Hiring Employees in Chile

The worker continues to provide services for the employer with his knowledge after the agreed date of termination.
Hiring Employees in Chile


Guide for hiring Employees in Chile 

LawsBrief Description
Constitucion Politica de la Republica de ChileIt is the maximum law that governs the economic, social and political life in Chile
Labor Code (CT- Codigo de trabajo)Labor relations between employers and workers will be regulated by this Code and by its complementary laws.
Law 21.015Encourage the inclusion of people with disabilities in the world of work
Law 20.545Modifies the rules on maternity protection and incorporates the Parenta Postnatal Permit
Law 20.137Grants work permit for birth and death of relatives
Law 20.012Grants extraordinary bonus for lower income sectors
Law 20.005Punish sexual harassment
Law 19728Unemployment Insurance
Law 16.744Approves social insurance against accidents risks at work and occupational diseases

Key Tax and Labor Authorities

AuthoritiesBrief Description
Internal Revenue Service (SSI-Servicio de Impuestos Internos)Is responsible for overseeing and providing services aimed at the correct application of internal taxes; efficiently, equitably and transparently. Its purpose is to reduce tax evasion and provide taxpayers with excellent services to maximize and facilitate voluntary tax compliance.
Ministry of Finance of ChileIt is the State Ministry responsible for directing Chile’s finances; its mission is to efficiently manage public resources through a modern state at the service of citizens; generating conditions of stability, transparency and competitiveness in an internationally integrated economy that promote sustainable and inclusive growth.
National Health Fund (FONASA- Fondo Nacional de Salud)It is the financial entity in charge of collecting, administering and distributing the state money destined to health in Chile, being one of its functions to finance the health benefits of its beneficiaries.
Pension Health (ISAPRES- Instituciones de Salud Previsional)They are private entities that operate on the basis of an insurance scheme, which are empowered to receive and administer the mandatory health contribution of workers and individuals, who free and individually they opted for them instead of the state health system (FONASA)
Pension Health Institutions (AFP- Administrado de Fondos de Pensiones)The mandatory individual capitalization system is that all workers must deposit a percentage of their salary or income in a personal account with a Pension Fund Administrator (AFP) each month. These resources are aimed at financing the future pension that the person will receive at the retirement stage.
Disability and Survival Insurance (SIS- Seguro de Invalidez y Sobrevivencia)Disability and Survival Insurance is a percentage of the employees’ taxable income that aims to pay them pension in case of disability or survival to the employees’ family in case of death.
Social Security Institute (IPS- Instituto de Previsión Socia)The IPS provides social security benefits and services, through its ChileAtiende service network, promoting excellence in its management and bringing the State in an inclusive manner to people, considering its officials and civil servants as the main capital of the institution.

Labor Contracts

The employment contract is a legal convention where by the employer and the employee reciprocally bind themselves, the employee will provide services under dependency and subordination on an ongoing basis and, the employer, to pay for these services a certain remuneration.

The employment contract is consensual; must be in writing within the deadlines established by law, and signed by both parties in two copies, leaving one in the possession of each contractor.

Type of contracts  

Indefinite contract The fixed term contract becomes indefinite when:

  • The worker continues to provide services for the employer with his knowledge after the agreed date of termination.
  • When it is renewed a second time.
  • It is presumed that a worker has been hired indefinitely when he has provided discontinuous services for the same employer under more than two term contracts, for 12 months or more in a total period of 15 months.

Temporary Work or Task Contract It is that convention by which the worker is bound by the respective employer to execute a specific and determined work, whose validity is limited to its duration. The different tasks or stages of a work may not by themselves be subject to two or more continuous contracts, in which case the contract will be understood to be an indefinite term. Part-time Contract This type of work its when it has been agreed to not exceed two thirds of the ordinary work day. Part-time workers will enjoy all other rights provided for full-time workers. However, the maximum limit of legal gratification may be proportionally reduced, in accordance with the relationship between the number of hours agreed in the part-time contract and that of the ordinary working day. Apprenticeship contract Apprenticeship work is when the employer or a third party undertakes to impart to an apprentice in certain conditions, the knowledge and skill to fulfill a task or work and will receive an agreed remuneration. Only workers under 21 years of age may enter into an apprenticeship contract. The following will be special obligations of the employer:

  •  Occupy the apprentice only in the work of the apprenticeship program, providing the appropriate work elements.
  • Allow the controls that correspond to the National Training and Employment Service in contracts of this kind. The contract referred to in this chapter will be valid until the end of the learning plan, which may not exceed two years.

Basic Requirements

The information that the contract must contain is stablished in the Article 10 of Labor Code:

Place and date of the contract.
Indication of nationality and dates of birth  and worker income.
Determination of the nature of the services and the place or city in which they are to be provided.
Amount, form and period of payment of the agreed remuneration.
Duration and distribution of the workday, unless the company’s system exists shift work, in which case the provisions of the internal regulations will be followed.
Term of the contract.
Other agreements agreed by the parties.


The payroll is one of the most important documents within a company, since there is a control of all the withholdings, by law and additional, of the salary of the employees. From this operation, the final amount that a worker will receive and the amount that the company will invest in a given period is obtained.

The employer must deduct from the salary the taxes, social security contributions, union dues in accordance with the respective legislation and obligations with social security institutions or public bodies. Whatever the basis of the deductions made to the remuneration by the employer, or the origin of the loans granted, in no case they may exceed, together, 45% of the total compensation of the worker.

Law Benefits in Chile

The main remuneration benefits that the employer is obliged to pay to its workers on the occasion of the employment relationship are those indicated in the Labor Code, without prejudice to all those granted and agreed according to the employment contract.

The role that labor benefits play is that they are always aimed at improving the living conditions of workers, reducing their expenses and granting them incentives that foster their cultural and social development.

Salary Article 41, Labor CodeCompensation is understood as the consideration in money and the additional benefits that can be assessed in money that the employee must receive due to the employment contract, an they shall be paid in the legal currency of the country. A compensation ca be: The salary or base salary, it is the mandatory and fixed stipend, in money, paid in equal periods, determined in the contract, that the worker receives for the provision of his services in an ordinary working day, the salary may not be less than a minimum monthly income wage. The overtime work remuneration. Commission, which is the percentage on the price of sales or purchases, or on the amount of other operations, that the employer makes with the collaboration of the worker. Participation, which is the proportion in the profits of a particular business or of a company. Gratification, which corresponds to the part of profits with which the employer benefits the worker’s salary.
Legal Gratification Article 47and 52, Labor CodeCompanies that pursue profit, will have the obligation to annually reward its workers in a proportion not less than 30% of the profits or surpluses. This obligation is annual. Even so, legally and commonly what is done by companies, is to pay 25% of the accrued in the respective commercial year for monthly remuneration. In other words, 25% of the employee’s gross salary is paid. It is also possible to opt for another modality by the employer, this is, in case 25% of the base salary exceeds 4.75 times the minimum monthly income the bonus to be received would be $ 119,146 (with a minimum salary of 01-03-2019).
Vacations Article 67, Labor CodeWorkers with more than one year of service will be entitled to an annual holiday of fifteen working days, with full compensation that will be granted in accordance with the formalities established by the regulation. During the holiday, the full remuneration will be constituted by the salary in the case of workers subject to the fixed remuneration system. In the case of workers with variable remuneration, the full remuneration will be the average of earned in the last three months worked.
Christmas Bonus  There is no legislation regulating the Christmas bonus, however, companies usually pay an amount in the month of September (national holidays) and another in December (Christmas).
Special Leaves Article 66, 199,206 and 207, Labor CodeMaternity Leave: She will be entitled to 6 weeks before delivery and 12 weeks after it. If during pregnancy a disease occurs as a result of it, verified with a medical certificate, the worker will be entitled to a supplementary prenatal rest whose duration will be fixed, where appropriate, by the services that are responsible for preventive or curative medical care. Women workers will have the right to have at least one hour a day to feed their children under two years of age. Paternity Leave: The father will have the right to have 5 paid days from the moment of birth. This also applies for the father who is in process of adoption. If the mother should die in childbirth the father will be entitle to the rest of the time the mother had right, to be able to take care of the child. Death of a Child, spouse or civil partner: every worker shall be entitled to seven consecutive days of paid leave, in addition to the annual holiday, regardless of the time of service. The same permit will be applied for three business days in the case of the death of a child during pregnancy as well as in the death of the father or mother of the worker. Women worker over 45 years old and works over 50 years old: if the employment contracts are for a period exceeding 30 days, they will be entitled to half a day of leave, once a year to submit to mammography and prostate exams, respectively, and may include other preventive medicine benefits. Marriage leave: every worker will be entitled to five continuous working days of paid leave, in addition to the annual holiday, regardless of the time of service. This permit may be used, at the worker’s choice, on the day of the marriage or of the civil union agreement and on the days immediately before or after its celebration.

Employers Contribution or Labor Cost

The employer contributions turn out to be those sums of money that the employer will be obliged to contribute to the state for having employees. They are not recoverable for the employer and turn out to be indispensable for employees since this covers part of what is paid to social security.

Social SecurityDisability and Survival Insurance AFP, SIS: Seguro Invalidez y Sobrevivencia AFP, SISThis insurance is financed by employers during the employees active working life. This insurance covers expenses in case of being declared invalid (partial or total) or death, granting a survivor’s pension. The SIS covers dependent, independent or voluntary affiliates, remaining under the concept of “Covered”. For the purpose of paying employers, the only rate to be paid is 1.53%. Benefits: Ensures a pension in case of disability due to an accident or illness of non-work origin. Protect the employees’ family in case of death. Pre-existing diseases, under certain conditions, are also covered by the SIS.
Social Security against Accidents and Occupational Diseases ATEP Seguro de Accidentes del Trabajo y Enfermedades Profesionales, ATEPThe objective of the ATEP is to prevent and protect the worker from an accident at work, from accidents on the way to work / home or from a professional illness by performing his work, either on a dependent basis (with an employment contract) or independently (fees or on their own). The dependent worker is covered from the moment he begins to work, even if he does not have a written contract or the respective contributions have been paid.
Unemployment Insurance Seguro de CesantíaIt is an economic protection in case of unemployment, to which all workers governed by the Labor Code are entitled. This affiliation is mandatory and must be communicated by the employer to AFC Chile. For each Affiliate, the AFC creates an Individual Unemployment Account (CIC), whose accumulated resources are owned by each worker. As a complement to individual savings, there is the Solidarity Unemployment Fund (FCS), which is a distribution fund made up of contributions from the employer and the State, whose property does not belong to any particular worker, but to all affiliated workers. It is used to supplement the benefit when the balance of the Individual Unemployment account is insufficient. Unemployment Insurance contributions are planned and therefore are exempt from income taxes.

Workday and holidays

Workday is the time during which the worker must effectively lends his services in accordance with the contract and will also be considered the time in which the worker is at disposition of the employer without doing work, for reasons that are not attributable to him.

The duration of the ordinary working day shall not exceed 45 hours weekly.

The weekly maximum may not be distributed in more than six or in less than five days. In no case may the ordinary day exceed ten hours per day.

The work day will be divided into two parts, leaving at least half an hour for collation.

The ordinary day may be exceeded, but to the extent necessary to avoid damages in the normal operation of the establishment or work, when force majeure or case occur, or when accidents must be prevented or arrangements or repairs cannot be carried out in the machinery or facilities. Hours worked in excess will be paid as overtime.

Overtime will be paid with a 50% surcharge on the salary agreed for the ordinary day and must be paid together with the ordinary remuneration for the respective period.

Type of Work DayWorking hours per DayOver TimeSundays
Day shift10 hours per day/ 45 hours per weekAn additional 50% of the salaryObligatory day of rest
Night Shift7 hours per day / 36 hours per week

On Sundays and those that the law declares holidays will be rest, except for the activities authorized by law to work on those days.

Mandatory Rest DateHoliday Name
January 1stNew Years
April 26thConstitutional Plebiscite
May 1stLabor Day
June 7thMayor´s Primary Elections (TBD)
September 18thNational Independence
September 19thDay of the Glories of the Army
October 25thMunicipal Elections
December 25thChristmas

Migration Process 

For foreigners’ workers who have been hired by a company with residence in Chile, they have authorized work visa maximum of 2 years, and they can apply also for a resident visa for their family members.

The process will take place in the Consulate of chile from their foreign residence and the Department of Immigration of the Ministry of Foreign Affairs, will analyzes the data of the applicant.


  • Letter from the employer addressed to the Consul justifying the hiring.
  • Work Contract (notary, legalized and translated, if applicable).
  • Professional title (if necessary).
  • Certificates of Criminal Background.
  • Medical Certificate
  • Current Passport
  • 4 photos as small as a passport

Requirements for the contracting company

  • It legal constitution in Chile
  • Proof of address
  • That the activity of the contractor is indispensable for the development of the country.
  • VAT paid for the last 3 months.
  • Paid worker forecast corresponding to the past 3 months.

About the Work Contract:

It must be drafted according to the Chilean legal norms and contain the following clauses:

  • Obligation of the employer to respond to the payment of the tax to the corresponding income in relation to the remuneration paid.
  • Obligation of the employer to pay the contributions to the Previsional System and to the Health Worker in Chile or abroad.
  • Responsibility to pay return shipping fees at the end of the employment contract, for the contractor and his family group.

Employee Termination

The employment contract will end in the following cases:

  • Mutual agreement
  • Resignation of the employee, with 30 days of prior notification
  • Death of the employee
  • Expiration of the agreed term in the contract
  • Conclusion of the work or service that gave rise to the contract
  • Fortuitous events

The employment contract ends without the right to compensation when the employer terminates it by invoking one or more of the following causes:

Misconduct of serious nature: Lack of work or performance of their duties Sexual Harassments Injuries issued by the worker to employer or employees Immoral conduct that affects the company
Negotiations executed by the worker within the business line and that would have been prohibited.
Non-attendance of the worker to their work without just cause for two days in a row.
Abandonment of the work.
Acts, omissions that affect safety or operation in the establishment.
Intentional damage to facilities, machinery, tools, etc.
Serious breach of the obligations imposed by the contract.

The employer may terminate the employment contract by invoking as grounds the needs of the company, establishment or service, such as low productivity, changes in market conditions or the economy, which make the separation of one or more workers necessary.

Invalidity, total or partial, is not just cause for the termination of the employment contract. The worker who is separated from his duties for this reason, will be entitled to a compensation.

In case of termination, the employer must communicate it in writing to the worker, personally or by registered letter sent to the address indicated in the contract, expressing the cause (s) invoked and the facts on which it is based.

Notwithstanding the foregoing, the employer must pay the worker the remuneration and other benefits set forth in the employment contract during the period between the date of dismissal and the date of sending or delivering the said communication to the worker.

Employers Contribution or Labor Cost

If the contract has been valid for a year or more and the employer terminates it in accordance with article 161 of the Labor Code, the worker must pay compensation for years of service that the parties have agreed individually or collectively, the employer must pay the worker a compensation equal to 30 of the last monthly remuneration for each year of service and fraction greater than six months, provided continuously. This compensation will have a maximum limit of 330 of remuneration.

The employer will have to pay as well the provision of the holidays that the employee was entitle to at the time of the termination.

The contract concluded for a specific work or task has been in force for a month or more, the employer may terminate it justifiably as long as it pays the worker, at the time of its termination, compensation equivalent to 2.5  days of remuneration for each month worked and a fraction greater than fifteen days […] (CDT. Art. 163)

You might be interested in reading...

Share this article : 

You may also like

Are you ok with optional cookies?
Cookies let us give you a better experience and improve our products. Please visit our Privacy Policy.

Call now
Call now
Americas + 800 493 3182
Asia +86 151 0219 7745
Brazil +55 4199 215 8100
Europe +34 900 876 009