Labor Code of Chile states:

“An individual employment contract is an agreement by which the employer and the worker mutually obligate themselves, the latter to provide personal services under the dependence and subordination of the former, and the former to pay a specified remuneration for these services.” Translation by the Author

The court’s dismissal of an esports employment relationship in this case was based on two main points:

1. Independence of Players: The court found that esports players could perform independently from the team, a finding that deviates from the reality where players often have to adhere to strict training schedules and team strategies.
2. Lack of Fixed Hours: The absence of fixed working hours was seen as indicative of a non-employment relationship, despite the players’ involvement in continuous and permanent activities, including training and participation in scheduled tournaments.

However, these findings overlook the structured nature of professional esports, which involves rigorous training regimes, adherence to team tactics, and participation in leagues that operate on fixed schedules.

In the opinion of Chilean legal scholars, the court erred in both key points. First, it suggested that an esports player could perform independently from the team, and secondly, it noted the absence of fixed work hours or continuous and permanent work. Diego Pinto Bravo argues that this reasoning greatly deviates from the actual conditions under which esports are conducted in the region. For instance, a League of Legends player necessarily belongs to a team to compete and must adhere to numerous contractual obligations such as daily training, maintaining a minimum division in the game, obeying coaches’ orders, and exclusivity.

Furthermore, Diego Pinto Bravo contends that the concept of subordination and dependency is already regulated under our labor code, specifically articulated for football players within Articles 152 bis A and subsequent sections of the Labor Code. These articles establish a labor relationship between the parties that operate under the same conditions, with the same characteristics, and following the same elements discussed in these legal proceedings.

In his view, the second argument is equally flawed based on practical experience in esports. It completely overlooks the fact that the Entel Honor League and its seasons begin each year in January, comprising two tournaments; one from January to April, and the other from July to October. This schedule necessitates that players engage in continuous and permanent work for ten out of twelve months each year, involving daily training, weekly tournaments, constant competition, and content creation—a logic that was severely neglected by the judges in their reasoning.

Comparative Legal Perspectives and Future Outlook

As mentioned in the introduction, this decision, which admittedly was taken in 2021, starkly contrasts with the legal trends in jurisdictions like France, where the relationships between esports teams and players are increasingly acknowledged as employment, prompting legislative adaptations tailored to the unique aspects of esports. The ongoing legal debates and pending appeals in the Chilean Supreme Court are anticipated to further evaluate the employment status of esports players in Chile.

Conclusion

The case underscores a critical need for specialized legislative frameworks in Chile that recognize the distinctive attributes of esports and esports employment. These frameworks should equitably balance the rights and protections for players with the operational realities of esports teams. Proactive legal and policy reforms are essential to support the sustainable growth of esports, ensuring that Chile and, by extension, Latin America can adequately navigate the evolving legal landscape of this global phenomenon.

With material from: Estado Diario