Chile presents a compelling opportunity for global organizations seeking high-impact talent at low hiring costs. In Chile, an EOR can be especially helpful due to the complex labor laws and regulations. By partnering with an EOR, you can ensure that your business is in compliance with all local laws and regulations while also providing your employees with the support they need. 

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Chile boasts a skilled and diverse workforce, cost advantages, a strong work ethic, advanced infrastructure, and a supportive business environment. With its highly educated population and proficiency in English, Chile offers a pool of talented professionals. The competitive labor costs and favorable government policies further enhance its attractiveness as a business destination, providing an optimal environment for companies to thrive and expand.

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However, many experienced employers find hiring in Chile amid its employment laws difficult. Chile’s labor laws have some unique characteristics making hiring in the country different from other markets. For example, maternity leave policies in Chile are very generous granting female employees 4 and half months of paid leave. Severance laws are employee-friendly, and employers must be wary during terminations. Additionally, employees in Chile are entitled by law to form and join trade unions. 

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Hiring and navigating these laws can be grueling for foreign employers.  Through the Gloroots' Chile EOR and PEO platform, you can tap into the remarkable talent pool in Chile and effectively grow your team.

The cost of Chile EOR/PEO services in Chile may differ based on various factors, such as the number of employees, the extent of services needed, and the intricacy of the project. The pricing structure for Chile EOR/PEO services usually involves a monthly fee per employee or a percentage of the employee's salary. Extra charges may apply for additional services or customization.

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Key Metrics For Foreign Employers 

For many employers, Chile is a gateway to the South American market. The country's entrepreneurial atmosphere, particularly in the technology and innovation sectors, fosters creativity and innovation, making it an attractive location for entrepreneurs and investors. 

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The table below depicts key indicators from the Global Talent Competitiveness Report for employers wishing to hire from Chile.

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Source: The Global Talent Competitiveness Index 2023

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Through the Gloroots’ Recrew platform, you can discover amazing talent in Chile.

Misclassification refers to the improper classification of workers, particularly in terms of their employment status. 

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Utilizing a PEO/EOR in Chile helps mitigate the risks associated with misclassification by ensuring compliance with labor laws, proper employee classification, accurate payroll processing, and access to comprehensive benefits. This enables businesses to focus on their core operations while entrusting employment-related responsibilities to experienced professionals.

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The main source of labor law in Chile is the "Código del Trabajo" (Labor Code), which establishes the fundamental principles and rules governing labor relations in the country.

Employment contract

The law in Chile recognizes three different kinds of employment contracts: individual employment contracts, collective employment contracts, and special employment contracts (such as contracts for apprenticeships or contracts for domestic help). 

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When an individual signs an employment contract, it signifies the start of their working relationship with the employer. Individual work contracts can either be permanent or transitory depending on the circumstances.

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On the other hand, collective employment contracts establish the broader terms and conditions that govern the relationship between employers and employees as a whole.

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In Chile, it is mandatory to have a formal employment agreement that is signed by both the employer and the employee. The employer is required to provide the contract in Spanish. 

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In accordance with the provisions of Article 10 of the Chilean Labor Code, employment contracts are required to contain the following information:

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• Identification of both parties
• Date and place of contract signing
• Job description, duties, and responsibilities
• Workplace location
• Remuneration and payment terms
• Working hours
• Duration of employment
• Benefits, whether in the form of goods or cash.

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It’s important for employers to understand the intricacies of these programs before making a hire. 

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This might sound overwhelming—but it doesn’t have to be. A solution like Gloroots eliminates the barriers for you. With Gloroots’ Employer of Record offering, hiring and managing employees globally is a piece of cake.

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

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Working Hour 

The working hour in Chile is 45 hours per week (maximum)

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Overtime

Overtime must be paid at a rate that is increased by a factor of 50%. The maximum amount of overtime allowed in a single day is two hours.

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Public holidays

In the nation, there are 16 designated public holidays during which employees typically enjoy time off from work.

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Payroll

Employers are required to remunerate wages and salaries at a minimum frequency of once per month. Payments should be issued within the same month in which the employee has provided their services.

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Minimum Wage

Employees in Chile are required to be paid at least the country's minimum wage. It has been decided that the minimum wage in Chile will be CLP 410,000 per month in 2023.

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Annual leave

Once employees have completed one year of employment, they are entitled to 15 paid days off per year. It is mandatory for at least 10 of these days to be taken continuously as a block of leave. Furthermore, after reaching 10 years of service, regardless of any job changes during that period, employees' annual leave allowance increases by 1 day for every 3 years worked with their current employer.

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Sick Pay

Employees who are absent from work due to sickness are eligible for paid sick leave, which begins accruing on the fourth day of absence and is paid for by Social Security. When an employee is absent from work due to illness for more than ten consecutive days, sickness benefits begin accruing on the first day of absence. It is required that a medical certificate be presented no later than two days from the commencement of the absence from work due to sickness.

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Maternity and paternity leave

Female employees are entitled to 18 weeks of maternity leaves. Employees can avail this leave 6 weeks before their due date and 12 weeks after their delivery. 

Maternity leave pay is at 73.2% of the employee’s salary.

Fathers are entitled to five days of paid paternity leave which can be availed post the due date. 

Both male and female employees are entitled to 12 weeks of paid parental leave . This leave must be spent within one year of the child’s birth.

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Tax and Social Security contribution

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Social security

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Note: The contribution rates for social security may vary depending on specific circumstances such as employment contract type.

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Employment Termination and Severance

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Employment Termination

Employees may face termination for valid reasons such as dishonesty, negligence, fraud, or other work-related offenses. While managerial staff can be dismissed at the employer's discretion, the law requires the provision of a severance package.

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Notification Period

Employers are obliged to give employees a minimum notice period of 30 days prior to termination.

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Severance pay

In cases of business-related dismissals, such as redundancy, employees have the right to receive a severance package equal to one month's wages. 

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However, employees found guilty of breaching their contract or committing serious offenses are not entitled to severance pay.

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When hiring globally, ensuring compliance comes with its own set of battles. Employers must ensure all hiring and onboarding activities adhere to employment laws, payroll procedures, DE&I compliance, GDPR and similar data protection, etc. If you think it is hard to set up local entities and start hiring, keeping up with a dynamic compliance landscape is far harder. 

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Gloroots helps you minimize all these efforts by providing a single window to manage all these tasks. Our in-house experts fully shield you from cross-border employment and payroll compliance risks. We do this by helping you with generating employment contracts, on-time payments, compliant benefits, while you focus only on screening talent. 

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Our promise is a stress-free global employment experience for both you and your employee.

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Contact our experts today to kickstart your global hiring campaign.

Growing a team means hiring the right employees at the right time and for the appropriate positions. Employers in Chile must have a local legal organization and use local resources to handle compliance, payroll, tax, and benefits management. The complexity of employment regulations in Chile makes compliance with employment laws demanding.

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With Gloroots’s global Employer of Record (EoR) service, you can let Gloroots do the heavy lifting of payroll, tax, benefits, and compliance and concentrate on what matters to you most: your employees and company growth.

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