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.
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:
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.
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
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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.
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.
Taxation in Chile:
Employers are required to give a share of their profits to their employees. Employers must pay one of the following:
- 30% of the company's net taxable income, subject to certain adjustments
- 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.