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South America

Chile

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Employer of Record (EOR) in Chile

What you'll learn

  • Country Introduction
  • Tax Breakdown for Employers
  • Statutory Leave Laws
  • Minimum Wage and Working Hours
  • Termination Process
  • Additional Information
Chile Introduction

Chile is a country on the western side of South America, bordered by Peru, Bolivia, and Argentina. It occupies a long narrow strip of land between the Andes mountain range and the Pacific Ocean. Chile is considered a developing country with a high-income economy, and has the highest degree of economic freedom in South America due to its efficient judicial system and prudent public finance management.

Paid Leave and Statutory Leave

Parental Leave

Pregnant employees in Chile can take 30 weeks of paid maternity leave, starting 6 weeks before the delivery and then 24 weeks after, this leave is paid by the country’s health insurance agency. Fathers receive 5 days of paid leave after the birth and can also share some of the mother’s maternity leave (up to 6 weeks), which is paid at 100% of the normal salary. Along with regular paid leave, mothers of children under 18 receive an additional 10 days of leave.

Sick Leave

Employees in Chile receive sick leave benefits if they can provide proof from a medical professional within 2 days of the leave beginning. The first 3 days are unpaid, and day 4 and on are paid by the employer (subject to a cap).

Paid Leave

There are 16 public holidays in Chile, and employees who have worked at least 1 year at their company are entitled to 15 days of paid time off per year. Additionally, employees in Chile can also receive Carer’s Leave and Adoption Leave.

Wage Requirements and Working Hours

There are 2 different rates for minimum wage in Chile, one for minors and retirees, and one for working adults. The rate is CLP$400,000 per month for working adults and CLP$283,471 for minors and those over 65.

A full workweek in Chile lasts 45 hours.  An employer can extend the day by no more than 2 hours per day, or 10 hours a week. Overtime worked is paid at a rate of 150% of the regular salary.

Termination Process

Process

In Chile there is no at-will termination, meaning employers must provide cause for terminations. The cause can be selected as one of these options:

  • Mutual agreement, resignation, or expiration of contract
  • Dismissal due to breach of contract or other proven serious issue
  • Company needs/reorganization
  • Force Majeure

It is common for Chileans to litigate terminations, so there needs to be documentation of the situation — employers could become liable for attorneys’ fees and other damages if they are found guilty of wrongful termination.

Notice Period

Employees in Chile are due 1 month of termination notice by law.  Much of the time this month of notice is paid out instead of asking the employee to work for one more month.

Severance Pay

In the event of termination, the employee is due a severance payment of 1 month salary for every year worked (with a max of 11 years).

Additional Information

Employees in Chile are entitled to a government-mandated “legal gratification” bonus that is typically paid monthly, and can be calculated in 2 ways:

  1. 30% of the company’s net income is divided amongst all the employees (proportionate to their income level)
  2. Pay the employee 25% of their wages earned that year, regardless of the company’s net income. This bonus is capped at 4.75 of the Minimum Monthly Income (IMM) which is currently around CLP$83,125 per month.

While not required, it is also common to pay a 13th month bonus “aguinaldo” on Chile’s Independence Day and around the December holidays.

OVERVIEW
Language(s):
Spanish
Currency:
Chilean Peso (CLP)
Capital City:
Santiago
Population:
19.4 Million
Cost of Living Rank:
82nd
VAT (Valued Added Tax):
19%
Employer TaxES
4.39%
(estimated)

★  2.4% - Unemployment

★  1.99% - Disability and Survival Insurance

Simplified Global HR and Payroll.
Let’s work on it together.

We've made the process really simple
with only 3 steps.

1

Remote candidate

You've sourced a full-time employee or contractor located in a country where your company is not incorporated.

2

Cost Calculation

Pass us the details of your candidate and we will let you know exactly what it costs to employ your candidate in that country.

3

Onboarding & Admin

Sit back and relax as we onboard your new team member and take care of all the local compliances and admin work.

Same-day onboarding
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How Remofirst employs in Chile

It can be prohibitively expensive to establish an entity in every country you want to hire talent in, so Remofirst will hire and pay your employee on your behalf while you manage their daily duties. Remofirst will handle formal HR procedures and employment contracts that adhere to local laws, so that you can simply approve invoices via our platform. When you work with an Employer of Record (EOR) you can compliantly hire the best employees around the world.

How employees in Chile get paid
Your employee's hours, time off, holidays, bonuses, and commissions are automatically calculated into payroll. Remofirst will invoice you in either US Dollars (USD), Euros (EUR), British Pounds (GBP), Canadian Dollars (CAD), or Singapore Dollars (SGD) around the 15th of each month to make sure your employees in Chile are paid on time in Chilean Peso (CLP). To make it even easier, you can summarize your entire global team's salaries to aggregate them into one payment (instead of many individual payments).
Full-time Employees vs Global Contractors

Unlike full-time employees, contractors work on projects with multiple companies at a given time and are technically self-employed. Full-time employees are solely focused on their employer and usually receive benefits (such as health insurance, equity or stock options, and time off) as an additional form of compensation. While it can be cheaper to work with international contractors instead of paying benefits to a full-time employee, you run the risk of misclassification. It's recommended to work with an EOR for contractor onboarding and payments, so you can know that your international contractors are paid compliantly and on time.

Dependable support for employees
Whenever the employee or employer has a question about benefits, Visas, or anything else related to international employment in Chile, they can use our platform's chat function to get answers from our team of experts. Every client of Remofirst also receives a dedicated account manager that will serve as a point of contact for global HR support.