There are two ways to hire employees in Chile. The first one is to hire employee with a Global Professional Employer Organization, or PEO, such as SERVIAP. The second one is by your own. You need to make an offer letter determining if the salary is This will cost more time and money than the first one.
Labor Contracts
The employment contract is a legal convention where by the employer and the employee reciprocally bind themselves, the employee will provide services under dependency and subordination on an ongoing basis and, the employer, to pay for these services a certain remuneration.
The employment contract is consensual; must be in writing within the deadlines established by law, and signed by both parties in two copies, leaving one in the possession of each contractor.
Type of contracts
Indefinite contract
The fixed term contract becomes indefinite when:The worker continues to provide services for the employer with his knowledge after the agreed date of termination.When it is renewed a second time.It is presumed that a worker has been hired indefinitely when he has provided discontinuous services for the same employer under more than two term contracts, for 12 months or more in a total period of 15 months.
Temporary Work or Task Contract
It is that convention by which the worker is bound by the respective employer to execute a specific and determined work, whose validity is limited to its duration. The different tasks or stages of a work may not by themselves be subject to two or more continuous contracts, in which case the contract will be understood to be an indefinite term.
Part-time Contract
This type of work it is when it has been agreed to not exceed two thirds of the ordinary work day.Part-time workers will enjoy all other rights provided for full-time workers. However, the maximum limit of legal gratification may be proportionally reduced, in accordance with the relationship between the number of hours agreed in the part-time contract and that of the ordinary working day.
Apprenticeship contract
Apprenticeship work is when the employer or a third party undertakes to impart to an apprentice in certain conditions, the knowledge and skill to fulfill a task or work and will receive an agreed remuneration.Only workers under 21 years of age may enter into an apprenticeship contract.The following will be special obligations of the employer:1.- Occupy the apprentice only in the work of the apprenticeship program, providing the appropriate work elements.2.- Allow the controls that correspond to the National Training and Employment Service in contracts of this kind.The contract referred to in this chapter will be valid until the end of the learning plan, which may not exceed two years.
Basic Requirements
The information that the contract must contain is established in the Article 10 of Labor Code:
Place and date of the contract.
Indication of nationality and dates of birth and worker income.
Determination of the nature of the services and the place or city in which they are to be provided.
Amount, form and period of payment of the agreed remuneration.
Duration and distribution of the workday, unless the company’s system exists shift work, in which case the provisions of the internal regulations will be followed.
Term of the contract.
Other agreements agreed by the parties.
Payroll
The payroll is one of the most important documents within a company, since there is a control of all the withholdings, by law and additional, of the salary of the employees. From this operation, the final amount that a worker will receive and the amount that the company will invest in a given period is obtained.
The employer must deduct from the salary the taxes, social security contributions, union dues in accordance with the respective legislation and obligations with social security institutions or public bodies. Whatever the basis of the deductions made to the remuneration by the employer, or the origin of the loans granted, in no case they may exceed, together, 45% of the total compensation of the worker.
Law Benefits in Chile
The main remuneration benefits that the employer is obliged to pay to its workers on the occasion of the employment relationship are those indicated in the Labor Code, without prejudice to all those granted and agreed according to the employment contract.
The role that labor benefits play is that they are always aimed at improving the living conditions of workers, reducing their expenses and granting them incentives that foster their cultural and social development.
SalaryArticle 41, Labor Code
Compensation is understood as the consideration in money and the additional benefits that can be assessed in money that the employee must receive due to the employment contract, and they shall be paid in the legal currency of the country.A compensation can be the salary or base salary, and it is the mandatory and fixed stipend in money paid in equal periods as determined in the contract that the worker receives for the provision of his services in an ordinary working day. The salary may not be less than the minimum monthly income wage, and can include the overtime work remuneration, commission (the percentage on the price of sales or purchases or on the amount of other operations the employer makes with the collaboration of the worker), participation (the proportion in the profits of a particular business), and/or gratification which corresponds to the part of profits with which the employer benefits from the worker’s salary.
Legal GratificationArticle 47and 52, Labor Code
Companies that pursue profit, will have the obligation to annually reward its workers in a proportion not less than 30% of the profits or surpluses. This obligation is annual.Even so, legally and commonly what is done by companies, is to pay 25% of the accrued in the respective commercial year for monthly remuneration.In other words, 25% of the employee’s gross salary is paid. It is also possible to opt for another modality by the employer, this is, in case 25% of the base salary exceeds 4.75 times the minimum monthly income the bonus to be received would be $ 119,146 (with a minimum salary of 01-03-2019).
VacationsArticle 67, Labor Code
Workers with more than one year of service will be entitled to an annual holiday of fifteen working days, with full compensation that will be granted in accordance with the formalities established by the regulation.During the holiday, the full remuneration will be constituted by the salary in the case of workers subject to the fixed remuneration system. In the case of workers with variable remuneration, the full remuneration will be the average of earned in the last three months worked.
Christmas Bonus
There is no legislation regulating the Christmas bonus, however, companies usually pay an amount in the month of September (national holidays) and another in December (Christmas).
Workday and holidays
Workday is the time during which the worker must effectively lends his services in accordance with the contract and will also be considered the time in which the worker is at disposition of the employer without doing work, for reasons that are not attributable to him.
The duration of the ordinary working day shall not exceed 45 hours weekly.
The weekly maximum may not be distributed in more than six or in less than five days. In no case may the ordinary day exceed ten hours per day.
The work day will be divided into two parts, leaving at least half an hour for collation.
The ordinary day may be exceeded, but to the extent necessary to avoid damages in the normal operation of the establishment or work, when force majeure or case occur, or when accidents must be prevented or arrangements or repairs cannot be carried out in the machinery or facilities. Hours worked in excess will be paid as overtime.
Overtime will be paid with a 50% surcharge on the salary agreed for the ordinary day and must be paid together with the ordinary remuneration for the respective period.
Type of Work Day
Working hours per Day
Over Time
Sundays
Day shiftNight Shift
10 hours per day/ 45 hours per week7 hours per day / 36 hours per week
An additional 50% of the salary
Obligatory day of rest
On Sundays and those that the law declares holidays will be rest, except for the activities authorized by law to work on those days.
Mandatory Rest Date
Holiday Name
January 1st
New Years
April 26th
Constitutional Plebiscite
May 1st
Labor Day
June 7th
Mayor´s Primary Elections (TBD)
September 18th
National Independence
September 19th
Day of the Glories of the Army
October 25th
Municipal Elections
December 25th
Christmas
Employee Termination
The employment contract will end in the following cases:
Mutual agreement
Resignation of the employee, with 30 days of prior notification
Death of the employee
Expiration of the agreed term in the contract
Conclusion of the work or service that gave rise to the contract
Fortuitous events
The employment contract ends without the right to compensation when the employer terminates it by invoking one or more of the following causes:
Misconduct of serious nature:
Lack of work or performance of their duties
Sexual Harassments
Injuries issued by the worker to employer or employees
Immoral conduct that affects the company
Negotiations executed by the worker within the business line and that would have been prohibited.Non-attendance of the worker to their work without just cause for two days in a row. Abandonment of the work. Acts, omissions that affect safety or operation in the establishment. Intentional damage to facilities, machinery, tools, etc. Serious breach of the obligations imposed by the contract.
The employer may terminate the employment contract by invoking as grounds the needs of the company, establishment or service, such as low productivity, changes in market conditions or the economy, which make the separation of one or more workers necessary.
Disability, total or partial, is not just cause for the termination of the employment contract. The worker who is separated from his duties for this reason, will be entitled to a compensation.
In case of termination, the employer must communicate it in writing to the worker, personally or by registered letter sent to the address indicated in the contract, expressing the cause (s) invoked and the facts on which it is based.
Notwithstanding the foregoing, the employer must pay the worker the remuneration and other benefits set forth in the employment contract during the period between the date of dismissal and the date of sending or delivering the said communication to the worker.
Employers Contribution or Labor Cost
If the contract has been valid for a year or more and the employer terminates it in accordance with article 161 of the Labor Code, the employer must pay compensation for years of service that the parties have agreed individually or collectively, the employer must pay the worker a compensation equal to 30 of the last monthly remuneration for each year of service and fraction greater than six months, provided continuously. This compensation will have a maximum limit of 330 months of remuneration.
The employer will have to pay as well the provision of the holidays that the employee was entitled to at the time of the termination.
The contract concluded for a specific work or task has been in force for a month or more, the employer may terminate it justifiably as long as it pays the worker, at the time of its termination, compensation equivalent to 2.5 days of remuneration for each month worked and a fraction greater than fifteen days […] (CDT. Art. 163)
Why to choose PEO in Chile?
The recruitment process will be carried out taking into account from the beginning with the skills and characteristics you need for this new member of your team. At SERVIAP, in addition to saving time and money, you will have a customer service manager dedicated to your account. You will be able to use NYRN Cloud where you will find personalized attention and all the information, reports from your employee.
