How to hire and pay employees in Chile

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Chile

Before hiring

EMPLOYEES IN
Chile

Before hiring employees in Chile, there are a few important things you’ll need to know. Firstly, the notice period in Chile is one month. It is common practice to waive the notice period and make a payment in lieu of it. 

It’s also important to know that in Chile, overtime cannot exceed two hours a day, or 10 hours a week. Overtime work is paid at a rate of 150% of the regular pay.

We know this might sound overwhelming—but it doesn’t have to be. A solution like Oyster eliminates the barriers for you. With Oyster, you can automate compliance across 180+ countries, easily managing HR and payroll—all in one, easy-to-use platform. 

Get an overview of what you need to know when hiring in Chile below.

At a glance

CURRENCY

CLP

OFFICIAL LANGUAGE

SPANISH

PAYROLL FREQUENCY

MONTHLY

PUBLIC HOLIDAYS

15

(based on region;
see here
)

EMPLOYER TAXES

3.35%

of gross salary

13th / 14th SALARY

N/A

Good to know

  • While not legally required, many employers give out bonuses twice a year called the Aguinaldos. These bonuses are paid out in September and then again around Christmas.
  • An employer cannot dismiss an employee for any reason and must substantiate their decision to terminate the contract. Valid reasons for termination include mutual agreement, resignation, expiration of a contract, breach of contract, or company needs.
  • The number of paid vacation days available to employees ranges from 15 to 20 days per year, depending on the region. Employees who have been working for 10 years or more for one or more companies get an additional working day off for every three years of work.

Labor laws in

Chile

Working hours and overtime

Employees in Chile work 45 hours per week spread over five or six days. The normal workday should not exceed 10 hours.

Overtime cannot exceed two hours a day, or 10 hours a week. Overtime work is paid at a rate of 150% of the regular pay.

Employment contracts

Probationary period

Probation periods are not recognized in Chile.

Pensions

IP protection and non-compete agreements

To be legally enforceable, non-compete agreements in Chile must be clear, reasonable, in writing, and include compensation for the employee. 

Calculate costs to hire internationally

Benefits and leave in

Chile

Vacation time

Employees who have been in service for at least one full year are entitled to 15 working days' paid leave in a year. In some regions of the country, this is equal to 20 days per year.

Employees who have been working for 10 years or more for one or more companies are entitled to an additional working day for every three years of work.

Sick leave

Employees are entitled to sick leave only if they can provide a medical certificate within two days from the beginning of the leave. The first three days of sick leave are unpaid. From the fourth day on, employees are entitled to sick pay, however, it may be subject to a cap.

Parental leave

Employees are entitled to 30 weeks of paid maternity leave; this can be taken in parts—six weeks before birth and 24 weeks after. Maternity leave is paid by health insurance.

Employees are also entitled to five days of paid paternity leave.

Holidays

View a list of recognized public holidays in Chile here.

Employer tax

In Chile, an employer’s social contributions are 3.35% of an employee’s salary and includes coverage for unemployment and occupational accidents. 

Individual tax

Employees in Chile are taxed between 0% and 35% depending on their income bracket. Employees also pay 17.6% into social security contributions. 

Termination in

Chile

Valid reasons for the termination of an employee contract in Chile include mutual agreement, resignation, or expiration of a contract, breach of contract, or company needs.

Employees who have completed at least one year are entitled to severance pay, which is statutorily equal to one month's salary for each year of service, capped at 11 months. This amount must not exceed 90 UFs.

If dismissal notice is not given 30 days in advance, the employee is entitled to receive a severance equivalent to one month's remuneration (capped at 90 UFs).

If dismissed for cause, the employee has no right to severance.

A labour release settlement agreement is mandatory and must be available to the employee within 10 working days after employee separation.

Notice period

The notice period in Chile is one month. It is common practice to waive the notice period and make a payment in lieu of it. This payment cannot exceed 90 inflation-indexed units (UFs).

Start hiring employees in

Chile

Setting up a business entity everywhere you want to hire a new employee isn’t scalable—it takes too long and the legal fees are high. At the same time, understanding and adhering to the local labor laws and employee expectations can be complex and time consuming. And it’s hard to find reliable information on up-to-date employment information for all the countries where you’re considering hiring. Not to mention tracking down invoices and managing employee contracts over email and spreadsheets—that gets messy fast. 

We can’t afford to take risks when it comes to compliance—we need to make sure we follow the local guidelines, especially when it comes to taxes and legalities.

With Oyster, you can manage HR and payroll, and automate compliance across 180+ countries—all in one, easy-to-use platform.

Disclaimer: The information provided in this resource is for general educational purposes only and shall not be construed as legal advice. While Oyster strives to provide current and accurate information, Oyster makes no warranties or representations as to the correctness of the content provided and accepts no liability or responsibility for any errors or omissions in the content provided. By using this resource you acknowledge and agree that you do so at your own risk. The content of this resource is subject to change without notice.

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