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Global HR Compliance in Chile

Hiring in Chile offers strategic access to one of Latin America’s most stable economies and most open business environments. But international employers must navigate strict labour protections, mandatory benefits, and complex termination processes — all of which require local expertise and operational infrastructure.

This guide outlines the key considerations for compliant hiring in Chile and how Acumen International enables companies to build legally sound operations without establishing a local entity.

What You Should ConsiderBefore Hiring in Chile

Chile is business-friendly, but when it comes to employment, it’s structured, rule-bound, and not particularly flexible. If you’re thinking of hiring staff here, don’t assume you can adapt as you go. Employment terms are formal, terminations must be justified, and foreign talent is tightly regulated. Here’s what you need to know upfront.

Employment is Highly Regulated

Chile’s labour market is formal and governed by detailed regulations. Fixed-term employment contracts are limited, termination must be justified and documented, and all employment relationships must adhere to mandatory standards, including vacation, severance, and social security contributions.

Quotas and Residency Considerations

At least 85% of a company’s workforce in Chile must be Chilean nationals, unless the company employs fewer than 25 workers. This restriction applies even for global companies and creates limitations when planning international transfers or hiring expat teams.

Incorporating in Chile requires local tax registration, appointing a legal representative, complying with corporate reporting requirements, and maintaining statutory employment records. For many companies, this is not feasible when the hiring need is urgent or exploratory.

How Acumen International Supports Hiring in Chile

As a Global Employer of Record, Acumen International provides the legal and operational infrastructure to employ talent in Chile without opening a local entity. We act as the Employer of Record (EOR), taking full responsibility for compliance, payroll, and HR administration, while you retain control over daily management and business objectives.

Here’s how that works in practice:

You can hire a Chilean national or eligible foreign worker under a locally compliant employment contract—without registering a company in Chile. We handle the employment formalities and assume the legal responsibility as the employer on record.

Compliance, Handled from Day One

We ensure every contract, payslip, tax contribution, and benefit aligns with Chilean labour law. You avoid the risk of misclassification, non-compliance, and post-hiring legal disputes—particularly around unjust dismissal or unpaid statutory entitlements.

Adaptability for Long-Term or Project-Based Needs

Whether you’re hiring for a defined-term project or building a long-term presence in Chile, our model supports both. We manage contract duration, renewal, and exit processes in full alignment with local law, giving you flexibility without exposure.

Global Payroll Calculator for Global Employment Cost Discovery

The Global Payroll Calculator (GPC) offers a sophisticated solution for instantly calculating employment costs across 190 countries, streamlining your global hiring strategy and ensuring cost-effective decisions.

Key Features & Benefits

  • Instant Cost Calculations: Quickly determine total employment costs, factoring in real-time tax rates and benefits for local and foreign talent in 190 countries.
  • Precision & Clarity: Achieve precise payroll calculations with detailed breakdowns of all payroll variables, ensuring transparency and preventing unexpected costs.
  • Cross-Country Comparisons: Utilise GPC’s capability to perform instant comparisons between countries, helping you identify the most advantageous locations for hiring.

Core Capabilities

  • Total Employment Cost Analysis:
    • Monthly and yearly costs.
    • Gross-to-net and net-to-gross calculations.
    • Detailed breakdowns, including employer liability and employee taxes.
  • Full Tax Breakdown:
    • Comprehensive coverage of social contributions, personal income tax, and automated tax caps.
    • Employer and employee tax splits with allowances and holiday entitlements.
  • Built-in Compliance:
    • Ongoing validation against trusted government sources.
    • Updates in real-time to reflect the latest tax and labour laws.

Hiring and Firing Employees in Chile: Employer Guide

Chile stands out among South American countries for its robust financial institutions, active foreign trade, and generally stable policy environment. For companies considering expansion, it offers a structured legal framework — but also one that requires detailed compliance. This guide provides a clear overview of employment contracts, terminations, benefits, and employer obligations under Chilean labour law.

Types of Employment Agreements in Chile

Main Contract Types

  • Indefinite (permanent) employment contracts
  • Fixed-term contracts
  • Casual or task-based contracts

Employers and employees may agree to either an indefinite or fixed-term employment contract. Fixed-term contracts must not exceed one year, or two years in the case of managers, professionals, or technicians. If the employment continues beyond the term without formal renewal, the contract automatically converts into an indefinite one. Task-based contracts are permitted for specific projects, ending when the agreed work is complete.

Termination of Employment in Chile

Grounds for Termination

Under the Chilean Labour Code, employment can be terminated for the following reasons:

  • Mutual agreement between employer and employee
  • Resignation
  • Expiration of a fixed-term contract
  • Completion of the contracted task
  • Force majeure
  • Death of the employee
  • Employer-initiated dismissal

Dismissal by the Employer

Employers may dismiss employees due to operational needs—such as company restructuring, low productivity, or changes in market conditions—or due to serious misconduct. Executive-level staff (e.g. managers, legal representatives) may be dismissed without cause but must still receive appropriate notice or compensation.

Notice Period Requirements

When termination is based on business needs, employers must give at least 30 days’ written notice or pay an equivalent of 30 days’ salary in lieu.

If termination is based on misconduct or other just cause under the Labour Code, no notice is required. In such cases, employers must issue a written notice — personally or by registered mail — outlining the legal grounds and factual basis for dismissal.

Severance Pay in Chile

General Calculation

Employees dismissed without cause or due to company needs are entitled to one month’s salary per year of service, up to a maximum of 11 months.

  • Salary cap: Severance is calculated based on a maximum of 90 UF (Unidad de Fomento).
  • Inclusions: Fixed monthly salary and recurring compensations.
  • Exclusions: Irregular or non-periodic bonuses.

Fixed-Term Contracts

If an employee is terminated before the end of a fixed-term contract, they are entitled to compensation equal to the salary they would have received through the end of the contract, capped at one year, or two years for professionals.

Exceptions

Severance is not payable in cases of termination due to serious misconduct or other causes outlined in Article 160 of the Labour Code.

Employee Benefits and Contributions in Chile

Social Security and Mandatory Contributions

All employees, including foreign nationals, are subject to Chile’s social security system. Contributions cover:

  • Pension (AFP)
  • Health (FONASA or ISAPRE)
  • Occupational accident insurance (paid to “Mutual de Seguridad”)
  • Unemployment insurance (AFC)

Foreigners may request exemption under specific treaties but must register and demonstrate equivalent coverage in their home country.

Probationary Period

Chile’s Labour Code does not formally recognise probationary periods for standard employment contracts. The only exception applies to domestic workers, who may be subject to a two-week probation period.

Overtime and Working Hours

Standard Working Hours

The standard legal working week is 45 hours, distributed over 5 or 6 days. Any excess is considered overtime.

Overtime Rules

  • Maximum: 2 hours per day
  • Overtime pay: 1.5x the regular hourly rate
  • Applicable only for roles not excluded from working time limits

Exemptions

Managers, representatives with decision-making power, and remote workers (who manage their own schedule) are not subject to the standard hours limit.

Paid Leave in Chile

Annual Leave

Employees with over one year of service are entitled to 15 working days of paid annual leave. After 10 years of total work (with one or more employers), vacation is extended by 1 day for every 3 additional years of service.

In certain southern regions (e.g. Regions XI, XII, and Palena Province), the basic leave entitlement is 20 days.

Sick Leave

Employees are entitled to sick leave, paid by their health insurance provider. If the absence is longer than 10 days, the first three days are unpaid. If the leave is shorter than 10 days, it is paid from day one.

Work-related injuries are covered separately by Mutual de Seguridad. Employers suspend salary payment during approved sick leave, and payment is subject to contribution caps.

Maternity and Parental Leave

Maternity Leave

  • 6 weeks prenatal
  • 12 weeks postnatal
  • Optional extension: Additional 12 weeks of full-time leave or 18 weeks part-time (half-day work with 50% salary).
  • Adoption: Adoptive mothers (or fathers) of children under 6 months receive the same entitlements.

Paternity Leave

Fathers are entitled to 5 working days of paid paternity leave, to be taken flexibly within the first month of the child’s birth or adoption.

How Acumen International Helps You Employ in Chile

Hiring in Chile without a legal entity requires more than a payroll provider — it requires full legal infrastructure, contract compliance, and ongoing HR administration. Acumen International provides that framework.

We serve as the legal employer, enabling you to:

  • Employ Chilean or foreign nationals without incorporating locally
  • Remain compliant with contracts, benefits, and social security obligations
  • Navigate limitations on fixed-term contracts and foreign workforce quotas
  • Maintain operational control while we manage legal employment risks.

Planning to hire in Chile?
We provide Employer of Record solutions and integrated local support so you can build your team compliantly — without the delays or overhead of entity setup.

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