Global PEO Services (GPS) helps companies hire employees in Chile without establishing a legal entity. All human resources, benefits, payroll, and tax needs for the employees are managed by the Global PEO, while the new hires and headquarter teams focus on your business goals.
When hiring employees in Chile, establishing a subsidiary or branch office is not always the best route, as it’s often a lengthy and expensive process. Hiring via a Professional Employer Organization (PEO), or Employer of Record (EOR), is a faster and often more effective option – especially when starting up in a new country.
Global PEO Services hires the employees on your behalf, legally contracting them through our subsidiary in accordance with Chile labor laws. As a result, the burden of compliance is on us and the employees can begin work for your company in a matter of days. PEOs/EORs provide you with a streamlined option for hiring employees, testing markets, and responding to growing business needs in Chile. With Global PEO Services, you get control without taking on legal entity liabilities, contractor risks, or sacrificing on talent or speed to market.
Chile - Country Overview
Chile is one of the stable and high-income economies in South America that offers a favorable investment climate for foreign companies. The domestic and foreign enterprises operate as equals in the country of which 60% GDP is generated through foreign trade (imports and exports). Chile’s openness to transparent regulatory environment, global trade and investment, and strong rule of law provide a sound foundation for economic dynamism. The Global Competitiveness Report places the country significantly above some of the Latin American giants such as Brazil and Argentina. A transparent regulatory system in Chile is further bolstered by secured property rights and provides commercial security to the private sector.
Other Major Cities
Santiago, Concepción, Valparaíso, Viña del Mar
Employment Contracts in Chile
The Labor Code mandates that employees and employers agree to a written employment contract. An employment contract needs to contain the following minimum provisions:
- The date and place of the contract
- Name and nationality of the employer and the employee
- Amount of remuneration
- Date of employment commencement
- Nature of the services that the employee will provide
- Method and period of remuneration
- Duration of the contract, and
- Work schedule.
Working Hours in Chile
The maximum allowed workweek in Chile is 6 days or 45 hours. Work is usually prohibited on Sundays and holidays other than essential services and few other exceptions. If employees work on a Sunday, they receive a wage premium of 30%.The law mandates a 30-minute break in the workday. These limitations on hours worked do not apply to managers, administrators, directors, domestic workers, and those who telecommute.
The rate of overtime pay is 150% of the standard hourly wage and must be paid when the work beyond 8 hours of per day or 45 hours per week is performed. The total work time that a worker is allowed to work in a day, including overtime, should not be more than 10 hours.
Employee Leave in Chile
Chile observes the following 15 public holidays:
- Jan. 1: New Year’s Day
- Good Friday
- Holy Saturday
- May 1: Labor Day
- May 21: Navy Day
- Closest Monday to June 29: Holiday of St. Peter & Paul
- July 16: Holiday of Our Lady of Mount Carmel
- Aug. 15: Holiday of the Assumption of Mary
- Sept. 18-19: 2 national holiday and Army Day (moved to Monday and Tuesday or Thursday and Friday if one of the days falls on Wednesday)
- Closest Monday to Oct. 12: Columbus Day
- Closest Friday to Oct. 31 (unless the date falls on a Thursday): Reformation Day
- Nov. 1: All Saints’ Day
- Dec. 8: Holiday of the Immaculate Conception
- Dec. 25: Christmas
- Dec. 31: Bank holiday (generally a curtailed workday but not a full holiday in other sectors)
States and territories can declare additional holidays or substitute one or more in the above list. Companies authorized to work on holidays must give compensatory off to employees or pay overtime.
Employers provide paid annual leave of 15 days to most workers who have completed at least 1 year of service, although employees who work in Chile’s 11th or 12th regions, and in the province of Palena in the 10th region, are entitled to 20 days of vacation. Employees who have completed 9 months of service, but not yet a full year, qualify for 11.3 days of paid leave. Employees who have worked 10 or more years for one or more employers are entitled to an additional day as an annual leave in every 3 years of employment. Annual leave must include at least 10 consecutive days. Unused leaves can be carried over for up to 2 years and may get encashed as mutually agreed by an employer and employee.
Female employees get maternity leave of 6 weeks before the expected date of childbirth and 12 weeks after delivery, paid from a government or private healthcare insurance fund. Depending on the child’s condition, the leave may be extended to 18 weeks. Further leave of 7 days for an additional child is provided for multiple births. Leave can be extended for up to 1 year in case of serious health conditions and both the parents can split it between them. The same leave policies apply for adoptive parents. Maternity leave can get extended up to a year for serious health conditions and can be split between the mother and the father.
Men are entitled to receive 5 days of paid leave for the birth or adoption of a child. In case the mother dies at the time of delivery, or when taking her maternity leave, the father can take her unused leave. The same leave policies are valid for adoptive parents. A worker who is the guardian or custodian of a child younger than 6 months may take up to 12 weeks’ leave. The 12-week period can extend up to 18 weeks based on a part-time work agreement.
Employees who have taken part in a government health insurance program for at least 6 months and made contributions for a minimum of 3 months are entitled to receive government-paid sick leave after they miss their fourth day at work. If the sick leave extends longer than 10 days, pay applies retroactively to the first day of missed work.
Employers may provide extra coverage if payments to the national health insurance are lower than workers’ remuneration.
- Bereavement Leave
Workers get seven calendar days of paid bereavement leave from the date of death of a child or spouse. This leave is in addition to annual leave and may be taken regardless of time worked. There is a 1 month tenure protection for workers who suffer the death of a child or spouse commencing from the date of death.
- Family Leave
Employees may take family leave to care for seriously ill or disabled children younger than 18 years. There is a special subsidized leave for mothers to care for an unwell child less than one-year-old, which is transferable to the child’s father with the mother’s consent.
- Military Service or Training
Employees’ jobs are guaranteed without losing seniority if they need to take leave for military service or training. Employers need to pay regular wages to reserve personnel called to service for less than 30 days.
Employee Benefits in Chile
Pension and Social Security
Social Security Contributions
The monthly contribution to Social Security is:
- 5% of the gross salary by the employer (upper limit is XAF 82,500 per month)
- 5% of the gross salary by the employee (upper limit is XAF 17,500 per month)
The employee social security contributions are deductible from taxable income and withheld by the employer each month.
The table below contains the items and applicable rates:
|Basic ceiling of contribution (XAF)
|Ceiling of contribution (XAF)
|Contributions related to family and maternity benefits
|Contributions related to occupational accidents and professional diseases
|Contributions related to insurance and pension for old age, incapacity, and death
Employees who retire at the age of 60 years (55 years for prematurely aged) and have at least 180 months of coverage qualify for the old-age pension.
If an individual is prematurely aged, the pension is reduced by 5% for every year the pension is taken before the regular retirement age. The minimum pension is 60% of the monthly minimum wage and the national monthly minimum wage is 59,995 CFA francs. Benefits are provided quarterly.
To qualify for disability pension, employees must be:
- assessed with a minimum of 66.7% loss of earning capacity due to disability, and
- registered with the fund for a minimum of 5 years with at least 6 months of contributions in the year before the disability started.
An insured person is credited with 1 year of coverage for each year when a claim is made before the individual reaches the normal retirement age. The disability pension stops at the normal retirement age and is replaced by an old-age pension of the same amount.
The constant-attendance allowance equal to 50% of the pension is paid. Benefits are paid on quarterly basis. Benefits are adjusted based on the changes in the cost of living and the minimum wage.
Spouse pension equal to 50% of the disability or old-age pension the deceased was receiving until death or was entitled to receive is paid. In case there is more than one eligible widow, the pension is divided equally. A lump sum equal to 6 months’ survivor pension is paid as a remarriage settlement.
An orphan pension equal to 25% of the disability, or old-age pension the deceased was receiving until death or was entitled to receive is paid for each orphan. The percentage is increased to 40% in case of a full orphan. Benefits are paid on quarterly basis. Benefits are adjusted based on the changes in the cost of living and the minimum wage. A lump sum equaling 1 month’s wages is paid for every year of coverage.