How to Hire Employees in Chile

Hiring in Chile requires a written Spanish-language employment contract and registration with Chilean social security bodies.

Companies with 25 or more employees must comply with the 85% Chilean nationality rule. Every termination also requires a formal finiquito settlement document signed before a notary or labor inspector.

• Employer payroll cost is approximately 6.51% of gross salary, rising gradually as pension reform phases in through 2033.
• The notice period is 30 days. Severance is one month of salary per year of service, capped at 11 months.
• The standard working week is 44 hours as of 26 April 2024, reducing to 42 hours in 2026 and 40 hours in 2028.
• Chilean labor law does not recognize probation periods. Employment protections apply from day one.

This guide covers contracts, payroll, taxes, statutory benefits, termination rules, and compliance obligations for employers hiring in Chile.

Gloroots operates as a Global Employer of Record (EOR), employing workers in Chile on behalf of foreign companies. This means your team members are employed under compliant local contracts while you retain day-to-day management and centralized governance over your workforce.

Job Market and Hiring Trends in Chile

Chile's hiring market in 2024 is strongest in technology, renewable energy, and mining, driven by the country's green hydrogen and lithium strategies.

Talent shortages are concentrated in engineering, IT, and skilled trades. General services roles see a relative surplus of candidates.

• Chile's employment rate reached 59.70% in December 2023, according to the National Statistics Institute (INE).
• The services sector contributes 54.26% of GDP and employs 70.42% of the workforce (World Bank).
• Chile ranked 41st in the 2021 IMD World Digital Competitiveness Ranking and 33rd specifically for future readiness.
• The IMF World Economic Outlook 2024 forecast GDP growth of 2.5% for Chile in 2024.
• Unemployment fell to approximately 8.5% in late 2023, per INE data.

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Your Options for Hiring in Chile: Entity vs. EOR vs. Contractor

Three paths exist for hiring in Chile: set up a local entity, use a Global Employer of Record (EOR), or engage independent contractors. Each differs in setup time, cost, and compliance burden.

Entity setup requires registration with the Public Commerce Registry, publication in the Diario Oficial, and completing SII Inicio de Actividades to obtain a RUT tax number.

Contractors offer immediate flexibility but carry real misclassification risk under Chilean labor courts, which can result in retroactive liability.

Foreign employers without a local entity must appoint a Chilean representative to sign contracts and manage payroll and social security obligations. A full entity is not required, but a representative is mandatory under Chilean law.

To understand how does EOR work in practice, or to compare providers, see our guide to the best employer of record options available today.

Employees vs. Contractors in Chile

Misclassifying a worker in Chile triggers labor court fines, retroactive social security contributions, back payment of statutory benefits, and reputational damage to the employer.

Chilean courts apply a five-factor test to determine worker status: the type of contract in place, the degree of employer control over work, how tax and social security are handled, whether the worker is entitled to statutory benefits, and whether the right of substitution exists.

The 85% nationality rule, which requires that at least 85% of a company's workforce be Chilean nationals, applies only to employees. Contractors are excluded from this count, which is a relevant factor in workforce planning for foreign employers.

Cost to Hire an Employee in Chile

Total employment cost in Chile exceeds base salary. Employer contributions currently add approximately 6.51% of salary, with that figure set to rise significantly over the next decade.

Employer obligations include unemployment insurance, work accident insurance, life insurance (SIS), a pension reform contribution, the SANNA Fund, legal profit sharing (gratificación), and a work-from-home allowance. Employees separately contribute to AFP pension and health insurance.

The pension reform contribution will increase employer cost to approximately 8.5% by 2033, making forward payroll planning essential. For a full breakdown of how these costs affect total employment spend, see our guide to employer of record cost.

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Compliance Risks While Hiring in Chile

The most common compliance failures in Chile carry financial penalties, retroactive liabilities, and potential criminal exposure for company directors.

• Worker misclassification: Labor courts can impose fines, require retroactive social security contributions, and order payment of back benefits. Misclassified contractors are frequently reclassified as employees.
• Failure to provide a written contract within 15 days: Under Labor Code Article 9, employers face fines of up to 5 UTM per violation. The obligation applies from the first day of employment.
• Violating the 85% Chilean nationality rule: Companies with 25 or more employees must ensure at least 85% are Chilean nationals. The Dirección del Trabajo enforces this rule and can issue sanctions for non-compliance.
• Payroll contribution errors: The SII applies penalties and interest on underpaid AFP, health, and unemployment contributions. Errors compound quickly when left uncorrected across multiple pay periods.
• Discriminatory hiring practices: Law No. 20.609 (Ley Zamudio) prohibits discrimination on grounds including race, gender, religion, and sexual orientation. Violations can result in legal action and damages awarded by civil courts.
• Incorrect termination: Employers must issue a finiquito within 10 working days of termination. Failure to do so triggers additional liability. Dismissal without valid legal grounds requires severance payment even when cause is claimed.

Key Labor Laws in Chile

Four laws govern most employment relationships in Chile: the Código del Trabajo, Law No. 21.561 (2023 Working Hours Reform), Law No. 16.744 (Workplace Safety), and Law No. 20.609 (Anti-Discrimination, known as Ley Zamudio).

The Código del Trabajo is the primary source of employment law. It sets rules on contracts, working hours, termination, and collective bargaining. All employers operating in Chile must comply with its provisions regardless of company size or sector.

Law No. 21.561 introduced a phased reduction of the standard workweek from 45 hours to 40 hours by 2028. The reduction applies in stages: 44 hours one year after enactment, 42 hours at three years, and 40 hours by the fifth year. Employers should review scheduling and overtime policies at each stage.

Law No. 16.744 requires employers to insure workers against occupational accidents and diseases through an approved mutual insurance body. Employers must also maintain a written workplace safety policy and report incidents to the relevant authority.

Law No. 20.609, the Ley Zamudio, prohibits arbitrary discrimination in employment on grounds including race, gender, religion, sexual orientation, and disability. Violations can result in civil liability and reputational consequences for the employer.

Employment Contracts

Chilean law requires a written employment contract within 15 days of the employee's start date. For contracts shorter than 30 days, the deadline is 5 days. Failure to comply carries a fine of up to 5 UTM under Labor Code Article 9.

Contracts must be written in Spanish. Both parties sign two copies, and the employer retains one. The contract must state the identities of both parties, the start date, work location, job description, agreed salary in CLP, working hours, and vacation entitlement.

Fixed-term contracts are permitted for a maximum of 12 months. In limited cases involving technical or managerial roles, this period may extend to 24 months. A second renewal automatically converts the contract to indefinite-term by operation of law. If work continues after the contract expires with the employer's knowledge, the contract also converts to indefinite-term.

Chilean law does not recognize probation periods. Employers cannot rely on a trial period to justify early termination. Clear drafting of the termination grounds at the outset is the recommended approach to managing performance risk.

Non-compete clauses must be written, specific, and reasonable in scope. To be enforceable, they must include compensation for the employee. A clause that restricts activity after employment ends is only valid if post-termination compensation is provided, as set out under Labor Code Article 160 N°2.

Working Hours and Overtime

Chile's standard workweek is 44 hours as of 26 April 2024, under Law No. 21.561. It drops to 42 hours from 26 April 2026 and to 40 hours from 26 April 2028.

Hours can be distributed across 4, 5, or 6 days per week.

Overtime applies to any hours exceeding 9 per day or the applicable weekly limit. Overtime on weekdays and Saturdays carries a 50% premium. Work on Sundays or public holidays is compensated at 100%.

Minimum Wage

Chile's minimum wage is set by annual legislation. The current monthly rate is CLP 500,000 for workers aged 18 to 65. Workers under 18 or over 65 are subject to a lower statutory rate.

The rate is reviewed and updated each year through a legislative process, so employers should confirm the figure in force at the time of hiring. Previous content cited a figure in euros (approximately USD 2,141), which does not reflect the Chilean peso amounts established under current law.

Leave Entitlements

Chilean law mandates paid annual leave, sick leave, maternity and paternity leave, and several special leave types. Full details appear in the Employment Benefits section below.

What to Include in an Employment Contract or Offer Letter in Chile

A compliant Chilean employment contract must be written in Spanish, signed within 15 days of the start date, and cover all mandatory Labor Code elements.

• Full legal names and RUT numbers of both employer and employee.
• Job title and detailed role description.
• Gross monthly salary stated in CLP.
• Working hours and schedule, including day distribution under Law 21.561.
• Annual leave entitlement of at least 15 working days.
• Notice period of 30 days.
• Termination grounds and procedure.
• Confidentiality and IP assignment clauses.
• Non-compete clause, if applicable. Any such clause must be compensated and set to a reasonable scope and duration.
• Governing law (Chilean Labor Code) and the applicable collective bargaining agreement, if any.

Note: Chilean law does not recognize probation period clauses. Do not include one in the contract.

Payroll and Taxes in Chile

Chilean payroll runs monthly and must be paid in CLP. Employers need a local Chilean bank account to remit taxes and salaries.

Foreign employers without a local entity must appoint a Chilean representative, typically a payroll provider or Employer of Record, to sign contracts and handle payroll and social security contributions on their behalf. Gloroots pricing gives teams a clear view of what entity-free employment costs in Chile before committing.

Income tax is withheld monthly by the employer under the Impuesto Único de Segunda Categoría. Foreign non-residents pay a flat 35% Additional Income Tax (Impuesto Adicional) on Chilean-source income.

Income tax brackets (CLP, monthly)

Foreign employee tax rules

• 35% flat Additional Income Tax for non-domiciled or non-resident foreigners
• 20% for scientific, cultural, or sports services
• 15% for professional or technical services
• Tax residency is acquired after 183 days in any 12-month period
• A 3-year grace period applies: foreigners are taxed only on Chilean-source income during this window

Payroll setup registration steps

1. Register with the Public Commerce Registry and publish in the Diario Oficial
2. File SII Inicio de Actividades to obtain a RUT
3. Open an SII tax account
4. Register with PreviRed for pension contributions
5. Register with AFC for unemployment insurance
6. Register with Mutual de Seguridad for workplace accident insurance
7. Register with SIS for disability and survivor insurance
8. Register employees with the Dirección del Trabajo within 60 days of hiring and within 60 days of separation

Employment Benefits in Chile

Chilean law mandates a broad set of statutory benefits. Employers should also budget for common supplemental benefits such as aguinaldos and meal allowances.

Profit-sharing (gratificación) is a statutory obligation for profit-making companies. They must distribute 30% of annual net corporate profits to employees, capped at approximately CLP 219,115 per month, or 4.75 times the minimum monthly income annually. This is a mandatory benefit, not a discretionary bonus.

Aguinaldos are semi-annual bonuses paid in September for Fiestas Patrias and in December for Christmas. They are not legally required, but they are standard practice across Chilean employers and should be included in compensation budgets.

Special and bereavement leave

• 5 days for marriage or civil union
• 4 working days for the death of a parent or sibling
• 7 consecutive calendar days for the death of a spouse or civil partner
• 10 consecutive calendar days for the death of a child

Postnatal parental leave

After standard postnatal leave, employees are entitled to an additional 12 weeks of parental leave, bringing total maternity-related leave to up to 30 weeks. The 12-week parental period can be transferred in full or in part to the father. All paid leave in this period is covered by health insurance.

Leave entitlements summary

Paid Time Off and Public Holidays

Employees earn 15 working days of paid annual leave after one year of service. Chile observes 17 public holidays in 2024.

Sick Leave

Sick leave is available upon submission of a medical certificate. The first three days are unpaid; from day four, social security covers sick pay.

Maternity and Paternity Leave

Chile grants mothers 30 weeks of total maternity leave: 6 weeks prenatal, 12 weeks postnatal, and 12 weeks of postnatal parental leave. After the baby's seventh week, mothers may transfer part or all of the postnatal parental leave to the father. All leave is paid through health insurance.

Public Health Insurance

All employees in Chile must contribute 7% of gross salary to either FONASA (public) or an ISAPRE (private insurer).

Work Permits and Visas in Chile

Foreign nationals must hold a valid work visa before starting employment in Chile. The two main visa types are the Temporary Residence Visa and the Work Visa.

Employers sponsoring a foreign national must verify the work permit before the employee's start date. Labor Code Article 20 requires that at least 85% of a company's workforce hold Chilean nationality. Hiring too many foreign nationals without qualifying status can breach this rule.

The following visa types apply to foreign workers in Chile:

For the 85% nationality rule, certain foreign residents count as Chilean nationals: foreigners resident for 5 or more years, foreign spouses or civil partners of Chilean nationals, children who hold Chilean nationality, and widows or widowers of Chilean nationals.

Onboarding New Hires in Chile

Onboarding in Chile is a compliance process. Several registrations and document deadlines apply before and after the first day of employment.

Before Day One

• Decide whether to use a direct entity or an entity-free employment model through a Global Employer of Record (EOR).
• Prepare a Spanish-language written contract. It must be signed within 15 days of the employee's start date.
• Register the employee for tax withholding with the SII, and enroll them in an AFP, health insurance, and unemployment insurance (AFC) before the first payroll run.
• Verify the work permit or visa for any foreign national before the start date.
• Collect identity documents (RUT/RUN), bank details, tax data, and role credentials.

Day One

• Issue the signed employment contract.
• Complete handbook acknowledgments and set up timekeeping.
• Enroll the employee in benefits, including AFP and FONASA or ISAPRE.

First Week and Beyond

• Register the employee with the Dirección del Trabajo within 60 days of hiring.
• Set up any remote-work arrangements. If applicable, pay the work-from-home allowance of CLP 32,000 per month.
• Register employee separation with the Dirección del Trabajo within 60 days of termination when that time comes.

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NDAs, Confidentiality and IP Protection in Chile

Confidentiality and IP clauses are enforceable in Chile when included in the written employment contract or a separate signed agreement.

Non-compete clauses must be written, clear, and reasonable in scope. They must also include compensation for the employee to be valid post-termination. During employment, non-compete obligations are generally enforceable without additional compensation. After termination, they are valid only if the employee receives payment for the restriction period, as required under Labor Code Article 160 N°2.

IP created by an employee in the course of employment belongs to the employer under Chilean law. Contracts should state this explicitly to avoid disputes. Confidentiality obligations can extend beyond the employment relationship if the contract is clearly drafted to that effect.

Termination and Offboarding in Chile

Termination in Chile requires 30 days' written notice, or payment in lieu capped at 90 UF. Valid grounds include mutual agreement, resignation, contract expiry, employee breach, and company operational needs.

Severance (indemnización por años de servicio) equals one month's last monthly remuneration per year of service, capped at 11 months (330 days). No severance applies when dismissal is for cause.

Offboarding requires four specific actions:

• Issue the finiquito (labor release settlement agreement) within 10 working days of separation. Failure to do so triggers additional employer liability.
• Deregister the employee with the Dirección del Trabajo within 60 days of separation.
• Process final payroll including accrued vacation, proportional gratificación, and any outstanding benefits.
• Return company property and revoke system access on the last working day.

Dismissal of a pregnant employee or an employee within 18 months post-birth requires prior labor court approval.

Business Culture in Chile

Chilean business culture is shaped by hierarchy, personal trust, and deliberate decision-making. Understanding these norms helps employers build productive working relationships from the start.

• Hierarchy matters. Decisions flow from senior management. Avoid bypassing the chain of command when communicating or escalating issues.
• Relationship-building comes first. Chileans call this confianza. Invest time in personal rapport before pushing for decisions or commitments.
• Meetings may start late. Punctuality is appreciated, but build buffer time into schedules to avoid friction.
• Negotiations are patient. Pressure tactics are counterproductive. Expect a deliberate pace and plan accordingly.
• Spanish is the working language. English proficiency is higher in Santiago and Valparaíso but should not be assumed across all roles or regions.
• Work-life balance is valued. Avoid scheduling meetings outside core hours or on public holidays.
• Gift-giving is appropriate when visiting someone's home. Wine or chocolates are common choices. Wrap gifts and open them upon receipt.

Top Sectors to Hire From in Chile

Chile's economy spans five distinct sectors, each with documented growth and active demand for skilled professionals. Employers targeting Chilean talent should understand where the strongest pipelines exist.

• Services. Value added in the services sector reached $172.73 billion in 2022, up $8.6 billion year-on-year. In-demand roles include finance professionals, tourism managers, and retail operations leads.
• Mining and industry. Chile produces approximately 27% of global copper supply, according to COCHILCO 2023. Mining engineers, geologists, and industrial operations managers are consistently sought after.
• Renewable energy. Chile's Ministry of Energy targets 70% renewable electricity by 2030. Solar and wind engineers, project managers, and environmental specialists are in high demand as that deadline approaches.
• Technology and digital. Chile ranked 41st in the IMD Digital Competitiveness Index in 2021. Software developers, cybersecurity analysts, and data scientists are among the fastest-growing roles in this sector.
• Agriculture. Chile's diverse climate supports viticulture and fruit farming at scale. Agronomists, viticulture specialists, and sustainable farming experts are actively recruited across the sector.

Companies hiring across Latin America can also review what it takes to hire employees in Colombia for a comparable regional market.

Top Cities to Hire From in Chile

Chile's talent is distributed across several cities, each with a distinct professional profile.

Santiago is home to the majority of Chile's Fortune 500 subsidiaries and a growing fintech sector. Professionals here specialize in finance, IT, legal, and creative industries.

Valparaíso is Chile's main port city and the seat of the National Congress. Talent concentrates in maritime logistics, digital services, and public administration.

Concepción hosts the Universidad de Concepción, one of Chile's top research universities. The city produces strong candidates in engineering, manufacturing, and biotech.

Antofagasta sits at the center of Chile's copper mining industry. Professionals here specialize in mining engineering, geology, and environmental management.

Viña del Mar is a growing business services hub adjacent to Valparaíso. Talent in hospitality, event management, and service industries is concentrated here. Companies hiring across Latin America also consider pairing Chilean hires with talent sourced when they hire employees in Brazil.

Hire Compliantly in Chile with Gloroots

Gloroots acts as the legal employer in Chile, managing contracts, payroll, social security registrations, and compliance so your team can focus on the work.

This model suits companies that want to employ staff in Chile without establishing a local entity or appointing a Chilean representative independently.

• No local entity required: hire in Chile within days, not months.
• Fast onboarding: contracts issued and registrations completed before the first payroll run.
• Local compliance and payroll: AFP, FONASA/ISAPRE, AFC, and SII handled correctly.
• Predictable pricing: fixed monthly fee with no hidden contribution surprises.
• Dedicated support: local expertise on the Chilean Labor Code, gratificación, and reform timelines.

Gloroots supports companies hiring one to hundreds of employees in Chile. For companies with an existing entity, Gloroots can also support payroll-only engagements. Learn more about EOR services and how does EOR work, or explore options to hire employees in Mexico across the region.

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Frequently Asked Questions About Hiring in Chile

Can a foreign company hire employees in Chile without setting up a local entity?

Yes. A foreign company can employ workers in Chile without registering a local entity by using a Global Employer of Record (EOR). The EOR becomes the legal employer on record in Chile, handling contracts, payroll, and statutory filings. This is called entity-free employment and is a common approach for companies testing the Chilean market or managing a small headcount.

What is the minimum wage in Chile?

Chile sets a statutory minimum monthly wage for employees aged 18 and older. As of August 1, 2022, the minimum wage was CLP 400,000 per month (approximately USD 450–470/month). The minimum wage is reviewed periodically by the Chilean government. Employers must apply the current rate at the time of payroll processing and should confirm the latest figure with a local compliance specialist before onboarding.

What are the notice and severance requirements in Chile?

Chilean labor law requires employers to give at least 30 days of written notice before terminating an indefinite-term contract, or pay one month's salary in lieu of notice. Severance is calculated at one month's last salary per year of service, capped at 11 months. The grounds for termination must be documented and legally valid under the Labor Code to avoid reinstatement orders or additional compensation claims.

Are probation periods allowed in Chile?

Chilean labor law does not formally recognize a statutory probation period. Employment protections apply from the first day of work. Employers can use fixed-term contracts for initial engagements, but these carry their own restrictions, including limits on renewals and pension eligibility rules. Misusing fixed-term contracts to simulate a probation period can expose employers to reclassification risk and back-pay liability.

What is the 85% Chilean nationality rule?

Under Article 19 of the Chilean Labor Code, companies with 25 or more employees must ensure that at least 85% of their workforce holds Chilean nationality. This rule applies to the total headcount across the business, not per department. Certain roles, such as technical specialists, may qualify for exemptions. Foreign companies scaling headcount in Chile should track nationality ratios carefully to stay within the legal threshold.

What is the standard working week in Chile, and how is it changing?

Chile's standard workweek is currently 45 hours across five or six days. A 2023 legislative reform introduced a phased reduction: the workweek dropped to 44 hours one year after enactment, falls to 42 hours three years after enactment, and reaches 40 hours by 2028. Many employers have already moved to 40 hours ahead of the final deadline. Overtime beyond the daily 9-hour or weekly threshold attracts a 50% premium on weekdays and 100% on Sundays and public holidays.

What leave entitlements do employees in Chile receive?

Employees with at least one year of service earn 15 working days of paid annual leave. An additional day accrues for every three years worked beyond ten years of service. Chile observes 17 public holidays in 2024. Sick leave requires a doctor's note within two days; the first three days are unpaid, and social security covers pay from day four onward. Maternity leave is 18 weeks, and fathers receive five days of paid paternity leave.

How long does it take to onboard an employee in Chile using an EOR?

Onboarding through a Global Employer of Record in Chile typically takes between three and seven business days once the employee's documentation is complete. The EOR prepares a locally compliant employment contract, registers the worker for social security and health contributions, and sets up payroll. Timelines can vary depending on the complexity of the role and the speed of document collection. Using an EOR removes the entity registration step, which can otherwise take several weeks.