Employer of Record in Chile

An Employer of Record (EOR) in Chile helps you hire employees there without setting up a local entity. This means you can build your team in Chile while the EOR handles all the legal and HR work. An Eor like Rivermate legally employs your Chilean team members on your behalf. They manage payroll, taxes, benefits, and compliance with local labor laws. This lets you focus on your business while the EOR takes care of the employment details.

How an Employer of Record (EOR) Works in Chile

Using an EOR in Chile simplifies your expansion. Here is how it works:

• You Find the Talent: You recruit and select the best candidate for your team in Chile.
• The EOR Hires Them: The EOR legally hires the employee in Chile under its local business entity. They create a compliant employment contract.
• You Manage Your Employee: You manage your employee’s day-to-day tasks and responsibilities. They are a core part of your team.
• The EOR Handles HR: The EOR manages all HR and administrative tasks. This includes payroll, taxes, benefits, and ensuring everything follows Chilean labor law.

Why use an Employer of Record in Chile

An EOR helps you enter the Chilean market quickly and compliantly. It removes the major hurdle of establishing a legal entity, which saves you time and money. You can hire top talent in Chile without getting tangled in local regulations.

Here are some key benefits:

• Enter the Market Faster: You can hire employees and start operating in Chile in days, not months.
• Ensure Compliance: EORs are experts in Chilean labor law. They make sure your employment contracts, payroll, and benefits are fully compliant.
• Reduce Costs: You avoid the high costs and complexities of setting up and maintaining a legal entity in Chile.
• Access Local Expertise: You get immediate access to local HR and legal knowledge. This helps you offer competitive benefits and navigate the local business culture.

Rivermate's transparent pricing model eliminates complexity with a single, competitive monthly fee per employee. Unlike traditional PEO providers, our pricing in Chile includes comprehensive HR support, benefits administration, compliance management, and access to our proprietary dashboard for real-time workforce analytics. No hidden costs, no setup fees—just straightforward pricing that scales with your business needs while ensuring full legal compliance in Chile.

Hiring in Chile is a great way to tap into a skilled workforce. But, you need to know the local labor laws. The legal system in Chile favors employee rights, so it is important to get things right from the start. This guide will walk you through the key things you need to know.

Employment contracts & must-have clauses

Written employment contracts are mandatory in Chile. You must give a signed copy to the employee within 15 days of their start date. If you don't, the terms the employee claims will be considered valid.

There are a few types of employment contracts in Chile:

• Indefinite contracts: These are the most common and are for ongoing roles.
• Fixed-term contracts: You can use these for temporary projects. They have a specific end date and generally cannot last longer than one year.
• Project-based contracts: These contracts end when a specific project is completed.

Every employment contract must include the following details:

• Place and date of the contract
• Full identification of both you and the employee
• Employee's start date
• Clear description of the job and duties
• Workplace location
• Salary and how it will be paid
• Working hours
• Whether the contract is for a fixed term or is indefinite

Probation periods

Chilean law does not recognize formal probation periods. Instead, you can use a fixed-term contract to see if a new employee is a good fit. A common practice is to offer a fixed-term contract for one to three months. If you both agree, you can then move to an indefinite contract.

Working hours & overtime

The standard workweek in Chile is currently being reduced from 45 to 40 hours. This change is happening in phases. As of July 2024, the standard workweek is 42 hours. This can be spread over five or six days.

Here are the key points on working hours:

• The workday is typically 9 hours.
• Employees are entitled to a lunch break of at least 30 minutes, which is not counted as part of the workday.
• Work on Sundays and public holidays is generally not allowed, with some exceptions for industries like retail.

Overtime is any time worked beyond the standard hours. You must get written consent from the employee for them to work overtime. Overtime pay is 150% of the regular hourly wage. You must keep accurate records of all hours worked, including overtime.

Public & regional holidays

Your employees in Chile are entitled to paid time off for public holidays. Here is a list of the national public holidays for 2025:

Some regions in Chile also have their own specific public holidays.

Hiring contractors in Chile

You can also hire independent contractors in Chile for project-based work. This can be a flexible option, but you need to be careful. The authorities in Chile look closely at contractor relationships to make sure they are not disguised employment.

An independent contractor:

• Works autonomously
• Controls their own schedule
• Uses their own equipment
• Can work for multiple clients

You must have a written service agreement with your contractor. This agreement should clearly define the scope of work, payment terms, and the independent nature of the relationship.

Misclassifying an employee as a contractor can lead to fines and penalties. You could be responsible for back payments of social security and other benefits. An Employer of Record (EOR) can help you hire contractors in Chile compliantly. An EOR ensures that your contractors are classified correctly and that all local labor laws are followed. This mitigates the risk of misclassification and gives you peace of mind.

Understanding compensation and payroll in Chile is straightforward. The system is designed to be clear for both you and your employees. It covers everything from how much you pay your team to the taxes you both contribute. To keep things compliant, you need to understand the local employment laws, which dictate minimum wages, working hours, and social security contributions.

Payroll cycles & wage structure

In Chile, you pay your employees monthly. The pay period covers work from the first to the last day of the month, with payment made at the end of the month. You must provide a payslip with each payment that details earnings and deductions.

An employee's total compensation includes their base salary plus any bonuses, commissions, and overtime pay. While a 13th-month bonus, known as "aguinaldo," is not required by law, many employers provide it twice a year, once in September and again around the holidays.

Overtime & minimums

The standard workweek in Chile is 45 hours. The government is gradually reducing this to 40 hours per week. Any hours worked beyond the standard week are considered overtime. You must pay employees 1.5 times their regular hourly rate for overtime work. Employees can work a maximum of two overtime hours per day.

As of July 2024, the monthly minimum wage is CLP 500,000 for workers between 18 and 65 years old. There are different minimum wage rates for employees younger than 18 and older than 65.

Employer taxes and contributions

As an employer in Chile, you are responsible for several payroll contributions. These are calculated as a percentage of your employee's gross salary.

Employee taxes and deductions

Your employees also contribute to social security and pay income tax. You will withhold these amounts from their paychecks.

In Chile, benefits and leave are a mix of government requirements and extra perks employers offer. The system makes sure employees get time off for rest, illness, and family. It also provides a safety net through social security. Understanding these benefits is key to hiring in Chile.

Statutory leave

Chilean law sets minimum leave requirements for all employees.

• Annual Leave: You get 15 paid days off each year after you've worked for the same employer for one year. At least 10 of these days must be taken in a row. In some regions, like Aysén and Magallanes, you get 20 days. After 10 years of work, you get an extra day of vacation for every three years you work for your current employer.

• Sick Leave: You can take sick leave if you have a doctor's note. You need to provide this to your employer within two days of starting your leave. The public health system pays your salary from the fourth day of your illness. If your leave is longer than 10 days, you get paid from the first day.

• Maternity Leave: Mothers get 30 weeks of paid maternity leave. This is split into six weeks before birth and 24 weeks after.

• Paternity Leave: Fathers get five days of paid leave. They can take this time all at once or spread it out over the first month after the baby is born.

• Marriage or Civil Union Leave: You are entitled to five continuous paid days off for your marriage or civil union.

• Bereavement Leave: You get three working days of paid leave if your child or parent passes away.

Public holidays & regional holidays

Chile has a number of national holidays. Some regions also have their own specific holidays.

Typical supplemental benefits

Many employers in Chile offer benefits beyond the legal requirements to attract and keep great employees.

How an EOR can help with setting up benefits

Setting up employee benefits in a new country can be tricky. An Employer of Record (EOR) makes it simple.

An EOR already has a legal entity in Chile. This means you don't have to set one up. They handle all the details of hiring and benefits.

Here's what an EOR can do for you:

• Ensure Compliance: An EOR understands local labor laws. They make sure your benefits packages meet all legal requirements.
• Save Time: You don't have to spend time researching and setting up benefits plans. The EOR does it all for you.
• Offer Competitive Benefits: EORs often have access to better benefits packages at a lower cost. This helps you attract top talent.
• Simplify Payroll: An EOR manages payroll and makes sure all contributions for benefits are handled correctly.

Using an EOR lets you focus on growing your business. You can be sure that your team in Chile is taken care of.

Letting an employee go in Chile involves specific legal steps. You cannot simply terminate employment at will. You must have a valid reason, such as a business need, and follow a formal process. This includes providing a written notice to the employee and filing it with the Chilean Labour Ministry. You also prepare a final settlement agreement, called a "finiquito," which details all final payments.

Notice periods

Chilean labor law requires you to provide employees with a written notice of termination.

• Standard Notice: The standard notice period is 30 days.
• Payment in Lieu: You have the option to pay an employee 30 days' salary instead of having them work the notice period. This is a common practice.
• Delivery: You must deliver the notice in person or send it by certified mail. A copy must also go to the Labor Inspectorate within the same timeframe.

Severance pay

When you terminate an employee for business reasons, they are entitled to severance pay.

• Calculation: Severance is typically one month's salary for every year of service.
• Cap: This payment is usually capped at 330 days, or 11 months of pay.
• Agreement: The final severance amount is documented in the finiquito. This agreement must be signed by both you and the employee in front of a notary public or the Labor Ministry to be valid.

How Rivermate handles compliant exits

Navigating employee terminations in another country can be complex. We make sure the process is smooth and compliant. We handle the details so you can focus on your business.

Here is how we help:

• Guidance: We provide clear guidance on local labor laws to ensure you are making informed decisions.
• Documentation: We prepare and manage all the necessary paperwork, including the termination notice and the final settlement agreement.
• Compliance: We ensure every step, from notification to final payment, follows Chilean regulations.
• Final Payroll: We process the employee’s final pay, including unused vacation days and severance, accurately and on time.

Navigating visas and work permits in Chile requires a clear understanding of the current rules. For anyone who is not a Chilean citizen, securing the right authorization is the first step to working in the country. The primary route for foreign workers is the Temporary Residence Visa, which has several subcategories depending on your situation. The application process is now mostly online, but you must apply from outside of Chile.

Employment Visas & Sponsorship Realities

When you need to hire employees in Chile, using an Employer of Record (EOR) is a practical way to do it without setting up your own local company. An EOR acts as the legal employer for your team, handling payroll, benefits, and making sure you comply with local labor laws.

Here’s what you can expect:

• Sponsorship: An EOR can sponsor work permits for foreign employees. They manage the necessary employment contracts and documentation required by Chilean immigration authorities.
• Limitations: Be aware that there can be limits on an EOR's ability to sponsor foreign employees due to visa quotas in Chile. It's always best to confirm the specifics for each case.
• Practical Route: The most common visa for employees is the Temporary Residence Visa for remunerated activities. This visa requires a local work contract or a formal job offer. An EOR can provide this, simplifying the process for your hires.

Business Travel Compliance

For short-term visits, the rules are more straightforward. Many nationalities, including U.S. citizens, do not need a visa for business travel, tourism, or academic conferences for stays of up to 90 days.

Keep these points in mind for short trips:

• Tourist Card: Upon arrival, you will receive a Tourist Card ("Visa de permanencia transitoria") which is valid for up to 90 days.
• Permitted Activities: This entry allows for business meetings and conference attendance. It does not permit you to perform paid work. For any actual employment, a work visa is necessary.
• Extension: If you need to stay longer, you can apply for a 90-day extension by paying a fee at a Chilean Immigration Office.
• Required Documents: For those who do need a visa, you will typically need a valid passport, proof of sufficient funds, and a letter of invitation from a company in Chile.