Chile presents a compelling opportunity for global organizations seeking high-impact talent at low hiring costs. In Chile, an EOR can be especially helpful due to the complex labor laws and regulations. By partnering with an EOR, you can ensure that your business is in compliance with all local laws and regulations while also providing your employees with the support they need. 

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Growing a team means hiring the right employees at the right time and for the appropriate positions. Employers in Chile must have a local legal organization and use local resources to handle compliance, payroll, tax, and benefits management. The complexity of employment regulations in Chile makes compliance with employment laws demanding.

With Gloroots’s global Employer of Record (EoR) service, you can let Gloroots do the heavy lifting of payroll, tax, benefits, and compliance and concentrate on what matters to you most: your employees and company growth.

Misclassification refers to the improper classification of workers, particularly in terms of their employment status. 

Utilizing a PEO/EOR in Chile helps mitigate the risks associated with misclassification by ensuring compliance with labor laws, proper employee classification, accurate payroll processing, and access to comprehensive benefits. This enables businesses to focus on their core operations while entrusting employment-related responsibilities to experienced professionals.

The main source of labor law in Chile is the "Código del Trabajo" (Labor Code), which establishes the fundamental principles and rules governing labor relations in the country.

Employment contract

The law in Chile recognizes three different kinds of employment contracts: individual employment contracts, collective employment contracts, and special employment contracts (such as contracts for apprenticeships or contracts for domestic help). 

When an individual signs an employment contract, it signifies the start of their working relationship with the employer. Individual work contracts can either be permanent or transitory depending on the circumstances.

On the other hand, collective employment contracts establish the broader terms and conditions that govern the relationship between employers and employees as a whole.

In Chile, it is mandatory to have a formal employment agreement that is signed by both the employer and the employee. The employer is required to provide the contract in Spanish. 

In accordance with the provisions of Article 10 of the Chilean Labor Code, employment contracts are required to contain the following information:

• Identification of both parties
• Date and place of contract signing
• Job description, duties, and responsibilities
• Workplace location
• Remuneration and payment terms
• Working hours
• Duration of employment
• Benefits, whether in the form of goods or cash.

It’s important for employers to understand the intricacies of these programs before making a hire. 

This might sound overwhelming—but it doesn’t have to be. A solution like Gloroots eliminates the barriers for you. With Gloroots’ Employer of Record offering, hiring and managing employees globally is a piece of cake.

Get an overview of what you need to know when hiring in Chile.

Working Hour 

Chile’s standard workweek is 44 hours over 5 or 6 days, with employers allowed up to 2 extra hours daily. A new law reduces the workweek to 40 hours by 2028, though many companies have already adopted the change early.

Overtime

Overtime in Chile is compensated at 150% of regular pay, including night shifts, weekends, and public holidays. However, employees in positions of trust or high responsibility are generally exempt from standard working hour regulations under Chilean labor law.

Public holidays

In the nation, there are 17 designated public holidays during which employees typically enjoy time off from work.

Payroll

Employers are required to remunerate wages and salaries at a minimum frequency of once per month. Payments should be issued within the same month in which the employee has provided their services.

Minimum Wage

The monthly minimum wage in Chile is CLP 510,500. This rate applies to adult workers and is set by the government. Employers must ensure compliance with this wage threshold as part of Chile’s labor law requirements.

Annual leave

Once employees have completed one year of employment, they are entitled to 15 paid days off per year. It is mandatory for at least 10 of these days to be taken continuously as a block of leave. Furthermore, after reaching 10 years of service, regardless of any job changes during that period, employees' annual leave allowance increases by 1 day for every 3 years worked with their current employer.

Sick Pay

In Chile, the first 3 days of sick leave are unpaid; from the 4th day onward, payment is covered by FONASA or ISAPRE, subject to caps. Employees must submit a medical certificate and meet contribution requirements to qualify for benefits

Maternity  leave

In Chile, maternity leave includes 6 weeks prenatal and 12 weeks postnatal, followed by an optional 12-week extension, or 18 weeks if working half-time. Leave is paid by FONASA/ISAPRE, with employers covering half-pay during part-time return. Pregnant employees are protected from dismissal without labor court approval and reassigned if duties pose health risks.

Paternity leave

In Chile, fathers receive 5 days of paid paternity leave, funded by FONASA/ISAPRE. Additionally, starting from the 7th week after childbirth, the mother can choose to transfer part or all of her remaining maternity leave to the father, allowing greater flexibility in shared parental responsibilities.

Tax and Social Security contribution

Employer Payroll Contributions

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• UF Rate = CLP 68,034

Mandatory profit-sharing options:

30% of net profits proportionally distributed, or
25% of annual wages (capped at 4.75 × IMM)

Employee Payroll Contributions

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Social security

Employee Income Tax

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Note: The contribution rates for social security may vary depending on specific circumstances such as employment contract type.

Employment Termination and Severance

Employment Termination

In Chile, an employer can only terminate an employee for legal reasons such as:

• Mutual agreement, resignation, or end of the contract
• Breach of contract (with proof)
• Company restructuring or business needs

A termination letter must clearly state the reason and the last working day. It should be signed by the employee or sent to their home by certified mail. A copy must also be filed with the Chilean Labor Ministry.

Afterward, a severance agreement must be prepared and signed within 10 days. In mutual agreements, both sides must sign a document confirming the decision, usually within 1–2 weeks.

Notice Period

Employers are obliged to give employees a minimum notice period of 30 days prior to termination.

Severance pay

If an employee has completed at least one year of service, they are entitled to severance pay. The standard entitlement is one month’s salary for each year worked, up to a maximum of 11 years. After the first year, if the employee works at least six months into the next year, they earn an additional month of severance.