Chile’s free market economy has produced well-rounded and highly skilled workers that will be a perfect addition to your business. But employers must be aware of the rules and regulations before onboarding employees from the country. The following sections cover some of Chile’s labor laws.
Employee Contract
Public and Provincial Holidays
Leave Information
Basic
Official Employment contracts in Chile must be written in Spanish. An English translation may be provided if both parties prefer it. However, a Spanish version must always be attached to it.
Probation Period
The probationary period for employees ranges from 3 – 6 months.
13th Month Pay
It is only customary to provide 13th-month pay for Chilean employees.
Employee Benefits
Employers in Chile may provide the following benefits to their employees:
- Pension Plan.
- Statutory Leaves.
- Health Benefits.
- Unemployment Insurance.
Chile releases payroll every month.
Minimum wage in Chile varies depending on an employee’s age. For employees aged 18 to 65 years old, minimum wage is CLP 400,000/month. For employees under 18 years old and over 65 years old, minimum wage is CLP 298,391/month.
The standard working hours in Chile are 45 hours per week. In Chile, employees are paid 150% of their hourly rate for overtime hours performed in a normal working day. For working on a rest day, employees are paid 130% of their regular rate.
Employer Payroll Cost:
| Contribution |
Employer payroll tax |
| Pension |
28% |
| Health Insurance |
6% |
| Insurance for work-related injuries and occupational illnesses |
0.10% to 1% |
Employee Payroll Cost:
| Type of Contribution |
Tax Rate |
| Unemployment Insurance |
2.4% |
| Disability and Survival Insurance |
1 to 1.5% |
Employee Income Tax
The Chilean Income tax operates on two tax categories. The first one, the Global Complementary Tax, is being applied annually. Below are the rates based on income.
| Taxable income bracket (USD) |
Rate (%) |
Discount (USD) |
| 0 – 11,368.06 |
0.0 |
0.0 |
| 11,368.06 – 25,262.37 |
4.0 |
454.72 |
| 25,262.37 – 42,103.94 |
8.0 |
1,465.22 |
| 42,103.94 – 58,945.52 |
13.5 |
3,780.93 |
| 58,945.52 – 75,787.10 |
23.0 |
9,380.76 |
| 75,787.10 – 101,049.46 |
30.4 |
14,989.00 |
| 101,049.46 and more |
35.5 |
19,637.28 |
The second is Employment Income tax is applied on gross salary minus social security contribution. Below are the rates: Employment Tax (rates as of June 2017)
Sheet1
| Taxable income bracket (USD) |
Rate (%) |
Discount (USD) |
| 0 – 947.34 |
0.0 |
0.0 |
| 947.34 – 2,105.20 |
4.0% |
37.89 |
| 2,105.20 – 3,508.66 |
8.0% |
122.10 |
| 3,508.66 – 4,912.13 |
13.5% |
315.08 |
| 4,912.13 – 6,315.59 |
23.0% |
781.73 |
| 6,315.59 – 8,420.79 |
30.4% |
1,249.08 |
| 8,420.79 and more |
35.5% |
1,636.44 |
VAT
The Standard VAT in Chile is 19%.
Generally, employment contracts in Chile must not be terminated at-will. The decision to end the contract must be grounded with just reason. A notice in writing must be given by either party regarding the termination.
Chilean employees under probation period must observe a notice period of up to 7 days. For employees outside probation, notice period will be up to 30 days.
Severance pay
Employees terminated without just cause, redundancy, and collective dismissal are entitled to severance pay equivalent to 30 days of remuneration for every year of service.
Foreign nationals intending to work in Chile must secure a work visa to be able to legally work in the country. A Chilean work visa has a validity period of one year and can be renewed. A Holiday working visa may also be granted for foreign workers intending to work in the country for a year. But unlike the standard work visa, a holiday working visa may only be granted once and cannot be renewed.