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Know Before You Grow:
Updates to Employment Legislation in Chile

By July 31, 2019 August 9th, 2019 No Comments
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Chile has much to offer businesses considering a global expansion. Not only is it the Chilean government’s official policy to actively seek out foreign investment, but the country is also acclaimed for its free trade policies with virtually zero barriers. Many organizations are also pleased to find out that taxes in Chile are neutral, meaning that entities with foreign investment are subject to the same tax system applicable to resident businesses.

Coupled with the fact that its economy is internationally seen as one of the most stable, open, and competitive in all of Latin America, Chile is drawing companies from all over the globe. But before organizations move into the pais de poetas, they’ll need a high-level understanding of employment legislation in Chile.

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Employment Legislation in Chile: Contracts, Holiday Pay, and Dismissal

One of the most important things to understand about employment legislation in Chile is that it maintains a country-wide policy that employers have a written contract in place within 15 days of an employee beginning work for their organization. If the contract itself is less than 30 days in length, that time limit drops to just five days.

In terms of holiday pay, it’s also essential for employers to know that their employees are entitled to 15 days of paid leave per year following just a single year of employment. If someone stays in the same position for ten years, that number climbs even higher. Note that this means that employees are expected to receive their full, normal pay during this leave period.

With regards to employee dismissal, Chilean employment legislation states that, those in certain positions—namely managerial roles—can be dismissed “at will.” This of course means that employers can fire workers without necessarily being required to provide any facts to support their decision. The catch, however, is that if the employee in question was employed for more than one year, the employer must make a compensatory payment.

Maximum Work Days and Minimum Wage in Chile

Employment legislation in Chile specifies a maximum working week of 45 hours, with absolutely no more than two hours of overtime per “work day.” Interestingly, this law also covers part-time work and is indeed part of how Chile has developed its reputation of being very pro-worker’s rights over the last few years.

Chile does have a very precise minimum wage law, and that number is adjusted every year during the month of July. Right now, the current minimum wage is 282,000CLP, or roughly the equivalent of 402USD. This is for a full-time employee. Part-time employee minimum wage will essentially be a proportional amount of the work they’re doing and the length of time they spend on the job.

Break into the Chilean Market with an Experienced Expansion Partner

Whether an organization chooses to expand into Chile or elsewhere around the globe, ensuring alignment with local employment legislation is key. Indeed, this is one of the many reasons why a growing number of businesses choose to partner with an International Professional Employer Organization (PEO) like Velocity Global. Through our International PEO solution, Velocity Global has helped hundreds of companies expand overseas. And, with capabilities in more than 185 countries, we can assist your organization when expanding into virtually any country.

If you’d like more information about employment legislation in Chile, or if you have any additional questions about how Velocity Global can help you break into new international markets in as few as 48 hours, reach out to us today.