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Capital City
Santiago
Currency
Chilean Peso
(
$
)
Timezone
GMT -3
Payroll Frequency
monthly
Tax Year
1 January- 31 December
Employer Tax
4.24%
Languages
Spanish
Capital City
Santiago
Currency
Chilean Peso
(
$
)
Timezone
GMT -3
Payroll Frequency
monthly
Tax Year
1 January- 31 December
Employer Tax
4.24%
Languages
Spanish
Chile's legal framework for employment, including distinct categories of labor agreements and mandatory written employment contracts, ensures clarity and compliance in the hiring process.
With a workforce of around 8.8 million people, Chile provides access to a considerable talent pool for international employers.
Despite its relatively small size, Chile boasts the fourth largest GDP in South America, indicating economic stability and growth opportunities.
Chileans are known for being friendly and hospitable, making it easier for foreign employers to integrate into the local business culture.
Businesses can only operate smoothly in Chile if they comply with local labor laws including drafting compliant employment contract agreements and meeting taxation and payroll obligations. Learn more about the employment laws and regulations in Chile below, to avoid any compliance issues.
When it comes to employment in Chile, there are three main types of agreements: individual contracts, collective contracts, and special contracts (like apprenticeships). Collective contracts set general employment terms, but the actual job relationship begins with an individual contract, which can be either permanent or temporary. As per Chilean Labor Code Article 10, the agreement needs to cover basics like:
We can help you get a new employee started in Chile quickly, with a minimum onboarding time of just 1-2 working days. The timeline starts once the employee submits all required information onto the Playroll platform and completes any necessary local authority registrations. For non-nationals, the Right to Work assessment (if applicable) may add up to three extra days. Additional time may be needed for follow-ups on this assessment. Please note, payroll cut-off dates can impact the actual start date. Playroll's payroll cut-off date is the 10th of each month unless otherwise specified.
The standard maximum working hours per week are 44, reduced from 45 hours. The allocation of the reduction must be agreed upon by the parties.
Employees can work up to two extra hours a day or ten extra hours a week. For this overtime, they get paid 50% more than their regular salary for that day. Parties may agree on up to 5 additional days off, instead of receiving a premium for overtime hours worked.
The labor laws don't set rules for how long an employee's probation period should be. An employee with a fixed contract may be considered as being on probation for the duration of the contract, to a maximum of 12 months.
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1 January- 31 December is the 12-month accounting period that businesses in Chile use for financial and tax reporting purposes.
The payroll cycle in Chile is usually monthly, with employees being paid by the last day of the month.
The minimum wage for employees in Chile is typically 2,622.38 CLP per hour, amounting to ~500,000 CLP per month for a typical 44 hour work week.
Chilean labor law doesn't have specific provisions for 13th salaries.
Employer payroll contributions are generally estimated at an additional 4.24% on top of the employee salary in Chile.
In Chile , the typical estimation for employee payroll contributions cost is around 17.6%.
Individual income tax in Chile is calculated based on progressive rates ranging from 0% to 40%. The tax is applied to monthly income, and 1 Monthly Tax Unit is equivalent to approximately 65 901 CLP as of August 2024, but changes monthly.
Employees are required to contribute approximately 10% to their pension. Getting the old-age pension is a choice. To qualify, employees need to be 65 (for men) or 60 (for women) and be part of AFP (Administradoras de Fondos de Pensiones).
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In Chile, work permits and visas are essential for employers hiring foreign workers. The process involves submitting applications to the Chilean Department of Immigration, paying applicable fees, and ensuring all eligibility criteria are met. The key visa types include the Subject to a Work Contract Visa, Temporary Residence Visa, Professional Visa, and Investor Visa. Employers must sponsor their international employees by providing a valid employment contract, proof of job necessity, and documentation of the employee’s qualifications. Compliance with Chilean labor regulations and timely renewals are crucial to avoid work authorization lapses or fines.
The annual leave entitlement in Chile is 15 days for a full time worker. These can include public holidays on top of that or within those days, which would otherwise be unpaid.
Public holidays that fall on the weekend are usually forfeited.
Employees with at least 1 year of service get 15 days of paid leave. After 10 years of employment for one or more employers, an employee will earn an additional day off for every 3 years of service with the current employer.
Female employees are entitled to a total of 18 weeks of maternity leave - Six weeks before the child is born, and 12 weeks after the birth. Women are entitled to an additional 12 weeks of leave after the compulsory maternity leave is completed. The social security system covers the wages of the employee, up to a prescribed legal cap.
Fathers are eligible for 5 days of paid paternity leave.
If employees get sick, Social Security pays for sick leave starting from the 4th day off. If the illness lasts more than 10 days, they get benefits from the first day. A doctor's note must be provided within 2 days of starting sick leave.
Women employees can take 10 days of leave for a child under 18. Although they are entitled to payment during this period, they need to compensate for the time off at a later date.
Employee is entitled to 10 days of Bereavement leave for the death of a child and 7 days for the death of a spouse/civil partner.
Employee is entitled to 5 days of paid leave in the case of marriage.
To terminate an employee in Chile, a valid reason must be determined. According to the law, acceptable reasons for termination include:
According to the law, the notice period for termination is one month. However, it's common for the notice period to be skipped, and instead, payment is made in place of the notice.
If an employee has worked for at least one year, they are entitled to severance pay. For each year up to 11 years, they get one month's salary. After the first year, they earn an extra month of severance pay if they have worked for at least half of the following year
Disclaimer
THIS CONTENT IS FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE LEGAL OR TAX ADVICE. You should always consult with and rely on your own legal and/or tax advisor(s). Playroll does not provide legal or tax advice. The information is general and not tailored to a specific company or workforce and does not reflect Playroll’s product delivery in any given jurisdiction. Playroll makes no representations or warranties concerning the accuracy, completeness, or timeliness of this information and shall have no liability arising out of or in connection with it, including any loss caused by use of, or reliance on, the information.
ABOUT THE AUTHOR
Jesse Weisz
Jesse is an experienced R&D Analyst at Playroll, a leading Employer of Record (EOR) provider. With a strong background in data analysis and market research, Jesse specializes in identifying emerging trends and driving innovation in global HR solutions. She is an all-rounder, critical thinker and success-seeker (often inextricably linked to being a late-night tea drinker).
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