Employer of Record in Chile

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Employ contractors and employees in 160+ countries
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Employer of Record in Chile

Skuad's Chile EOR (Employer of Record) solution helps you expand your business into Chile without the need for an entity setup. Our unified and automated global HR platform enables you to expedite the onboarding of your remote team and manage their payroll, benefits, etc., compliantly. We help you streamline your global expansion process with the able assistance of our international network.

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Chile at a Glance

  • Estimated Population: 19 million
  • Currency: Chilean Pesos
  • Capital: Santiago
  • Languages Spoken: Spanish, English
  • GDP Growth: 1.1% (2019)

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What You Must Know Before Employing in Chile

Chile's labor laws are nearly similar for residents and non-residents, except for a few minor differences. It is crucial to understand the various aspects of employment in Chile.

Companies looking to set up an entity in Chile should be aware of local laws and regulations. The main sources of Chile's employment laws are The Labor and Employment Code, Law 16,744 on Occupational Accidents and Diseases, Law 17,322 on Social Security Payment, Law 19728 on unemployment insurance, Law 21,227 on Protection of Employment and Access to Benefits. Employment agreements in Chile need to be in line with the laws. To mitigate the risks of understanding and applying the employment laws, you can partner with Skuad, which is well-versed with the rules and regulations of Chile. Contact Skuad to Book a demo today.

Some provisions of the employment laws to note before hiring in Chile are:

Entitlements Explanations
Statutory Working Hours A general workday in Chile shall not exceed 10 hours. The workweek cannot exceed 45 hours.
Overtime Employees in Chile get their hourly salaries at the rate of 50% over the regular wage if they work overtime. The overtime should not exceed 10 hours per week or 2 hours a day.
Rest Period The workday is split into two periods with a break in-between. Companies must provide a lunch break of at least 30 minutes between the two periods.
Paid Public Holidays There are 17 public holidays every year, as follows.
  • New Year’s Day (1st January)
  • Good Friday (2nd April)
  • Holy Saturday (3rd April)
  • Labour Day (1st May
  • Naval Glories Day (21st May)
  • Feast of St. Peter and St. Paul (29th June
  • The Feast of Our Lady of Mount Carmel (16th July)
  • Assumption of Mary (15th August)
  • Independence Day (18th September)
  • Day of the Glories of the Chilean Army (19th September)
  • Day of the Races (12th October)
  • National Day of the Evangelical and Protestant Churches (31st October)
  • All Saints’ Day (1st November)
  • Feast of the Immaculate Conception (8th December)
  • Christmas Day (25th December)
Medical Leave Employees need to submit a medical certificate within two days of taking sick leave. They do not get paid for the first three days of the leave. After that, they are entitled to paid sick leave.
Maternity Leave Women are entitled to 18 weeks of maternity leave. They can take six weeks before the child’s birth and 12 weeks after giving birth.
Bereavement Leave In Chile, employees get up to 7 days of bereavement leave after the death of their child or spouse. In case of the death of a parent, employees can take up to 3 days of bereavement leave in addition to annual leave.
Paternity Leave Male employees are entitled to 5 days of leave within the first month immediately after childbirth.
Annual Leave Accrual Entitlement

Employees who have been in service for more than a year are entitled to 15 days of annual leave. In practice, they get up to 21 days of annual leave.

Employees who work in the southern part of Chile (Region IX and X) are entitled to 20 days of annual leave.

Employees can accumulate their annual leaves for up to two years.

Employee Protection and Anti-Discrimination Rights Chile’s Labor Code explicitly prohibits discrimination on the grounds of age, belief, disability, gender, sexual orientation, ethnicity, illness, language, marital status, nationality, opinion, personal appearance, socio-economic status, religion, or union membership and participation. Discrimination is also prohibited based on breastfeeding, HIV/AIDS, and maternity.

Contractors vs. Full-Time Employees

Chilean law does not differentiate between types of employees. It states that universal treatment has to be meted out to all employed persons. Contractors and full-time employees are only different in the kind of service they provide. Employers control how full-time employees' services are rendered. They also decide the employees' hours of work. Employees are usually subordinate to employers.

Contractors are often independent. Employers do not have direct control over them. A mutually agreed project and the relative outcome are planned and signed under an agreement between both parties. The contractor is not subordinate to the employer.

Whether you hire an employee or an independent contractor, you must understand Chilean employment laws. Book a demo now to know why Skuad's EOR Chile is the perfect solution for you.

Hiring in Chile

There are numerous ways to hire employees in Chile. Employees often post job advertisements on their website and other popular job-hunting platforms, like Indeed, Laborum.cl, Chile Trabajos, and Buscojobs. This is a low-cost endeavor that helps them land the employees they need.

Businesses also use hiring companies in Chile to get employees. However, this is an expensive undertaking. The HR team has to sift through the candidates' list and conduct the hiring process in a new country. There are costs associated with every avenue of hiring. Further, companies have to run background checks, onboard employees, manage payroll, and handle taxation, additional responsibilities, and costs. Instead, companies can expand their business in Chile using an EOR like Skuad to handle all the employment-related responsibilities. Click here to learn more.

Probation Period

Employment contract laws in Chile do not mention probation. There is no standard probation period in Chile as the employment laws do not talk about probation, except in cases of domestic workers, where employers can take up to two weeks to decide whether they want to hire full-time workers or not. However, employees on a fixed-term contract for less than 12 months are considered to be on probation. Once the 'probation' is up, employers can decide whether they want to extend the employee's contract or not.

Termination of Employment

Employment contracts in Chile often contain a termination clause that states the termination procedure. Employees are entitled to a termination letter that must include the reason for termination and all relevant facts. Employers need to include social security receipts too with the termination letter. The letter must be given to the employee within three days of termination.

Employers need to pay severance pay when terminating an employee. The compensation should be one month's pay for each year of service. If someone has been in service for 5 years, he will get 5 months of compensation if he is terminated. In calculating severance, the monthly payment cannot exceed 90 UF (US$3,571). This limit can be waived if both parties want to.

Even with notice, not all employees can be terminated. A pregnant woman can only be terminated with the permission of the labor board. The period for this shall be the period of pregnancy and one year six weeks after giving birth. The severance pay shall be the same as other employees.

A copy of the letter must be sent to the labor department. Employers do not require permission from the government to terminate the services of an employee.To ensure your expansion endeavors are in compliance with the Chile employment laws, Contact Skuad today.

EOR Solution in Chile

Business expansion is a long-drawn process that calls for extensive planning, especially when expanding to a foreign country. It is complicated and can take up to several months to complete but by choosing the EOR route for hiring employees in Chile, you can fast-track the expansion process. Employer of Record Chile (EOR) solutions by Skuad can make expansion to Chile much simpler and a lot quicker for business. Our global outreach and a tech-enriched HR platform ensure compliance with local labor laws by managing employment responsibilities such as monthly payroll, work permits, employment contracts as well as taxation for your employees in Chile. Book a demo with Skuad today.

Outsourcing Employment Through an EOR in Chile

Payroll outsourcing in Chile has never been easier. Chile's talent pool is sure to attract the best of companies. If your company is looking to expand into Chile, you need to consider whether you want an in-house team or an EOR for employment-related responsibilities. An EOR like Skuad can make your decision easier by providing an efficient and effective platform to expand into Chile. Book a demo now.

Types of Visas in Chile

Visa Category Explanation Duration
Tourist Visa Chile’s tourist visa can be availed by submitting the following documents:
  1. Valid passport
  2. Colour photograph (5 x 5 cm)
  3. Proof of economic solvency
  4. Invitation letter
  5. Return ticket
Thirty to 90 days
Chile Work Visa People who have secured a job in a resident company can apply for a work visa. Chile Work Visa requirements:
  1. Copies of a valid passport
  2. Proof of legal status in the country where they reside
  3. A colored passport size photograph
  4. Copies of flight itinerary and reservation
*These are some of the required documents needed while applying for a work visa in Chile.
Two years
Temporary Residence Visa People with family ties and investments in Chile or considered advantageous for the country can apply for a temporary residence visa. One year
Working Holiday Visa This visa is for people between the ages of 18 and 35. The youth of Australia, Canada, and New Zealand can apply for this visa to work in Chile for a limited period. One year

Book a demo today with Skuad!

Work Permits

Anyone with a secured employment contract in Chile is eligible for the Chile work visa, while the working holiday visa is given only to people from a few selected countries. People can't get a Chile work permit without a job offer. Skuad's Chilean partners can sponsor foreign workers for work permits and take on all responsibilities associated with employment.

Can Skuad sponsor work permit in Chile? Yes
Processing time 15 to 20 days
Work permit process

Step 1: Skuad’s local partner in Chile applies for the work permit.

Step 2: After the working visa is processed, the employee gets the visa.

Step 3: He has to fill out a document called ‘Cedula Consular.’ Once he enters Chile, he will have to show the document.

Step 4: Once in Chile, he has to get his visa stamped and apply for an ID card.

Passport Submission The original passport is needed at the time of applying for the work permit.
Work Permit Validity Two years
Work Permit Process for Different Countries For most countries, the process is similar.
Change of Sponsor Within Chile Employees can apply to change their sponsor.
Where is the Application Processed? The application might be processed in Chile or the employee’s home country.
Work Permit Restrictions To get a work permit, one must have a job letter from a Chilean firm. Moreover, the duties of the person applying for a work permit must be important for the benefit of the country.
When Can Employees Travel to Chile? You can come to Chile after your visa is approved.
What’s the Cost of a Business Visa? Approximately USD 580
Duration of Business Visa Processing Fifteen to 20 days
Switch Business Visa to Work Permit? No
Can Spouses Work on Dependent Visas? No
Special Requirements for Work Permit Cancellation The employer or appointed employment agent must cancel the work permit.

Payroll & Taxes

To set up payrolls in Chile, you have to know the local rules and regulations that govern payroll taxes. Tax laws are often complex and difficult to understand. Working with an EOR can help you save time and cost to focus on your goals and objectives of the expansion.

Payroll options:

Option Details
Remote Payroll Companies can pay their employees in Chile from their headquarters. However, they still need to understand the local laws and regulations.
Payroll Outsourcing Companies can choose to outsource their payroll to a company based in Chile. However, companies will be liable for any employment issues that might arise.
Payroll in Chile Companies that have an office in Chile can choose to set up a payroll system there. They will have to hire personnel to understand the employment laws and for taxation purposes.
Choose an Employer of Record An EOR like Skuad can manage all the processes related to payroll.

Taxation in Chile:

Employer Taxation

Tax Explanation
Financial Year End Date 31st December
Corporate Tax

Corporate tax is 25% to 27%, depending on the tax regime the company chooses. There are two regimes in place: Attributed Income Regime and Distributed Income Regime. Under the former, the income earned by a company during a financial year is attributed to its partners or shareholders without considering the dividend distributed. If a corporation chooses this regime, it will have to pay 25% tax.

Under the distributed tax regime, the income tax is charged on the actual distribution of dividends or profits. The corporate tax rate is 27% under this.

Withholding Tax (For Non-residents)

Interest: 35%

Interest on loans that financial institutions or foreign banks grant: 4%

Royalty: 30%

Royalty payments with connection to software: 30 (royalty) + 15% (If the software is non-custom or standard, it is exempt from an additional WHT of 15%.)

Medical Insurance Health plans from privately-run companies secure employees. They contribute to the plan every month.

Employee Taxation

Tax Explanation
Income Tax Rate A Chilean resident is subject to the Second Category Tax (employment income tax). Here are the tax rates (June 2020):
Income (in CLP) Tax Rate Rebate
0 - 13,357,800 5% -
13,357,800 - 22,563,000 10% 27,200.88
22,563,000 - 31,588,200 15% 87,647.28
31,588,200 - 40,613,400 25% 226,170.28
40,613,400 - 54,151,200 32% 561,144.08
54,151,200 - 67,689,000 37% 896,621.60
67,689,000 and above 40% 1,174,675.04

Foreign workers considered residents or those who have domiciled in Chile have to file an annual tax return. They have complementary global taxes. Here are the tax rates.

Unit Tax Rate
<13.5 0%
13.5 - 50 4%
50 - 70 8%
70 - 90 13.5%
90 - 120 23%
120 - 150 30.4%
>150 35.5%

*The Chilean Government designates the value of a unit in CLP, keeping in mind inflation every month.

Sales Tax 19% VAT on all taxable goods
Public Pension In 1980, Chile moved from a government-managed pension system to a private pension system fueled by employees' contributions. 10% of the monthly income has to go toward a pension. Part of the income that exceeds US$2,800 (60 Chilean Unit of Account) is non-contributory.
Employees’ Contribution Toward Social Security

10% toward pension plans (subject to a cap of USD 3,334)

0.06% toward unemployment insurance

7% toward health plan


Employers are required to give a share of their profits to their employees. Employers must pay one of the following:

  1. 30% of the company's net taxable income, subject to certain adjustments
  2. 25% of the employee's annual pay, but no more than 4.75 times the minimum wage for the month

The private sector is not compelled by law to pay Aguinaldo's 13th month salary (December bonus). Some businesses, on the other hand, agree to pay this bonus to their employees as part of individual or collective bargaining agreements.

Incorporation: How to Set Up a Subsidiary in Chile

Setting up a subsidiary in Chile is a long process that can take months. Incorporating a holding company in Chile is even more long-drawn. You need to consider numerous laws to determine if you want to set up an entity or hire an EOR instead. Here is the process of setting up a subsidiary in Chile:

The first step of the process is getting the company registered with the Registro Público de Comercio y Servicio de Impuestos Internos. You will need to wait 15-20 days after applying for registration. In addition to registration, you need to publish a social constitution and open bank accounts to operate the business.

There are numerous other steps as well. Chile's Company Registry will need to approve the name of your company. A description of the profile of your company and how it plans to start operations will be asked for. The details of the shareholders, as well as directors, must be submitted to the Registry office. Most importantly, you will need to prepare a Memorandum of Association (MOA) and Articles of Association (AOA) and file it with the Conservador de Comercio.

Professional Employer Organization (PEO)

A Professional Employer Organization (PEO) can make it easier for you to hire employees in Chile. Skuad's PEO solution can handle payroll management, taxation related to employment matters, HR consultation, insurance issues, employee health benefits in Chile, compliance assistance, and training. Through co-employment arrangements, the PEO files Chilean employer payroll taxes on behalf of the company employing people.

On the other hand, an EOR is not a co-employment organization. It does not provide HR services like a PEO. There are numerous advantages of hiring a PEO or an EOR. Employment laws and regulations are often complex, and there are lots of compliance issues to be dealt with when employing people. With a PEO, you need to have an entity in the country, while with an EOR, you do not need to set up a subsidiary to hire people in Chile.

Skuad's EOR solution is a good way to expand your business in Chile without setting up a separate entity. Our solutions help you to stay focused on your business and leave all business compliances, payroll processing and complete management work to us. Connect with Skuad to know more


Expanding your business into another country is not an easy business. You need to comply with the local laws and regulations. You need to understand the local customs and business environment. The culture change can be quite tough for a company that has not operated there. An EOR solution like Skuad can help you land on your feet firmly with constant help in understanding the local laws and business practices. Its international network can be immensely beneficial for your company.

A new employer needs to deal with Chile's payroll tax rates, health benefits, insurance, conflicts in the workplace, and many more issues before hiring employees in Chile. Skuad can help you with all the employment-related responsibilities so that you can focus on more pressing issues that need to be dealt with.

Another hurdle that most new businessmen face is setting up a subsidiary in Chile. Skuad can help you hire employees from Chile without setting up an entity there. With its unified employment platform Skuad will ensure that you can hire and manage employees in Chile easily. Book a demo now.

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