Hire in Chile: A Comprehensive Guide for 2026

Introduction

Hiring remote employees in Chile means working within the Labor Code, which sets three main contract categories and requires mandatory pension, unemployment insurance, and work accident contributions on top of salary.

Foreign companies without a local presence must employ through a registered entity, an employer of record (EOR) that holds the legal employment relationship, or an agent of record (AOR) for contractors.

Registering a local entity, with the Servicio de Impuestos Internos can take weeks, and a notarized incorporation and local bank account are required before a single hire can start. Hiring contractors looks simpler, but Chilean labor law can reclassify a contractor as an employee based on fixed hours or direct supervision, leaving you liable for back pay and fines.

In this guide, we cover the three ways to hire remote employees in Chile, what each option costs, the employment laws that apply, and the challenges to plan for.

How to hire in Chile?

Companies looking to hire in Chile generally choose between three routes: setting up a local entity, hiring through an Employer of Record (EOR), or engaging contractors through an Agent of Record (AOR). Each route carries a different cost, timeline, and compliance load, so the right choice usually depends on headcount, budget, and how long the company plans to operate in Chile.

Option 1: Set up a local entity

Companies that want direct control over payroll, benefits, and day-to-day HR can register a local entity in Chile, typically a Sociedad por Acciones (SpA) or a Sociedad de Responsabilidad Limitada (SRL). This generally means getting a tax ID (RUT) from the Servicio de Impuestos Internos (SII), notarizing incorporation documents, opening a local bank account, and registering as an employer.

This route usually makes the most sense for companies planning a long-term presence in Chile, since it comes with ongoing Labor Code and statutory compliance that a foreign company needs local expertise to manage properly.

Option 2: Hire employees via an Employer of Record (EOR)

An EOR acts as the legal employer of record for a company's Chilean hires without requiring entity setup. The EOR holds the formal employment relationship, while the hiring company continues to manage the employee's day-to-day work.

This route generally suits companies that want to hire quickly, test the Chilean market, or bring on a small team without taking on the registration and compliance burden of a local entity.

Option 3: Hire contractors via an Agent of Record (AOR)

For project-based or limited-scope work, companies can engage independent contractors in Chile directly, or through an AOR that manages contractor agreements and payments on their behalf. This route is more flexible than full-time employment, but it carries misclassification risk, since Chilean labor law draws a clear line between employees and contractors based on factors like fixed hours, direct supervision, and whether the work is a core business function.

Choosing between an entity, an EOR, or an AOR is the first decision that shapes everything else in this guide, from payroll setup to termination rules.

Skuad supports both hiring models from a single platform:

EOR for full-time employees

• Acts as the legal employer across 160+ countries, so you can hire without setting up a local entity
• Supports employment contract generation aligned with local labor laws across supported markets
• Facilitates statutory contribution workflows covering applicable social insurance and pension obligations
• Supports payroll processing in 70+ currencies with automated tax withholding and year-end reconciliation
• Assists with termination and offboarding, including notice periods and severance calculations as required locally

Contractor management

• Helps onboard contractors with locally compliant agreements that reduce misclassification exposure
• Supports invoice generation, approval workflows, and payment processing in local currency
• Helps flag classification risk before it becomes a compliance issue with built-in worker classification checks
• Facilitates multi-currency payouts across 70+ currencies with no manual reconciliation

Hire employees or contractors in Chile, Skuad supports both. See pricing

How much does it cost to hire in Chile?

Hiring in Chile involves more than the employee's base salary. Employers should budget for the following:

• Recruitment costs: Expenses tied to advertising open roles, screening candidates, and running interviews, whether handled in-house or through a local recruiter.
• Onboarding costs: Costs for training new hires, providing equipment, and completing the administrative steps needed for a compliant start date.
• Payroll: The employee's gross salary before taxes and deductions.
• Mandatory pension and social security contributions: Employers in Chile are required to contribute toward pension, unemployment insurance, and work accident insurance on top of the employee's salary.
• Employee benefits: Offering paid annual leave, sick leave, and statutory bonuses where applicable add to the overall cost of hiring in Chile.

To help you budget accurately, it's worth knowing where salaries in Chile actually land. With industries and job opportunities developing in various sectors, Chile offers attractive job prospects and salary packages.

Between recruitment, onboarding, mandatory contributions, and market salary benchmarks, estimating the full cost of a Chile hire by hand takes time, and it's easy to miss a line item.

Skuad helps with this through its employee cost calculator, which brings these variables together for a full estimate on a single platform.

Here is what Skuad helps with:

• Supports employer cost estimates that combine gross salary with statutory contribution categories
• Facilitates payroll processing in 70+ currencies with accurate tax withholding and statutory deductions
• Supports employment contract generation across 160+ countries, aligned with local labor laws and statutory requirements
• Helps model the total cost of a hire before an offer is extended, so budgeting decisions happen upfront
• Assists with ongoing payroll administration once the hire is onboarded

See your estimated cost to hire in Chile

What are the employment laws in Chile?

In Chile, employment laws apply to both employer and employee; the three main categories of contractual terms are indefinite term, fixed-term, and project-based term. Employment relationships can exist even without written contracts.

Minimum Terms and Conditions of an Employment Contract:

• Date and place of execution
• Identification of the parties, including nationality
• Starting date
• Description of the services to be performed
• Location
• Time of payment
• Working hours
• Duration of contract

Main Sources Of Employment Law in Chile

• The Constitution
• Labour and Employment Code
• Law 17,322 on Social Security Payment
• Law 16,744 on Occupational Accidents and Diseases
• Decree-Law 3,500 and its Executive Regulation.
• Law 20,609 on Discrimination Prohibition
• Law 19,799 on VIH treatment
• Executive Law Regulation from 1967
• Law 19,728 on Unemployment Insurance
• Supreme Decree 594 on Health and Environmental Basic Workplace Conditions

What is the leave structure in Chile?

• Maternity Leave - 30 weeks paid leave, 6 weeks before birth and 24 weeks after birth, covered by health insurance
• Paternity Leave - 5 days of paid leave, to be taken continuously from the birth or distributed within the first month. Separately, the mother may transfer one or more weeks of her 12-week postnatal parental leave to the father, starting from the 7th week of that leave.
• Bereavement Leave - 10 continuous days for the death of a child, 7 continuous days for the death of a spouse or civil union partner, 7 business days for the death of a child during pregnancy, and 4 business days for the death of a sibling, parent, or another close family member.

What are the challenges of hiring in Chile?

Hiring in Chile comes with real financial and legal exposure when compliance gets skipped or handled loosely. The risks below are concrete, not hypothetical‍

• Misclassification penalties: Treating an employee as a contractor when the working relationship doesn't hold up can trigger fines under Article 506 of the Labor Code, ranging from 1 to 60 UTM (roughly CLP 66,000 to CLP 3.96 million as of March 2026), scaled by company size and doubled or tripled for serious or very serious violations.
• Termination exposure: Ending an indefinite contract for company needs without valid legal cause can mean paying severance of one month's salary per year worked, capped at 11 years, on top of 30 days' notice or payment in lieu.
• Entity setup delays: Registering a local entity such as a SpA or SRL means securing a tax ID from the Servicio de Impuestos Internos, notarizing incorporation documents, and opening a local bank account before hiring can start, which typically adds several weeks to a hiring timeline.
• Rising employer contribution costs: Chile's pension reform under Law 21,735 is raising the employer's mandatory pension contribution from 1% today to 7% by 2033, on top of existing contributions to unemployment insurance and work accident coverage, a cost that will keep increasing each year through the transition.
• Workplace safety compliance: Employers must meet the sanitary and environmental standards set out in Supreme Decree 594, and failing to maintain compliant workplace conditions can result in fines from the Superintendencia de Seguridad Social on top of any liability tied to a workplace incident

Skuad acts as the legal employer in Chile, so your company can hire, onboard, and pay employees without entity setup, local legal counsel, or in-house Chile payroll infrastructure. Here is what Skuad helps with:

• Employment contract generation across 160+ countries, aligned with local labor laws and statutory requirements
• Statutory contribution workflows across supported markets, covering applicable social insurance and pension obligations
• Payroll processing in 70+ currencies with accurate tax withholding and statutory deductions
• Termination and offboarding support aligned with local labor requirements across supported markets
• Work permit and visa support for foreign nationals joining your team
• Background verification covering identity, employment history, and criminal records before onboarding

Customer story: How PureRED scaled across six countries with Skuad

PureRED, a marketing and advertising agency, needed to onboard employees across six countries, including Colombia, a LATAM market with employment complexity comparable to Chile's. Skuad supported the process with localized employment contracts, multi-currency payroll, and ongoing compliance support. PureRED onboarded 65 employees across the six countries through the platform.

"Skuad made our team expansion possible, handling the complex onboarding and payroll processes across six different countries with ease. Their local expertise ensured our compliance, letting us focus on what we do best — serving our clients."

- Brian Butcher, EVP Corporate Development, PureRED

Read the full case study

Hire in Chile without the compliance guesswork

Hiring in Chile means working within a Labor Code that covers contract rules, mandatory leave, rising pension contributions, and real penalties for getting classification or termination wrong. Whether you set up a local entity, hire through an EOR, or bring on contractors through an AOR, the route you choose early shapes how much of this complexity your team ends up managing directly.

Skuad supports the operational complexity of hiring in Chile, including employment contracts, payroll and statutory contributions, leave administration, and compliant terminations, so your team can focus on the work, not the paperwork.

Companies across SaaS, e-commerce, logistics, and technology use Skuad to enter the Chilean market, stay aligned with employment law as it changes, and grow their Chile team without building local HR infrastructure from scratch.

Start hiring in Chile compliantly, without entity setup. Book a demo

FAQs

1. What are the main ways to hire employees in Chile?

Companies can typically hire in Chile by registering a local entity such as a Sociedad por Acciones (SpA), engaging independent contractors, or partnering with an Employer of Record. Each route carries different compliance obligations under Chile's Labor Code, so the right choice usually depends on hiring volume and timeline.

2. What documents are required to hire an employee in Chile?

Hiring in Chile generally requires a written employment contract in Spanish, proof of the employee's RUT tax identification, and registration with the relevant AFP pension fund and health provider. Foreign hires may also need a Visa Sujeta a Contrato, which requires the employment contract to be notarized and legalized, depending on the employment structure used.

3. Can a foreign company hire in Chile without setting up a local entity?

Foreign companies can typically hire in Chile without a local entity by partnering with an Employer of Record, which holds the legal employment relationship on their behalf. This route generally avoids the registration, notarization, and bank account requirements tied to setting up a Sociedad de Responsabilidad Limitada.

4. What happens if a company misclassifies a worker in Chile?

Misclassifying an employee as an independent contractor in Chile can expose a company to fines, back payment of statutory benefits, and scrutiny from the Dirección del Trabajo. The risk generally increases when a contractor works fixed hours, follows direct supervision, or performs core business functions.

5. Is it better to hire in Chile through an EOR or a local entity?

This usually depends on hiring volume and timeline. An EOR generally suits companies testing the market or hiring a small team quickly, while entity setup often makes sense for larger, long-term operations that need direct control over payroll, benefits, and local infrastructure.

6. What termination requirements apply when hiring in Chile?

Terminating an employee in Chile typically requires a valid legal cause under the Labor Code, along with 30 days' notice or payment in lieu. Severance obligations generally apply based on tenure, and employers usually need to notify the Dirección del Trabajo as part of the process.

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