Employer of Record in Chile: how to hire compliantly without an entity.

Chile is one of 18 countries where Employ Latam can hire employees on your behalf, without you setting up a local entity. As an EOR, we handle the employment contract, payroll, statutory contributions, and benefits, so your team can focus on managing the work rather than the paperwork.

Chile's labor market runs on a well-codified Labour Code that governs everything from working hours to termination. Employers hiring here need to plan around a few structural features: mandatory gratification tied to profits (not a flat 13th-month payment for everyone), progressive income tax, and a working week that recently dropped from 44 to 42 hours as part of a phased national reduction. None of this is exotic, but it does require getting the details right from day one, particularly around contract registration, contribution deadlines, and leave entitlements.

Country at a glance

Employers should also budget for statutory contributions on top of gross salary. Employer contributions include components for pension, unemployment insurance, and occupational accident coverage, with rates depending on contract type and activity risk. Employees contribute to pension and health coverage from their gross pay. Corporate tax sits at 27%, VAT at 19%, and the top personal income tax bracket reaches 40%.

Statutory leave includes 15 working days of paid annual leave after a year of service, 16 public holidays in 2026, and family-related leave for events like marriage, birth, and bereavement. Maternity leave runs 18 weeks in total (6 weeks before birth, 12 after), with postnatal parental leave and paternity leave (0.7 weeks, or 5 paid working days) as separate entitlements. Overtime is capped at two extra hours a day under a written agreement and carries a 50% premium over the regular rate.

Termination without cause typically involves a notice period and service-based compensation that scales with tenure, subject to statutory caps. Fixed-term contracts have duration limits and can convert to indefinite status if renewed or continued past expiry. Chile also enforces a workforce nationality rule for larger employers, requiring a minimum share of Chilean workers across covered operations.

Chile does not have a universal 13th-month salary in the sense used in some other LATAM countries. Instead, qualifying profit-making employers must pay statutory gratification: at least 30% of qualifying net profits allocated under the Labour Code's rules, or the alternative article 50 method of 25% of the employee's annual remuneration, capped at 4.75 monthly minimum wages. Employ Latam confirms which method applies to each employer and includes it in the cost estimate before an offer goes out.

Payroll runs monthly, with a pay period that cannot exceed one month. Employees receive an itemized payslip showing gross pay, deductions, and the calculation behind them. Social contributions are generally due by the 10th of the following month (extended to the 13th for electronic payment), separate from the employee's own payday.

Employee pension and health deductions total 10% (pension) plus 7% (health) of covered pay, plus the AFP's administration commission and, for covered indefinite contracts, 0.6% unemployment insurance. The employer side is layered: pension, unemployment, occupational accident cover, and SANNA all apply on top of gross salary.

Contribution ceilings for 2026 are 90.0 UF monthly for pension, health, and occupational accident contributions, and 135.2 UF for unemployment insurance. Since UF is an indexed unit, the peso equivalent shifts month to month, so payroll must apply the current conversion.

Income tax is progressive and withheld monthly, with rates from 4% to 40% depending on the band, calculated on remuneration net of the employee's pension and health deductions. Thresholds move with the monthly UTM, so each payroll month uses its own table rather than a prior month's figures.

The monthly minimum wage is CLP 553,553 for standard adult workers (from May 2026), with a separate lower rate for workers under 18 or over 65. Overtime, where agreed in writing for temporary business needs, carries at least a 50% premium on top of ordinary pay.

Employ Latam handles the monthly contribution filings, tax withholding, and gratification calculation as part of payroll, and keeps the payslip and contribution records available for the employer to verify.

Chile's Labour Code sets specific rules for how employment ends, and the route matters. Resignation, mutual agreement, fixed-term expiry, serious misconduct, and employer business needs are all separate legal grounds, each with its own procedure. There is no general probation period that exempts a new hire from these rules: the standard termination framework applies from day one.

For dismissal based on the employer's business needs (article 161), the employer owes at least 30 days' written notice, with a copy to the labour authority, or payment in lieu of notice. Where the employee has completed at least one year of service, service compensation is also due: 30 days of the last monthly remuneration per year of service, including a fraction exceeding six months, capped at 330 days. The monthly calculation base is generally capped at 90 UF, with separate rules for variable pay. This service compensation is distinct from notice pay and from any accrued, unused leave, which must also be settled.

Resignation by the employee requires at least 30 days' written notice, following the required signature or ratification formalities.

Employers should not assume these figures apply uniformly to every exit. Fixed-term contract expiry, genuine project-contract completion, and dismissal for serious misconduct each follow different rules and cost calculations. A genuine project contract lasting at least a month, for example, carries a completion compensation of 2.5 days of remuneration per month worked, not the standard annual-service formula.

Certain employees carry statutory protection that limits or blocks a business-needs dismissal outright. Pregnancy protection generally runs from conception until one year after maternity leave ends. Employees on qualifying medical leave also have restricted exposure to this type of dismissal. Terminating a protected employee without the required court authorization exposes the employer to real legal risk, so this status needs to be checked before notice is issued.

The final settlement, covering unpaid earnings, applicable gratification, accrued leave, and the relevant termination payment, must generally be made available within ten working days of separation, along with a written settlement statement.

Employ Latam handles the termination process as the employer of record: confirming the lawful ground, calculating notice and severance correctly, and processing the final settlement on the required timeline.