Permanent employment contracts in Chile must be in writing and signed by both parties. Both the employer and employee receive one copy of the contract. The contract must be signed within 15 days iafter hriing. For fixed-term contracts, the deadline to sign is five days to avoid a penalty. The maximum length for a fixed-term contract is 12 months with one renewal. Employers with more than 25 employees must maintain at least 85% Chilean nationals. Employers can conduct background checks on employees or candidates but not related to an individual’s union membership, credit or health status.

The monthly minimum wage in Chile is 460,000 CLP. The next minimum wage increase is expected in July 2024 to $500,000 CLP.

Common Benefits
Home Office allowance: 30 USD a month
Private health: depending on the position approx. 50 USD a month
Meal allowance (“Colación”): 20 USD a month
Transportation Allowance

A full workweek in Chile is 45 hours over 5 or 6 days. The employer has the right to extend the day by no more than 2 hours a day or 10 hours a week. The Chilean labor code recommends daily rest periods, a midday meal (as part of a break for at least half an hour), a weekly rest day on Sundays, and national holidays.

Employees delivering services providing technical support, working in public shops, or in the entertainment industry and therefore required to work on Sundays and national holidays, are provided with rest days on different days.

In 2023, Chile approved a 40-hour workweek law reducing the length of the working day to improve the quality of life of workers who are governed by the labor code.

This law will be implemented gradually as follows:
One year after implementation: the working week will be reduced from 45 to 44 hours.
Three years after implementation: the working week will be reduced to 42 hours.
5 years (in 2028) after implementation: the working week will be reduced to 40 hours.
Although this law is set to be implemented gradually, many companies have already put a 40-hour work week into effect.

Overtime
Overtime is paid at a rate of 150% of the regular pay

In Chile, employees are entitled to sick leave if they can provide a medical certificate within 2 days from the beginning of the leave. The employer must then forward the certificate to the health insurance within 3 days.
For the first 3 days of sick leave the employee is not entitled to pay.
From the 4th day on employees are entitled to sick pay which is paid by social security, however, it may be subject to a cap.

Maternity Leave

In Chile, the woman is entitled to 18 weeks of maternity leave – split between six weeks paid prenatal leave and twelve weeks paid postnatal leave. Following completion of the twelve-week postnatal leave, new mothers have the right to request a further twelve weeks’ leave.

During the pregnancy, the woman is not required to participate in activities that would endanger her health (i.e. heavy lifting). If this is a requirement of the job, the employer must reassign her to a different position during her pregnancy without pay reduction. Also during the entire pregnancy and up to eighteen months after the birth, the company may only terminate the employment contract of the mother with authorization of a labor court.

Maternity and paternity leave are paid for by the government or the company health insurance provider. During the Maternity leave, The employee must to deliver to HR the “licencia medica” (medical absence certificate).

Paternity Leave
Fathers are entitled to 5 days of paid paternity leave.
After the 7th week of birth, the mother can opt to transfer some or all of her maternity leave to the father.

Parental Leave
Female employees are entitled to 10 days of parental leave for a child under the age of 18. While the employee is entitled to be paid they must make up the time taken off at a later date.

Employees who have been employed for at least 1 year are entitled to 15 working days of paid leave. After working for 10 years, an extra day is added for every 3 years of service.

Marriage leave- Employers are entitled to 5 days of full pay which they must take them all at once). The days may be before or after the wedding date.

Bereavement Leave- If a member of the employee’s immediate family passes away ( father, mother or brother) the employee is entitled to 4 days of paid leave. In the event of a death of spouse, sons/daughter; the employee will be eligible to 7 days of Bereavement leave.

Public holidays that fall on the weekend are usually lost.

Date Day Holiday
1 Jan 2024 - Monday - New Year’s Day
29 Mar 2024 - Friday - Holy Friday
30 Mar 2024 - Saturday - Holy Saturday
1 May 2024 - Wednesday - Labor Day
21 May 2024 - Tuesday - Glorias Navales Day
20 Jun 2024 - Thursday - Indigenous People’s Day
29 Jun 2024 -Saturday - Saint Peter & Pablo
16 Jul 2024 - Tuesday - Carmen Virgin’s Day
15 Aug 2024 - Thursday - Mary’s Assumption
18 Sep 2024 - Wednesday - Independence Day
19 Sep 2024 - Thursday - Army Day
20 Sep 2024 - Friday - National Holiday Additional
12 Oct 2024 - Saturday - Race’s Day
31 Oct 2024 - Thursday - Church’s Day
1 Nov 2024 - Friday - All Saints Day
8 Nov 2024 - Friday - Immaculate Conception
25 Dec 2024 - Wednesday - Christmas

Chile provides access to healthcare funded through employer and employee contributions. Private health care also is available.

In order to terminate an employee, the cause must first be decided. By law, the following reasons are valid reasons for termination:

• Mutual agreement, resignation, or expiration of a contract

• Breach of contract (employer must be able to provide proof)

• Company needs or reorganization (the most common reason for the dismissal of an employee)
  

The employer must prepare a letter for the employee stating the cause for termination as well as the effective date and it must be signed in person by the employee or sent by certified mail to their home address. In addition, the same letter must be filed with the Chilean Labor Ministry. It is common that the employee is notified on the last day of work.

After the termination letter is given, the employer must prepare a severance agreement, which must include the cause for termination as well as the amount that will be paid out to the employee. The severance agreement must be signed within 10 days of the termination.

In the case of a mutual agreement, both parties must sign a document acknowledging that both parties have agreed that the employment contract is terminated. A severance agreement must also be signed within the first 1-2 weeks following the termination date.

Notice Period
The notice period is 1 month by law. It is common that the notice period is waived and payment is made in lieu.

Severance Pay
If the employee has completed at least 1 year of employment, they are entitled to severance pay. For every year of service up to 11 years, the employee is entitled to 1 month’s salary. In addition, after one year of employment, the employee accumulates an additional month of severance pay if they have worked for at least half of the following year.

Probation Period
Probation period is not allowed by law in Chile.

Employer Payroll Contributions

2.4% - Unemployment capped at 84.3UF
1.49% - Disability and Survival Insurance (SIS) capped at 84.3UF
3.89% - Total Employment Cost

Employee Employee Payroll Contributions

10.0% - Pension capped at 84.3UF
0.60% - Unemployment Insurance capped at 126.6UF
7.00% - Health Plan capped at 84.3UF
0.49- 1.44% - Pension Fund
0.93% - Workplace Accident Mutual Fund

19.04%- 19.99% - Total Employee Cost

Employee Income Tax

UF = 36,733 CLP for January 2024 (the Tax Units are updated every month)
0.00% - Up to 13.5 UF
4.00% - 13.5 – 30 UF
8.00% - 30 – 50 UF
13.50% - 50 – 70 UF
23.00% - 70 – 90 UF
30.40% - 90 – 120 UF
35.00% - 120 – 310 UF
40.00% - 310UF and Above

Payroll Cycle
Monthly

13th Salary
There are no provisions in the law regarding 13th salaries.

Anyone who comes to Chile with the intention to work even if they don’t require a visa to enter must receive a work visa.

There are two kinds of work visas available to foreigners:

Visa Subject to a Contract – for candidates who have secured an employment contract prior to arriving in Chile. It is valid for 2 years and can be renewed for an additional 2 years. After that, a candidate needs to apply for permanent resident status, which would allow the candidate to continue to work in Chile.

The process requires about 20-30 days to complete. The application should be filed 30-60 days before the expected arrival.

To get the permit, the hiring company must be incorporated in Chile, demonstrate that the hiring will help Chile and have their VAT and employee insurance paid for the past 3 months.

Working Holiday Visa

People from Colombia, Mexico, Peru, Germany, Canada, Australia, Czech Republic, and New Zealand who are between the ages of 18 and 35 can apply for a 1-year visa that allows them to work in Chile. The visa cannot be renewed.

The standard VAT rate is 19%.