How to hire employees in Chile

Chile's dynamic economy, highlighted by its dominant role in global copper production and growing industries such as renewable energy and agriculture, makes it an attractive location for recruitment initiatives. The nation is celebrated for its rich array of talent in fields ranging from mining to innovative renewable resources, establishing Chile as a beacon of diversity and specialization within the workforce.

Moreover, Chile's labor market presents a cost-effective platform for securing highly skilled professionals, offering businesses a notable advantage in operational efficiency. This harmonious blend of rich natural resources, economic resilience, and skilled labor enhances Chile's attractiveness as a prime destination for companies aiming to broaden their operational scope or strengthen their global standing.

What you need to know before hiring employees in Chile

Job market in Chile

When exploring how to hire employees in Chile, the following trends can help you hire cost-effectively and pay talent correctly. 

• Despite past volatility, Chile's trade surplus in 2016 underscores its capability for economic resilience and growth.
• With China and the United States as its principal trade partners, Chile is deeply integrated into the global economy, offering vast opportunities for businesses looking to tap into international markets.
• The services sector leads the economy, closely followed by the industrious and innovative contributions from the industrial sector, showcasing a diversified economic base ripe for investment.
• A higher proportion of the workforce in agriculture compared to its GDP share points to untapped potential in agri-business and related industries.
•  With a GDP per capita of $12,993 in 2020 and expected to rise, Chile demonstrates solid foundations for economic expansion and investment returns.
•  Recognizing its rank as the 11th most unequal country in Latin America in 2018, Chile is poised for reforms that aim to create a more inclusive economic environment, potentially unlocking further growth.
• The decrease in the unemployment rate by one percentage point in 2022 indicates an improving labor market, making it an opportune time for businesses to invest in Chilean talent.
• Ranked 50th with a GRWI score of 0.651, Chile is acknowledged for its suitability as a remote work destination, reflecting its robust digital infrastructure and skilled workforce.

Chile Hiring Trends

In 2024, the landscape for hiring employees in Chile presents a promising horizon for employers seeking to tap into the country’s rich and diverse talent pool. With the employment rate climbing to 59.70% by December 2023, Chile showcases a robust and adaptable workforce, ready to meet the dynamic needs of various sectors that form the backbone of its economy, including services, industry, and the world-renowned copper production.

The anticipated GDP growth of 23.9% up to 2028, alongside proactive economic strengthening measures, underlines Chile's readiness for business expansion and recruitment. Despite the challenges posed by an 11.65% inflation rate in 2022 and previous years' fluctuations, Chile's economy reveals unique opportunities for hiring. 

Employers aiming to leverage Chile’s hiring potential are encouraged to adopt strategies focusing on skill development, diversity, and inclusivity. By doing so, they not only contribute to their organizational success but also play a vital role in bolstering Chile's presence on the international stage. 

Engaging with Chile’s workforce is not just about filling positions; it’s about making a positive impact and fostering mutual growth.

How to hire employees from Chile

Set up an entity in the country

Establishing a legal entity in Chile offers businesses a gateway to harnessing the South American market's potential, enabling direct oversight of employment practices and fostering long-term economic gains. 

This initiative starts with choosing the right corporate framework, such as a Sociedad por Acciones (SpA) or Sociedad Anónima (SA), crucial steps that lay the foundation for future growth. Next, formal registration with Chile's Commercial Registry and obtaining a RUT for tax identification mark critical milestones in integrating into the local economic fabric.

However, this path is layered with complexities, blending legal, financial, and administrative challenges that demand a nuanced comprehension of Chilean labor legislation and a strategic approach to human resources and payroll management. 

Hire independent contractors

Hiring independent contractors in Chile involves entering into contracts with individuals or entities for designated assignments or projects, providing notable flexibility suited for temporary requirements or distinct project goals.

Ensuring accurate worker classification is essential to sidestep legal hurdles and potential penalties. It’s also critical to understand that contractors may not demonstrate the same level of commitment or loyalty as full-time, permanent staff, an important factor to consider when leveraging this staffing strategy. 

This approach allows businesses to efficiently adapt to project demands and market changes in Chile, offering specialized skills without the commitment to long-term employment.

Partner with an EOR in the country

Employing an EOR service streamlines entry into Chile's marketplace, circumventing the complexities associated with establishing a legal presence. This strategy significantly reduces liabilities and enhances cost-effectiveness. 

Collaboration with an EOR ensures compliance with Chilean employment standards, taxation, and legal regulations, substantially lowering the risk of legal challenges and crafting a compliant business environment. This method enables companies to focus on their core operations while confidently expanding their footprint in Chile, leveraging local talent and resources efficiently.

Compliance risk while hiring in Chile 

Hiring in Chile introduces compliance risks concerning labor laws, taxation, and accurate worker classification. Successfully navigating this intricate landscape demands a deep comprehension of both local Chilean regulations and potentially applicable international agreements to avert legal repercussions and uphold fair employment standards. 

Engaging with local specialists or employing an Employer of Record (EOR) service can substantially reduce these risks, ensuring compliance and facilitating ethical hiring practices within the Chilean market.

Key Aspects of Chile  Labor Law

Employment Contract:

In Chile, employment contracts are typically presumed to be indefinite in nature unless explicitly defined otherwise. Although not legally required, it is standard practice for companies to formalize agreements in writing. These contracts detail:

• The identities of both the employer and the employee.
• The commencement date of employment, and for fixed-term contracts, the duration.
• The location where the work is to be carried out.
• A comprehensive description of the job role.
• The compensation amount in Euros.
• The agreed-upon working hours.
• Vacation entitlements provided to the employee.
• The periods of notice for termination by either party.
• Any relevant collective bargaining agreements that apply.

Fixed-term contracts are permitted but are subject to certain limitations, notably in terms of pension rights, with eligibility typically arising after four years of service in such roles.

Working Hours:

In Chile, the standard workweek is set at 45 hours, spread across five or six days. Employers have the flexibility to extend work hours by up to 2 hours daily or 10 hours weekly, within the limits of the labor code. This code also advises for daily breaks, including a half-hour midday meal, a day of rest each week typically on Sundays, and observance of national holidays.
For those in roles such as technical support, retail, or entertainment, where Sunday and holiday work is necessary, alternate rest days are arranged.
Significantly, a legislative reform in 2023 marked the introduction of a 40-hour workweek, aiming to enhance workers' quality of life. This adjustment will roll out in stages:

• The workweek will decrease to 44 hours one year post-implementation.
• It will further reduce to 42 hours three years after implementation.
• By 2028, a 40-hour workweek will be fully established.

Many companies are already adopting the 40-hour standard ahead of the official schedule.

Overtime:

• To adhere to the standard weekly working time norms, employees must receive compensatory rest for any overtime worked.
• Workers earn extra remuneration for hours worked exceeding the daily 9-hour limit and the weekly 40-hour threshold.
• Overtime completed within the week, including Saturdays, attracts a 50% premium.
• For overtime performed on Sundays or public holidays, the compensation rate increases to 100%.

Minimum Wage:

In sectors lacking specific joint committee wage determinations, the minimum wage defaults to the inter-professional average minimum monthly income.
From August 1, 2022, this standard minimum monthly income for employees aged 18 and older was set at €1,879.13.

Payroll laws in Chile

In Chile, payroll is distributed monthly.

Employment benefits in Chile

Leave Policies in Chile

1. Paid Time Off:

Employees with a minimum of one year's tenure are eligible for 15 working days of paid vacation. For every three years of service beyond ten years, they earn an additional day of leave.

2. Public Holidays:

Chile observes 17 public holidays in the year 2024.

3. Sick Days:

In Chile, workers qualify for sick leave upon submitting a doctor's note within two days of the leave's start. Employers are responsible for forwarding this documentation to the health insurance within three days. The initial three days of such leave are unpaid. Starting from the fourth day, employees receive sick pay from social security, subject to certain limits.

4. Maternity and Paternity leave

In Chile, women are granted 18 weeks of maternity leave, divided into six weeks before and twelve weeks after childbirth. New mothers can extend their postnatal leave by an additional twelve weeks if they wish. 

Pregnant employees are exempt from performing tasks that could pose a health risk and must be reassigned without a cut in pay if necessary. The employment of a mother can only be terminated with a labor court's approval during pregnancy and up to 18 months post-birth. Both maternity and paternity leaves are financially covered by either the government or the employer's health insurance. 

Fathers have a right to five days of paid paternity leave, and after the baby's seventh week, mothers may transfer a portion or all of their remaining maternity leave to the father.

Public Health Insurance 

Chile's public health insurance system operates through the National Health Fund (FONASA), catering to a majority of the population, including employees, the unemployed, and retirees. Funded by payroll deductions, government contributions, and co-payments, FONASA offers a range of medical services through public hospitals and clinics. Additionally, individuals can opt for private health insurance providers, known as ISAPREs, which offer more extensive coverage options at a higher cost. This dual system allows citizens to choose the type of coverage that best suits their healthcare needs, aiming to provide comprehensive access to medical services across the country.

Filing tax in Chile

Income Tax:

In Chile, employee income tax rates vary based on monthly earnings, starting at 0% for incomes up to 13.5 UF and progressing to 40% for incomes exceeding 310 UF, reflecting a progressive taxation system. These brackets ensure equitable contributions across different income levels, with higher earners paying a larger share. For a complete overview of tax brackets and more in-depth analysis, our guide offers a detailed exploration of Chile's income tax framework.

Other Tax and Social Security Contributions:

In Chile, payroll contributions for employers and employees encompass various social security aspects, including unemployment, disability, pension, and health plans, with total costs ranging from 3.89% for employers to 19.04%-19.99% for employees. For detailed rates, refer to our guide.

Business Culture in Chile

Business culture in Chile is distinguished by its formality, emphasis on hierarchy, and the importance of personal relationships in professional settings. Here are the fundamental aspects:

• In Chilean business contexts, a firm handshake is the standard greeting, regardless of gender. As relationships develop, cheek kissing (one on the right cheek) becomes more common, particularly among female colleagues or mixed-gender interactions.
• Chilean business culture values respect and politeness. Formal address using "usted" is common until a mutual agreement to use first names or the informal "tú" is reached. It's important to maintain courtesy throughout discussions.
• Initial meetings are formal and serve as a foundation for building trust. Although punctuality is appreciated, meetings may start with casual conversation to establish rapport. Decision-making can be hierarchical, often requiring senior management approval.
• Patience is key in negotiations, as building trust and understanding takes precedence over quick deals. Chileans prefer face-to-face meetings for significant discussions, valuing personal connections.
• Business attire in Chile is conservative and formal. Men typically wear suits and ties, while women wear business suits or professional dresses. Dress codes may vary by industry and geographic location, with less formality in hotter regions.
• Presenting small gifts, such as wine or chocolates, can be a gesture of goodwill, especially when visiting someone's home. Gifts should be wrapped, and it's polite to open them upon receipt.
• The exchange of business cards is a standard practice. Presenting and receiving cards with both hands demonstrates respect. If possible, having one side of your business card translated into Spanish shows consideration for Chilean culture

Top sectors to hire from in Chile

Services Sector

Dominating the economy with a 54.26% contribution to Chile's GDP and employing 70.42% of the workforce, the services sector stands as the most robust area for recruitment. The sector's value added increased by $8.6 billion in 2022, reaching a peak of $172.73 billion. This growth indicates a thriving ecosystem ripe for opportunities in areas such as finance, tourism, and retail services, making it a prime sector for businesses looking to expand their teams.

Industry Sector

Contributing 31.97% to the GDP and employing 23% of Chile's labor force, the industry sector is a critical pillar of the Chilean economy. This sector encompasses mining (including Chile's world-renowned copper industry), manufacturing, and construction, offering a wealth of opportunities for skilled professionals in engineering, geology, and industrial operations.

Agricultural Sector

Although it represents a smaller portion of the GDP at 3.54% and employs 6.58% of the workforce, agriculture remains a vital sector in Chile. The country's diverse climate supports a range of agricultural activities, from vineyards to fruit farming, offering niches for specialists in agronomy, viticulture, and sustainable farming practices.

Digital Jobs

Chile's notable 41st rank in the 2021 IMD World Digital Competitiveness Ranking, especially excelling in future readiness at 33rd place, highlights its digital advancement. This underscores a growing demand for professionals in IT, digital marketing, cybersecurity, and tech innovation, pointing towards significant employment opportunities in these sectors as Chile progresses in digital transformation.

Top cities to hire from Chile

Santiago:

As Chile's capital and economic hub, Santiago houses numerous multinational corporations, tech startups, and financial institutions, making it a prime location for talent in various sectors including finance, IT, and creative industries.

Valparaíso:

Known for its port and logistics operations, Valparaíso also has a growing tech scene. It's a strategic spot for hiring in maritime, logistics, and digital services.

Concepción: 

With a strong industrial base and one of the leading universities in Chile, Concepción is a key city for engineering, manufacturing, and academic research talent.

Antofagasta: 

This city's economy is driven by mining and mineral processing, making it ideal for hiring experts in mining engineering, geology, and related fields.

Viña del Mar: 

Alongside its tourism appeal, Viña del Mar has a burgeoning business services sector. It's becoming a go-to for professionals in hospitality, event management, and service-oriented industries.

Hire in Chile compliantly with Gloroots

Gloroots, acting as an Employer of Record (EOR) in Chile, provides a streamlined solution to manage the intricacies of hiring. Our comprehensive EOR platform guarantees rapid onboarding of talent, enabling prompt commencement of operations in compliance with both Chilean and international standards. 

Tailored for organizations of every scale, Gloroots alleviates the complexity of payroll, benefits management, and tax obligations, eliminating the necessity for a physical presence in Chile. This approach empowers businesses to efficiently establish a remote workforce in Chile, ensuring operational effectiveness and regulatory adherence. For detailed insights on how Gloroots can support your Chile hiring initiatives, please contact us.

Frequently Asked Questions 

1. What do I need to know about hiring employees in Chile?

Hiring in Chile requires adherence to local labor laws, including contracts, minimum wage, working hours, and termination procedures. It's essential to understand these regulations to ensure compliance and avoid legal issues.

2. Can foreign nationals work in Chile?

Yes, foreign nationals can work in Chile, but they must obtain a work permit or visa. Employers often need to sponsor the visa application, which involves proving that the position cannot be filled by a local worker. 

3. What are the main types of employment contracts in Chile?

Chile recognizes several types of employment contracts, including indefinite (permanent), fixed-term, and part-time contracts. Each has specific rules regarding termination and benefits.

4. How does the payroll system work in Chile?

Employers are required to register their employees with the Chilean social security system and make contributions toward pension, health insurance, and unemployment insurance. Payroll must be processed monthly, and taxes withheld accordingly.