Hire in Chile
Here’s where you get started with human resources best practices and hiring in Chile.
Chilean Peso (CLP)
Key Country Facts
Chile, officially called the Republic of Chile, is a country in western South America. With a population of just over 19 million, it encompasses 16 regions, 56 provinces and 348 communes. The capital city Santiago (Santiago de Chile) is the capital and largest city of the country. Chile is a high-income economy and is transparent and stable. In addition, Chile has a mature financial market that is receptive and dynamic.
Chile covers an area of 756,096 square kilometers. It is the world’s southernmost country and the closest to Antarctica. Chile shares a border with Peru to the north, Bolivia to the northeast, Argentina to the east and the Drake Passage in the far south.
Chile has a diverse climate, including the world’s driest desert in the north (Atacama Desert), Mediterranean climate in the center and subtropical, oceanic, alpine tundra and glaciers in the east and south.
Since the colonial period and during the early Republican period, Chile’s culture was dominated by the Spanish. Other European influences began in the 19th century and are still present today. Prior to the colonial period, northern Chile was a region of Andean culture influenced by altiplano traditions.
Over 55% of the Chilean population claim adherence to the Roman Catholic church and 13% to an Evangelical church, which includes all Christian denominations other than Roman Catholic and Orthodox.
The official language of Chile is Spanish. German is spoken to some extent in Southern Chile. Several indigenous languages (Aymara, Rapa Nui and Quechua) have become minority languages and are close to extinction.
Chile HR at a Glance
The Chilean Labor Statute is composed of the Labor Code (Código del Trabajo) and several special social security laws. All employees mut be affiliated to a Pension Fund Administrator (AFP) of their choice (with contributions to Survival & Disability Insurance Fund, Individual Savings Insurance and commission payment), health insurance (state FONASA or private ISAPRE), labor-related accident insurance and unemployment insurance (paid to AFC).
Key Points – Employers should prepare for:
Chile’s labor laws are established as a system to protect employees.
Terminations in Chile must be in writing, whether for cause or without cause.
Labour Courts are sensitive to employee rights and will usually rule in employees’ protection.
Labour Courts apply the ‘rule of reason’.
The Labour Code was amended in 2020 to regulate remote work.
The following must be considered for determining employees’ and employers’ rights and obligations:
The rights and duties of employers and employees in Chile are derived from various statutory sources. These include the National Constitution, the Labor Code, statutes/decrees, and judicial and administrative decisions.
Chile’s National Constitution establishes rights relating to employment and social security, including unions, collective bargaining and prohibiting employment discrimination based on characteristics other than personal ability.
There are five books in the Labor Code regulating individual labor/employment contract/training, protection of employees, labor unions, collective negotiations and labor jurisdiction.
Labor statutes can be light on details; thus court and administrative decisions play an important part in determining rights and obligations in employment relationships.
The main administrative enforcement agency is the Labor Directorate, which is primarily responsible for ensuring employers comply with labor laws.
An employment contract in Chile must be in writing and executed within 15 days from the initiation of services by employee. If the contract’s duration is less than 30 days or if length of terms is not mentioned in the contract, the time to execution is five days.
If the labor contract is not put in writing within the aforementioned time frame, the terms of conditions shall be indicated by the employee and the employer shall bear the burden of proof.
The labor contract must contain the following clauses:
The labour contract must contain the following clauses:
Date and place of execution
Employee’s nationality and date of birth
Description of services to be performed by employee, including location where services are to be performed
Remuneration amount, time and form of payment
Number of working hours and work schedule
Duration of contract
Benefits in cash or in-kind
Any other terms and conditions as agreed by employer and employee
Restrictive covenants (e.g. non-compete and confidentiality) can be enforced during an employment relationship, as long as they are agreed upon between the parties.
Post-contractual restrictive covenants are not prohibited because they may be valid under specific circumstances (e.g. employees handling confidential/sensitive information), but they must meet the conditions of employee consent, of legitimate reason to protect employer’s business interest, of limited scope/timeframe and consideration (e.g. for employee to be compensated for the covenant).
There are 3 main categories of employment contracts:
Individual labor contracts
Collective labor contracts (common labor conditions, remunerations or benefits in kind for a fixed period)
Special contracts (e.g. apprenticeships, farm contracts, seafarers/docks, domestic help)
In general terms, the duration of a labor contract can be one of the following:
Indefinite or permanent
Fixed time period
Until the completion of a certain event/task
Probation Period / Trial Period
In general, the Labor Code does not consider a probationary period. However, a two-week term is provided for domestic workers and either party may terminate at any point during this time.
For other employees, the practice is to use fixed-term agreements as de facto probationary period (1st employment contract term set for a couple of months). This ‘probationary period’ can be extended by employer to the maximum period of one or two years depending on nature of job.
The labor contract can then be renewed or an indefinite (permanent) contract can be signed if employee fits the position.
There is a 45-hour cap per week on working hours, distributed across no more than six and no fewer than five days.
Employees with powers to manage, work without direct supervision, work at home or in location other than workplace are excluded from these limits.
The ordinary work day cannot exceed 10 hours.
Any work in excess of 10 hours/day and 45 hours/week is considered overtime.
Only two hours of overtime are allowed per day, which means no employee can work more than a total of 12 hours a day because the maximum ‘ordinary’ hours is 10 hours.
Employees who are excluded from the work hour limitations (e.g. managers) are not entitled to overtime pay.
Overtime can only be agreed on a temporary basis and cannot exceed a total of three continuous months. The extra hours must be indicated in writing and overtime pay cannot be waived by agreement of the parties.
Overtime pay is compensated at 1.5 times the ordinary hourly salary.
Health and Safety in the Workplace
Companies must have an internal regulation handbook (Reglamento Interno) that covers the country’s health and safety regulations:
1. First, there is the Internal Regulations on Organisation, Health and Safety, which is defined and regulated by the Chilean Labor Code. This is drafted by the employer and any company with 10 or more permanent employees is legally obligated to have this in place.
2. Second, every company, regardless of the number of employees, must observe the regulations established by the Industrial Accidents and Occupational Hazards in the Workplace Law.
A labor contract can only be legally terminated by:
Agreement of both employer and employee
Death of the employee
Expiration of the fixed-term agreed upon in the contract
Completion of the project or work for which the employee was hired
Circumstances beyond control of both parties (force majeure)
Company needs (changes in market conditions or economy)
Dismissal by the employer
As a general rule, an employer in Chile cannot terminate a labor contract at will. Terminations must be grounded by a company-related business need. Recently, courts have become increasingly strict when considering if the invoked business grounds are enough to justify a termination.
Trust positions (such as managers or employees entitled to broadly act on behalf of the company) can be terminated without invoking business needs. A written eviction is enough.
Employees can be dismissed without compensation in cases where they commit various acts of serious misconduct or breaches of contract.
Employees receive special protection against termination of employment at certain times, such as during maternity leave (and for one year after) and if they engage in various trade union or similar activities. Where an employee is covered by this special protection, the employer can terminate the employee’s contract only with the prior authorization of a court.
An employer must follow certain procedures when an employment contract terminates, notably drafting a “final settlement” within ten working days of termination. This must confirm the end of the employment relationship and that the employee has received all payments due from the employer.
In certain circumstances – such as cases where the employer has seriously breached a employment contract – an employee may terminate employment agreement and seek compensation from the employer via the courts. This is known as an “indirect” dismissal.
If the termination of an employee’s employment contract is identified by a court as unjustified, unfair or without legal grounds, compensation is the main remedy available to the employee.
In the event of dismissal on certain grounds, such as redundancy, the employer must offer the employee at least 30 days’ notice or, alternatively, one month’s pay in lieu of this notice. On the other side, an employee must generally give at least 30 days’ notice of resignation.
There are no labor rules in Chile expressly regulating or prohibiting restrictive covenants. However, Chile’s Constitution explicitly protects the employee’s right to work and their freedom of choice.
The following restrictive covenants can be included in the employment agreement, during the labor relationship and may be enforceable under the law:
non-solicitation of customers
non-solicitation of employees
Non-compete clauses after labor termination have been accepted as valid when they are provided for in writing, if compensation is paid to employee and if duration is reasonable. However, enforceability is difficult in practice.
Redundancy Severance Pay
If a labor contract is terminated due to company’s needs (e.g. downsizing or a change in economic conditions) or in the case of termination at will (when permitted by law), the employer must pay severance as follows:
An amount equal to one month of salary for each year worked, as long as employee has been in service greater than 6 months. The amount will be pro-rated.
If the termination notice is not at least 30 days, the employee will be entitled to receive a severance compensation equivalent to one month’s remuneration.
In both of the above scenarios, the severance may be waived when mutually agreed by both parties.
The general rule in Chile is that payment of severance is what was contractually agreed upon. If there was no agreement, or if the agreed amount is lower than the legal severance pay, the legal severance must be paid.
If an employee is dismissed for cause (such as serious breach of contract by the employee, material misconduct, etc.) the right to severance compensation does not apply.
The employer must state the total sum on the date of termination of the labor contract, including social security contributions, bonuses or any items valued in money. This sum excludes benefits the employee may receive occasionally.
Employers with five or more employees must manage a payroll ledger book, detailing remunerations paid, social contributions and taxes deducted. It must be stamped by the Chilean IRS (Servicio de Impuestos Internos) on a correlative basis.
Trade Unions / Collective Agreements
The right to constitute labor organizations (unions, federations or confederations) without prior authorization, is acknowledged. Unions are regulated in the Labor Code. Membership to a union is personal and voluntary.
The main purpose is to represent employees in exercising their rights, foster integration between employers and employees, promote education and improve safety in the workplace.
Workers may belong to only one union for each employment position they hold.
More than one union may exist in each company.
The union is the only entity allowed by law to represent employees in a collective bargaining process.
Strikes are not allowed in utilities, such as those supplying electricity or water, or in activities where serious damage may be caused to the security or economy of the country. In these cases, mandatory arbitration applies.
Fixed Term Contracts
The duration of fixed term contracts is set at the time of signing.
Fixed term contracts have a maximum duration period of one year or, exceptionally, two years in cases of managers or persons with professional or technical qualifications from a higher education institution.
Fixed-term contracts may be renewed only once. If renewed a second time, they become indefinite. This clause also applies if a worker continues to render services once a contract has expired, and the employer has knowledge of this.
If the employer ends the contract before the date set in the contract, the employer is responsible to pay out the full contract.
Different tasks or stages of a specific job may not be considered as two different successive fixed term contracts; this will be presumed to be an indefinite contract.
Any contract engaging permanent services from an employee will not be considered a contract for a specific job.
Fixed term contract employees are entitled to vacation and special termination severance, if certain requirements are fulfilled.
Tax and Social Security
Personal Income Tax
Taxes are generally withheld at the source of income (as per Impuesto único de Segunda Categoría) and employers pay monthly contributions between the 10th and 12th of each month. All new employees must be registered with tax authorities within 60 days of hiring date.
Chile levies income tax on a progressive scale. The first CLP 680,022 per year (approx. US$950) are exempt, beyond which seven bandings apply:
|Annual Income||Tax Rate (%)|
|Beyond CLP 680,022 up to CLP 1,511,160||4.0|
|Up to CLP 2,518,600||8.0|
|Up to CLP 3,526,040||13.5|
|Up to CLP 4,533,480||23.0|
|Up to CLP 6,044,640||4.0|
|Up to CLP 15,615,320||35.0|
|Beyond CLP 15,615,320||40.0|
Earnings beyond CLP 8,038,926/year are subject to Global Complementary Tax, with separate progressive rates applicable. Foreign workers in Chile are taxed only on their Chilean-sourced income for their first three years in Chile and are taxed on worldwide income thereafter. Non-residents are taxed at a flat rate of 15% on technical and professional services or 35% for other work.
In Chile, most social security costs are withheld from the employee rather than paid by the employer. Notably, the Chilean Social Security System is administered by private entities, subject to overall government control. This change to a privately-administered system change was made in 1980.
|Type of insurance||Paid by employer||Paid by employee||Total|
|1. Pension Fund*, comprising:|
|Survival & Disability Insurance||1.53%||0.00%||1.53%|
|Individual Saving Insurance||0.00%||10%||10%|
|Commission to Affiliate AFP||0.00%||0.77 – 1.45%||1.45% (maximum)|
|2. Health Insurance||0.00%||7% (minimum, employee decides)||7%|
|3. Labour-related Accident Insurance||0.95%||0.00%||0.95%|
|4. Unemployment Insurance||2.4%||0.6%||3.0%|
* Every employee must be affiliated with a Pension Fund Administrator (AFP) of choice. Employees are free to choose whether to pay into a government-managed plan (FONASA) or private insurer (ISAPRES).
**The above table serves as a broad guideline. Actual rates charged will differ.
Salary can be paid monthly, weekly or daily but it must be on a regular basis. Payment unit cannot exceed one month.
Payslips must be issued at least once monthly and must outline a detailed description of remuneration paid.
Employees who have worked for a year or less have the right to annual paid vacation of 15 working days. The holiday must be continuous but the excess over 10 days can be divided by mutual agreement.
After working 10 years, regardless of whether the tenure is continuous or for same or different employers, vacations are increased by one working day for every three years of service for current employer.
In the 11th and 12th regions of Chile, as well as in the province of Palena, the base vacation period is 20 days.
There is no annual limit on the number of days of sick leave that an employee can take but the allowance will depend on the medical certificate extended by the doctor. Employees are entitled to sick leave if supported by a medical certificate given to the employer within two working days from the date of beginning of the sick leave.
The employer has three working days to forward the medical leave certificate to the health insurance institution (ISAPRES or FONASA) who pays for the sick leave. This may be subject to caps.
The following rules apply to sick leave:
For three or less days of sick leave, employees are not entitled to sick pay.
For between four and 10 days of sick leave, employees are entitled to sick pay.
For more than 10 days of sick leave, employees are entitled to sick pay for all working days during the sick leave period.
Compassionate & Bereavement Leave
Employees are to receive paid bereavement leave for the following:
Death of child or spouse/civil partner: employees are entitled to seven calendar days of leave, in addition to annual leave and may be taken regardless of tenure to date with the employer.
Death of parent: employees are entitled to three business days of leave from date of death.
Death of unborn child for both male and female employees: employees are entitled to three business days of leave from date when death is confirmed with appropriate fetal death certificate. There is also tenure protection of one month for employees who suffer the death of a child or spouse. This begins from the date of death.
Family Care Leave: When the spouse, the civil partner, the father or the mother of the employee are in a terminal state, the employee may be provided with 10 working days of paid leave with proof of a medical certificate.
Marriage/Civil Union Leave: Every employee shall be entitled to five continuous working days of paid leave for marriages or civil unions, in addition to the annual leave. This leave may be used, at the employee’s choice, on the day of the marriage and on days immediately before or following the marriage.
Other rights for leave of absence
Military/Training Leave: An employee retains the right to the job without pay while doing military service or being part of the mobilized national reserves. However, employers are required to compensate regular wages to reserve personnel if they are called in for less than 30 days.
Medical Examination Leave: Female employees over 40 years of age and older and male employees over the age of 50, who are employed for a term greater than 30 days, will have the right to half a day’s leave once a year to undergo the necessary preventive health examinations.
Vaccination Leave: In the cases of public vaccination programs or campaigns for the control and prevention of communicable diseases, all employees shall be entitled to half a day’s leave for vaccination.
Maternity & Parental Leave
Female employees are entitled to six weeks of leave (prenatal) before and 12 weeks (postnatal) after delivery. If the birth occurs after six weeks after the date on which the woman had begun the maternity leave, the prenatal leave will be extended until the delivery. When delivery occurs before the 33rd week of gestation, or if the child at birth weighs less than 1,500 grams, the postnatal leave will be 18 weeks.
Female employees cannot be dismissed during pregnancy and for a period of one year from the end of the postnatal leave.
In cases where two or more children are delivered, the postnatal rest period is to be increased by seven consecutive days for each child born after the second.
If both parents are employees, either of them, at the mother’s choice, may enjoy the parental postnatal leave from the seventh week for the number of weeks that the mother indicates. If the mother died in childbirth or during the period of leave after delivery, the said leave will be granted to the father or to the child’s legal guardian.
Breastfeeding Breaks: Employees will have the right to have at least one hour a day to feed their children under two years of age. This right may be applied in any of the following forms, to be agreed with the employer:
At any time during the working day;
Dividing it into two portions at the request of the employee;
Postponing or advancing the break by half an hour or an hour at the beginning or end of the workday
The time consumed for the purpose of breastfeeding shall be considered as working time and cannot be waived by the employees who have children under the age of two years.
Adoption leave: If women, single men or widowers adopt a child, such employees are entitled to a period of one year of unpaid adoption leave from the date when the court grants the parents custody of the child. If the minor is less than six months old the parent is entitled to an allowance for adoption for a period of 12 weeks.
Paternity leave will also be granted to a father engaged in the adoption process. It will be counted from the notification of the resolution granting personal care or welcoming the adoption of the child.
Paternity leave: Fathers are entitled to five continuous working days of paternity leave to be used at his choice from delivery date. This permission is also granted to a father in the process of adoption. The leave will be counted from the notification of the resolution granting personal care or fostering the adoption of the child.
Fathers may also share parental leave of up to six weeks of full-time leave or 12 weeks of part-time leave.
Childcare Leave: A mother with a child under one year of age dealing with serious illness shall be allowed to take leave during the period prescribed by the health service. This right shall extend to the spouse or civil partner. If both parents are entitled to leave, it is to be the mother’s choice as to who would be entitled.
Employees (both the father and mother) with a child older than one year and below 18 years, who is suffering from a serious accident or life-threatening illness, is entitled to a paid leave of absence for the number of hours equivalent to 10 working days per year. This is to be distributed at the employee’s choice in full, partial or combined days.
If a company experienced profits, it must share it with employees specifically 30% of the net profits in proportion to each employee’s salary. This can be monthly/annually.
In lieu of the above obligation, the company may pay a bonus of 25% of yearly salary. In this case, regardless of salary level, the bonus cannot exceed the monthly minimum wage.
A profit-sharing agreement may be established between the company and employees that is different but payment to employee cannot be lower than the two mentioned above.
13th & 14th Month Salary
- 13th and 14th Salaries (Gratificación de Fiestas Patrias and Navidad), must be paid annually, in two installments, with first instalment paid in Fiestas Patrias (in the month of September) and the second installment paid on Christmas (in the month of December).
There are 17 paid public holidays. When a holiday falls on a weekend, the Chilean government may decide to extend the holiday to either Friday or Monday. Presidential and parliamentary elections are held every four years on the third Sunday in November. Election days (for Presidential and Municipal/Regional) are declared holidays.
There are two holidays that are local/regional:
1. June 7th – Battle of Arica (only in the Arica and Parinacota Region)
2. August 20th – Nativity of Liberator Bernado o’Higgins (only in the communes of Chillán and Chillán Viejo)
Benefits to the Employee in Chile
There are five categories of employer social security contributions:
Labor-related accident insurance, made to employers’ associations of labor security which are private non-profit institutions or to the Social Security Regularisation Unit (ISL)
Fondo SANNA, for working parents of children aged one to 18 who have a serious health condition so that parents can take a leave of absence from work to take care of them.
Insurance for high risk jobs (2% for heavy work or 1% for less heavy work)
On March 31, 2020, legislation was approved by Congress to provide protection to workers and impose obligations on employers, when an employment relationship is suspended due to COVID-19. This includes allowing employer and employee to agree on a suspension of the labor relationship, agree on a reduction of work hours with a proportional reduction of salary (where employee can obtain unemployment insurance benefits of up to 25% of salary) and where employer is still required to make social security and health insurance payments with certain ceilings during the suspension.
A new mandatory health policy for the gradual and safe return to work was also passed. This covers hospital and worker rehabilitation expenses and indemnifies in case of death from COVID-19 for workers who are performing their work in person, whether in whole or in part. Employees under remote work arrangements are excluded from this obligation.
It is common to offer additional benefits such as:
Transportation allowance (Movilización)
Meal allowance (Colación)
Visas and Foreign Workers
The Resident subject-to-a-contract status or Work Contract Visa is the most common long-term work authorization category. These are the requisites for a foreigner to sign a work contract in Chile:
The company, institution or individual hiring a foreign worker must have a legal address in Chile.
The work contract needs to be signed before a notary, with signatures from the employer and the employee or whoever represents the latter.
In the case of professionals or skilled technicians, they must produce a degree properly certified in their country of origin.
The activities to be performed by the foreign worker must not be considered dangerous or risky to the country’s national security.
The hiring of the worker and the contract must comply with all pertaining legal and labor measures, as well as ones established by the aliens register office (Extranjería) required for obtaining a Work Contract Visa.
A Work Contract Visa is generally granted for two years and may be renewed indefinitely for subsequent equal periods. Holders of this category of visa may only work for the entity that sponsored their visa.
Minimum requirements for a Work Contract Visa:
Place and date the contract was signed (must be signed before a notary).
Name, nationality and addresses for both the employer and the employee.
Task, mission or project to be developed in Chile.
Schedule and location where the work will be performed.
Amount of remuneration, which cannot be inferior to Chile’s minimum wage and may be paid in Chilean or foreign currency.
Duration of contract.
Date of start of activities.
Travel clause which specifies that the employer agrees to pay the worker and his or her family members at the end of the contract for a return ticket to his or her country of origin or to a country agreed by the parties. This obligation on the part of the employer will exist until the foreign worker exits the country, is granted a new visa or secures a definitive continuance.
Clause of pension scheme by which the employer obliges itself to make the necessary arrangements to ensure the worker makes the contributions into his or her future pension, unless by mutual agreement of both parties to opt out.
Clause of income tax, where the employer is liable for payment of the income tax corresponding to the foreign worker’s remuneration.
The foreign worker can start to work once he or she has obtained the certification of his or her residency in Chile or the work permit for foreigners.
A work visa can be given for free without a written work contract in these cases:
Artists, scientists, teachers, writers and, in general, people who are highly relevant in the world of culture.
Individuals who are sponsored by public or private institutions which have well-known funding.
When an individual’s activities are carried out with aims of charity, education or the spread of knowledge.
Temporary Residence Visa: For foreigners with professional or family interests in Chile, the Temporary Residence Visa generally permits work for up to one year and may be extended for an additional year. After this, the visa holder must apply for permanent residence.
Temporary Opportunity Visa for Entrepreneurs: For entrepreneurs wishing to start a business, invest and live in Chile with a commitment to invest at least ~US$100,000 during the first year in Chile this visa can be renewed once. A Spanish diploma is required, at a minimum B1 level
Temporary International Orientation Visa: For foreigners who have reached a certain level in selected top global universities, this visa allows working in Chile for up to 12 months and can be renewed once.
Work Holiday Visa: Valid for 12 months with a cap on yearly visas issued, this visa accepts applicants between 18 and 30 in age.
Fees & Processing Time
You only pay a Chilean work visa fee after your application is approved. The fees vary from $50 to $150. The visa fee amount is determined during the online application. A Chile work visa is processed within 15-20 days, but Chilean embassies/consulates may not accept your application at all if it is submitted less than 30 days in advance.
Getting a Tax Number
There are two types of ID numbers in Chile:
RUT: Rol Único Tributario or Chilean Tax ID number
RUN: Rol Único Nacional or Civil Register ID number
For an individual person, whether a Chilean or a foreigner living in Chile, RUT and RUN are identical. The Unique National Role (RUN) is a unique identification number given to every Chilean, whether a resident or not residing in Chile, as well as any foreigner who remains, whether temporarily or permanently, with a visa other than a tourist visa in Chile.
The agency in charge of granting the RUN is the Civil Registry and Identification Service (Registro Civil). The RUT is assigned by the Internal Revenue Service (SII) upon request to companies, international organizations, tax offices, NGOs, etc.
Public Holidays in 2022
|1||New Year’s Day||January 1st|
|2||Good Friday||April 15th|
|3||Labor Day||May 1st|
|4||Glorias Navales Day||May 21st|
|5||National Day of Indigenous Peoples||June 21st|
|6||St. Peter and St. Paul||June 27th|
|7||Day of the Virgen del Carmen||July 16th|
|8||Assumption of the Virgin||August 15th|
|9||Independence Day||September 18th|
|10||Day of the Glories of the Army||September 19th|
|11||Meeting of Two Worlds||October 10th|
|12||Evangelical and Protestant Churches Day||October 31st|
|13||All Saints Day||November 1st|
|14||Immaculate Conception||December 8th|
|15||Christmas Day||December 25th|