Chile is in the Southern part of South America with its coastline facing the Pacific Ocean. The capital Santiago lies in a valley surrounded by the Andes and the Chilean Coast Range mountains, which offers an exquisite landscape that draws more than four million foreign tourists a year. Chile ranks as the sixth most populated country in South America, with more than 19 million people. Chile holds the Pacific Alliance’s best investment profile along with many free trade agreements in the region. Chile also led the creation of the Progress of South America (PROSUR) a forum in defense of a market economy, social agenda, sustainability and development. These are some of the significant reasons why businesses may consider expansion in Chile.
Permanent contracts must be in writing and signed by both parties. Both the employer and employee receive one copy of the contract. The contract must be signed within 15 days immediately after the hiring process. For fixed-term contracts, the deadline to sign is five days to avoid any kind of penalty. The maximum length for a fixed-term contract is 12 months. Employers with more than 25 employees must maintain 85% Chilean nationals. Employers can conduct background checks on employees or candidates using third-party service providers as well. However, employers cannot conduct background checks related to an individual’s union membership.
The standard working hours are 45 hours a week, with a maximum of 10 hours a day. Overtime is limited to two hours a day at the rate of 50% over the regular wage. The rest break is at least 30 minutes in a workday. Employees between the ages of 15 and 18 years old may work no more than eight hours a day. Work performed at night is paid at 50% of the standard rate. Employees under the age of 18 and pregnant employees are not allowed to work at night.
Employees are entitled to sick leave and may be entitled to sick benefits through Chile’s social security system. To qualify for paid benefits, employees must have made at least six months of contributions, including at least three months of the last six months. Employees who meet these conditions will receive 100% of their net earnings, paid retroactively to the first day, if the illness lasts 11 days or more, or from the fourth day if the illness is less than 11 days. Employees also receive seven days of paid leave for the death of a spouse or child, and three days of leave for the death of a parent or for a stillborn child. The days must be taken consecutively.
Female employees receive 18 weeks of maternity leave with six weeks before childbirth and 12 weeks after delivery. Social security pays 100% of the wages under certain conditions. If during the period of pregnancy, a governmental authority declares the constitutional state of emergency due to public calamity, or n an epidemic or pandemic, the pregnant employer must offer the pregnant worker, during the time of the emergency, the modality of remote work or telework. If the nature of the worker’s functions is not compatible with the modality of remote work or telework, the employee must be assigned to tasks that do not require contact with the public or with third parties outside of the workplace. The employee needs to agree and its is prohibited to decrease their salary. Male employees are entitled to 5 days of leave within the first month immediately post-childbirth.
Chile has a minimum wage. Employers must distribute a portion of profits to employees. The private sector is not required by law to pay the 13th month salary or Aguinaldo’s (December bonus). However, some employers agree to pay this bonus to their employees through individual or collective agreements.
In addition to public holidays, employees are entitled to 15 days of paid annual leave after one year of service with full compensation. Employees working in the following regions receive 20 days of annual leave: Duodécima Región de Magallanes y de la Antártica Chilena, en la Undécima Región de Aysén del General Carlos Ibáñez del Campo, and in the Provincia de Palena. After ten years of work for one or more employers, continuous or not, the employee is entitled to one additional day for every three years worked. Employees are entitled to payment of accrued, and unused vacation days upon separation of service.
Chile provides access to healthcare funded through employer and employee contributions. Private health care also is available.
Employment contracts can be terminated at the end of the agreement (if for a fixed-term), by mutual consent, either by the employer or by the employee. Employers may dismiss an employee without providing notice or severance for misconduct. In some situations, written notice and the reason for dismissal must be provided to the employee. Employers may terminate employment based on the needs of the company, but are required to provide notice and pay severance upon termination of an employee with one or more years of service. Likewise, managers, directors and employees representing the company with power of attorney may be terminated without cause, but notice and severance must be provided. The notice period is 30 days. Employers may provide pay in lieu of notice. Severance is one month of salary for each year of work or a fraction of less than a year, and it is limited to eleven month’s pay. Dismissal without cause must be on the economic needs of the company.
We understand that local laws and regulations change and sourcing an accurate reference guide is not easy. Our data is researched and verified by our team of local international Employment Attorneys, HR and Benefit Professionals and Tax Accountants through our Atlas team and consultants, to ensure information up-to-date and accurate.
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