Chile PEO & Employer of Record

WeHG provides an International PEO and global Employer of Record service in Chile to companies willing to enter the Chilean market or hire local/expat employees in this country.

A common approach requires establishing a subsidiary in Chile. Still, our solution affords you to start the operations in Chile within days hence save time and money.  WeHG would hire candidates on your behalf while you maintain total operational control of their work. So legally they would be our employees, on our local payroll, 100% compliant but will work on your behalf.

Chile fast facts

Population, million: 19
Land area: 756,096.3 km²
Capital: Santiago
Local currency: Peso (CLP)

GDP per capita:$ 12,612
GDP in currency:$ 245.414 billion

Chile, country situated along the western seaboard of South America. It extends approximately 2,700 miles (4,300 km) from its boundary with Peru, at latitude 17°30′ S, to the tip of South America at Cape Horn, latitude 56° S, a point only about 400 miles north of Antarctica. A long, narrow country, it has an average width of only about 110 miles, with a maximum of 217 miles at the latitude of Antofagasta and a minimum of 9.6 miles near Puerto Natales. It is bounded on the north by Peru and Bolivia, on its long eastern border by Argentina, and on the west by the Pacific Ocean. Chile exercises sovereignty over Easter Island, the Juan Fernández Archipelago, and the volcanic islets of Sala y Gómez, San Félix, and San Ambrosio, all of which are located in the South Pacific. Chile also claims a 200-mile offshore limit. The capital is Santiago.

Hiring, Negotiating and Doing Business in Chile

Necessity of written employment contract

A written employment contract is not required.

Different forms of engagement: employment, contracting, work with private entrepreneur

If the company has 25 or more employees, at least 85% of them need to be Chilean citizens. It is important to note if Chilean nationals cannot replace technicians, the law excludes for these purposes.

If the company has 24 employees or less there is no regulation regarding the proportion of Chilean nationals that employers must hire.

Chile Employment Contract

Types of employment agreements

• Individual labor contracts

The individual labor contract is a written agreement (but it can also exist without one) to which an employee and an employer are bound. In this contract, an employee will provide personal services in favor and benefit the employer. The employer must pay compensation for those services.

In Chile, the existence of a bond of dependence and subordination triggers the existence of a labor contract. Article 10 of the labor codex indicates what minimum clauses this contract needs to have in order to be legally binding. This can be the place of work, duration of the bond, remuneration, and others.

• Collective labor agreements

Collective labor agreements in Chile can be sub-classified into Collective Labor Contracts (Contrato Colectivo) or in Collective Labor Agreements (Convenio Colectivo). The first is a contract signed between an employer and one or more unions, or even non-unionized employees acting as a whole. It is in order to negotiate collectively and reach common working conditions and certain remunerations and benefits. This type of contract needs to be agreed written.

The difference between a Collective Labor contract and a Collective Labor Agreement is that the latter does not require a previously regulated collective bargaining process, if negotiations are carried out with a union.

• Special contracts

Special contracts are for specific labor relationships in specific sectors and industries such as labor contracts for ship personnel at sea.

In general terms, the duration of a labor contract in accordance with labor laws in Chile can be either:

• Indefinite or perpetual
• For a fixed time period
• Until the completion of a certain task or event.

Chile working hours

For most employees, there is a 45-hour cap per week. The law divides these hours across no less than 5 and no more than 6 consecutive days. On average, an employee should work 9 hours a day.

Without prejudice of the above, by labeling the employee (on their contracts) as “trusted” they can be legally exempt from the caps stated above. This started as a clause for managers and executives but over time, it has been implemented for other kinds of employees.

Overtime

The maximum working hours are 45 hours a week from Monday to Friday or Saturday depending on the work schedule. The manner in which these hours are divided is decided by the employer, however, no employee can work more than 12 hours a day, this includes overtime hours. So the maximum “ordinary” hours can be 10 hours a day, and one can agree with the worker additional working hours a day that cannot exceed 2 hours within the same day, bringing the total for each day to a maximum of 12 working hours. In addition, overtime can only be agreed on a temporary basis, which cannot exceed a total of 3 continuous months. Furthermore, the extra hours must be indicated in writing. This extra hours has a surcharge of 50% over the regular work hours.

Vacation leave in Chile

Employees with more than one year of service have a right to 15 paid working days per year.  Ten days can typically be taken consecutively, and the remaining 5 as agreed by the employee and employer. Vacation time can be accrued for up to 2 consecutive years. Most employers give the statutory minimum.

Chile Maternity Leave

In general, employees are entitled to 6 weeks of maternity leave before childbirth and 12 weeks after childbirth. In addition, parental leave may be granted, at the choice of the new mother, under any of the following options: (a) a 12-week leave following the expiration of maternity leave or (b) 18 weeks of half-day work following the expiration of maternity leave.

Employees are entitled to a subsidy during leave. This is generally less than the employee’s salary and companies will often make up the difference. The employee’s job is protected for one year after maternity leave ends.

Fathers are entitled to 5 continuous working days of paternity leave to be used when they want after the child is born. Fathers can also share the parental leave of up to six weeks of full-time leave or 12 weeks of part-time leave.

Chile Severance Laws

The employee must be given a 30-day notice, or payment in lieu of notice of one month’s salary. The last monthly salary on which the payment in lieu of prior notice is based has a statutory cap of 90 “monetary indexed units” (At the end of 2012, about US$ 4,280 – this unit is adjusted daily to inflation by the Chilean government. At the end of 2012 1 monetary indexed unit is equivalent to approximately US$48), except if modified by the parties by mutual agreement. Calculation (for EPL indicators): 0.5 months (average of cases with notice or severance payment)

Chile Tax

Tax Rate  – 30.4%

Social security contributions due by an employer and an employer:

• Health contribution at 7% on a maximum of CLP 1,876,049
• Pension contribution at 12.5% on a maximum of CLP 1,876,049
• Unemployment insurance at 0.6% on a maximum of CLP 1,876,049

Health Insurance Benefits in Chile

Employees are entitled to sick leave if supported by a medical certificate that is given to the employer within two working days from the date of beginning of the sick leave. The employer then has three working days to forward the medical leave certificate to the health insurance institution (Isapre or Fonasa) who pays for the sick leave, which may be subject to caps.

• 3 days or less of sick leave: employees are not entitled to sick pay
• Between 4 and 10 days of sick leave: employees are entitled to sick pay
• Greater than 10 days of sick leave: employees are entitled to sick pay for all working days during the sick leave period

Additional Benefits in Chile

Employers have no legal obligation to provide fringe benefits, other than benefits which may be voluntarily agreed in individual or collective contracts or agreements. Pension and sickness benefits are covered by the Social Security system. There is no legal obligation to provide catering facilities and meals.

General market practice benefits/additional allowances

Chile is highly regarded within the financial community as one of the strongest investment destinations in Latin America. With its significant exposure to commodities, such as copper, the country has attracted a lot of foreign capital that has helped grow its economy. And, emerging minerals like lithium have helped keep the country’s resources in demand.

Some benefits of investing in Chile include:

• Strong Performance
  Chile was the first South American country to join the OEDC in May of 2010, with the highest nominal GDP per capita and highest competitiveness rating in Latin America, according to the Global Competitiveness Report for 2009-2010.
• Vast Natural Resources
  Chile is the world’s largest exporter of traditional copper, as well as lithium that’s used to power next-generation batteries. By some estimates, the country has about a quarter of the world’s lithium reserves.
• Friendly Government
  Chile’s government is one of the richest governments in Latin America thanks to favorable economic policies designed to promote growth and sustainability over the long-term.

Chile Holidays

The following national holidays are celebrated in Chile:

• New Year’s Day
• Good Friday
• Holy Saturday
• Labor Day
• Navy Day
• Our lady of Mount Carmel
• Assumption
• Independence Day in Chile
• Army Day is on Saturday
• Discovery of Two Worlds Day (Columbus Day)
• Reformation day
• All Saints’ Day
• Immaculate Conception
• Christmas Day

In certain cases, when a holiday falls on a weekend, the Chilean government may decide to extend the holiday to either the Friday or Monday.

Why Choose WeHireGlobally

WeHG takes care of all the onboarding hurdles, payroll, compensation and benefits, tax filing, and termination of employment. Our Employer of Record solution allows you to manage your overseas teams efficiently while minimizing cost and risk.