Engage In Chile

Table of Contents

About Chile

Capital City

Santiago

Population

As of March 2024, the estimated population of

Currency

The currency in Chile is the Chilean Peso (CLP). The currency symbol is $.

Exchange Rate Calculator

USD

Overview

Chile, a country of breathtaking contrasts and natural wonders, sits along the southwestern coast of South America. With its extraordinary shape, stretching over 2,700 miles from north to south, Chile is a geologic marvel. Its territory consists of a long, narrow ribbon of land squeezed between the heights of the majestic Andes Mountains and the depths of the Pacific Ocean. This unique geography gives Chile a diverse range of climates and landscapes, from towering volcanic peaks in the Andes to ancient forests in the Lake District. Known for its dramatic scenery, Chile boasts icy glaciers, pristine parks, and a mesmerizing archipelagic maze in its southern Patagonia region. Additionally, Chile is rich in natural resources, including copper, fruits, forests, and fish, contributing to its economic success and stability. Not only is Chile admired for its natural beauty, but it also enjoys a history of political stability and honesty that sets it apart in Latin America. With its rapidly growing economy and reputation as an honest and well-governed nation, Chile stands as a shining example of progress and possibility in South America.

Employment Relationship

Permanent Employment

Employees hired for an indefinite term are regarded as permanent employees. In case of fixed-term contracts, if an employee has continued working after contract expiration without renewal, he/she is considered to have been hired for an indefinite time. In addition, an employee who has provided discontinuous services by virtue of more than 2 term contracts, for 12 months or more in a period of 15 months, counted from the first contract, will be legally presumed to have been hired for an indefinite duration.

Fixed-Term or Specific-Purpose Contracts

Labor law limits fixed-term contracts to one year, renewable for another term. If the employee continues after expiration without renewal, he/she is considered to have been hired for an indefinite term. Contracts renewed twice are considered to be made for indefinite term. The duration of fixed-term contracts can be more than two years for managers, professionals or technical staff.

Temporary Employment Contratcs

A temporary employment contract can be concluded, only for certain cases, such as leave substitution, special events, expansion of facilities, etc. An employer (user) can hire temporary workers from temporary services agencies by concluding a written contract. This contract must include the rights and duties of hired employees, along with reasons for hiring temporary workers, jobs for which they are hired, their duration and agreed fee. 

Probationary Period

The duration of the probationary period in Chile without prior agreement is 2 weeks by default. During this time, either party to the employment contract may terminate the relationship with 3 days' notice. 

Working Hours

Per Chilean labor law, the standard workweek is 44 hours, and the ordinary workday cannot exceed 10 hours. This is transitionary, and in 2028 the work week will decrease to 40 hours per week. Employees working longer are eligible for overtime. The maximum weekly hours cannot be distributed in more than 6 or less than 4 days. Overtime work can be required in extraordinary situations to avoid damages in the ordinary course of work, to prevent accidents, or to make urgent repairs to machinery. Employees and employers are required to include the modalities of remote work in their employment contracts. All remote work contracts must be registered with the Labor Department within 15 days. Remote work is subject to the regulations related to general working hours. 

Holidays / PTO

Statutory Holidays

  • New Year’s Day - January 1
  • Assumption Day - August 15
  • All Saints’ Day - November 1
  • Virgins Day - December 8
  • Christmas Day - December 25
  • Ascension of the Lord of Corpus Cristi - Date subject to change every year
  • National Independence Day - September 18
  • Army Day - September 19
  • Navy Day - May 21

Paid Annual Leave

The Labor Code of Chile entitles employees to an annual leave of 15 days with full salary after a full year of service with their employer. The leave time adds up to 21 consecutive days (including weekends) or a total of three weeks. Fixed-term employees who provide continuous services to the same employer by virtue of two or more contracts that exceed one year are also entitled to the same annual leave. Employees with over ten years of experience receive one extra day of annual leave for every three years of service beyond ten years. The annual leave can be broken into segments, with one of the parts being at least ten days. If an employee has two consecutive periods of vacations lined up, the employer must instruct the employee to take a minimum of 15 days off from work before the end of the year.

Sick Leave

The Chilean Labor Code entitles employees to 8 days of unpaid sickness leave if they have worked for less than 6 months. Employees who have worked more than 6 months but less than a year are entitled to 15 days of unpaid sick leave. Employees who have worked 12 months or more are entitled to 30 days of unpaid sick leave.

Maternity Leave

The labor code of Chile entitles female employees to a maternity leave of six weeks before delivery and 12 weeks after delivery. The benefits for this leave is paid by social insurance. To qualify for maternity benefits from social insurance or mandatory private insurance, employees must have at least six months of contributions, including at least three months of contributions in the last six months. There is a maternal subsidy for women without a valid employment contract, paid by the Social Security Superintendence. 

Paternity Leave

The labor code of Chile provides a paid paternity leave of five days to employees, which can be used continuously or distributed within the first month of the birth of child. If the mother died during childbirth or during the period of maternity leave after it, remaining leave is transferred to the father or to whomever custody of the minor was granted  

Termination of Employment

Notice Period

The Labor Code of Chile requires a notice period of 30 working days to an employee for dismissal due to business reasons. The notice must be in writing and clearly indicate the reason for dismissal. A copy is to be sent to the Labor Inspector. The notice period can be waived off by paying salary in lieu of notice.

Severance Benefits

The labor code of Chile entitles dismissed employees who have completed at least one year of service to severance pay equal to one month of salary for each year of work, limited to 11 months’ salary. Employees must be dismissed by their employer for business reasons to be eligible for severance.

Social Security

Pension

The Social Security Institute of Chile mandates the legal age of retirement at 65 years. The monthly pension for retired members is calculated as 50% of the average monthly salary of the employee for the last five years before retirement, increased by 1% for every 50 weeks of insurance in excess of 500 weeks. This pension is limited to a maximum of 70% of the average monthly salary of the employee for the last five years before retirement. The source of funds for old-age pensions is the contribution made by employees equal to 10% of their monthly wages. There is a monthly universal old-age benefit for persons who are not eligible to receive a pension in any pension system, have reached the age of 65 years, and have stayed in Chile for at least 20 years (4 out of last 5 years).  Effective September 1, 2022, social security coverage and employment protections will extend to those employed by digital platforms, and those employees will be classified as either formal employees or self-employed. The extended protections allow employees of digital platforms to access old-age, disability, and survivor pensions as well as health insurance and other social security benefits.   

Dependents/Survivors Benefit

The Social Security Institute provides survivor benefits to the spouse, children, and parents of the deceased insured person. The widow is entitled to receive 50% of the pension that the deceased would have been eligible to if he was permanently disabled for one year prior to death. The pension is 60% if there are no common children. The benefit is paid for life if the widow is disabled or has reached the age of 65 years at the time of death of the insured person. All legitimate, natural or adopted children of the deceased, below age 15 are eligible for a monthly pension equal to 15% of the deceased’s average monthly salary. The pension is 11% of the deceased person's average monthly salary for partially disabled children under 24 years. If there are no other survivors, the benefit amount for the deceased person's parents is 36% of their average monthly salary, and it is 30% if there are dependent children. The fund is sourced by contributions made by employees in the amount of 1.53% of their monthly wage.

Invalidity Benefit

The Social Security Institute of Chile is responsible for providing life and disability insurance. In order to be eligible for disability pension, the following conditions must be fulfilled: They must be declared absolute or partial disabled. If the employee is unable to procure an income equal to at least 30% of the usual salary earned by a healthy worker in similar conditions, he/she is declared as absolutely disabled. If the person is able to earn more than 30%, but less than 60% of the remuneration earned by a healthy worker in similar conditions, he/she is declared to be partially disabled. They must have at least 50 weeks of insurance They must be below the age of 65 years at the time of beginning of disability Monthly pension for absolute disabled persons is 50% of the average monthly salary of employees for the last five years before retirement, increased by 1% for every 50 weeks of insurance in excess of 500 weeks. Source of funds same as those for retirement.

Taxation of Compensation and Benefits

Personal Income Tax

Per Chile's income tax code, all individuals who are domiciled in or are residents of Chile are subject to income tax on their income from sources within and outside of the country. Foreign residents are only subject to income tax on their income from Chile for the first 3 years, and after that are liable to pay income tax on their worldwide income. The tax slabs on income in Chile are set monthly, depending on the monthly tax unit set by the government. Rates range from 0-40% of total income. The monthly tax unit for October 2023, for example, is set to CLP 762,180 (Chilean pesos) by the Central Bank of Chile. This unit changes every month and is determined by the Central Bank of Chile according to inflation.

Immigration

Types of Visas

Tourist – issued to those who visit Chile for tourism purposes, with a validity of 90 days Diplomatic – issued to those who work in diplomatic or consular departments and their families for the duration of their mission Resident (includes student and political asylum) – issued to people who wish to stay in Chile for longer durations than 90 days While citizens of several countries (such as the US, Canada and Germany) may travel to Chile only on a passport, others require a visa.

Work Permit

Foreign workers in Chile are required to receive a residence permit or visa subject to a contract that is valid for up to two years and can be extended for the same period. To obtain this visa, the employee must attach an employment contract with the application. If the employment relationship is terminated, the visa expires. A request for permanent residency in Chile can be made after two years of holding this type of residence visa. The temporary residence visa also allows holders to carry out any activity in Chile, with no limitations other than those established by law. It is issued for a maximum period of one year, renewable for up to two years, at the end of which the foreigner must apply for permanent residence or leave the country. The Ministry of the Interior and Public Security can authorize tourists who have a valid permit to work in the country for a period of no more than 30 days, extendable for equal periods until the expiration of the visa. Under the law, in companies with more than 25 employees, 85% of the workforce must be Chilean citizens. 

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