Employer of Record in Chile

Chile’s Labour Code does not include a probationary period outside of two weeks provided for domestic workers. Either party may terminate the employment contract during this window if they give a three-day notice and the employer pays the employee for the time served.

In practice, many Chilean companies implement a de-facto probationary period by offering employees an initial fixed-term agreement. If the employee demonstrates sufficient value by the end of this fixed-term period, the employer will offer the employee an indefinite contract. Otherwise, the employer will not renew a contractual agreement with the employee.

Employers and employees usually outline bonus structures in employment contracts.

Chile also has a government-mandated bonus program known as Legal Gratification. Through this system, employers must share profits with every employee. Legal Gratification comprises 25% of the employee’s base salary but cannot exceed 4.75 times the Chilean minimum wage.

Chilean employers commonly adjust the base salary they offer employees to account for Legal Gratification.

Employers must have a valid reason to dismiss an employee. Examples of valid reasons include circumstances related to the market or overall economy, a company’s overall business performance, or a company’s need to restructure its organization or reallocate resources.

Employers must dismiss employees with a formal termination letter, delivered personally or by certified mail, within three days of the termination.

Employers must give an employee 30 days’ notice before dismissal or pay the employee wages or salaries equivalent to 30 days of work.

Employers are exempt from providing a 30-day notice of dismissal or corresponding payments if the employee has engaged in:

• Dishonest conduct
• Sexual, labour, verbal, or employment harassment
• Physical assault
• Immoral behavior
• Activities that violate the employment contract

Employers are responsible for providing severance pay to dismissed employees at the rate of one month of pay for every year an employee has worked for the company. Employers will not have to pay more than 11 months of severance pay to an employee, regardless of how many years that employee has worked for the company.

• Male employees can take five days paid leave preceding or following the birth or adoption of a child. Employees must take their leave in the month during or following childbirth or adoption.
• Either parent can request leave to take care of a child under one year old, provided the parent can provide a medical certificate outlining the need for care. The employee on leave is due his or her salary while away from work. The employee’s health insurance provider is responsible for this payment.
• Parents of children between one and 18 years of age are entitled to leave if their child has cancer, has suffered a severe accident, has been diagnosed with a terminal illness, or is undergoing organ or bone marrow transplants. The time extent of the leave depends on the specific circumstances the child is facing.

• Chile’s Labour Code guarantees employees 15 days of vacation each year.
• Once an employee has logged 10 years of work for any number of employers, that employee earns one additional vacation day for every three years spent with his or her current employer.
• Employees must obtain consent from employers regarding when they take their leave

• There is no limit to the amount of sick leave an employee can take in a given year. To be eligible for sick leave, an employee must have documentation from a doctor.
• Employees are entitled to normal pay during their sick leave, which is to be paid by the employee’s health insurance.
• If an employee takes sick leave due to a work-related accident, the employee is entitled to normal pay from a special entity that oversees workplace accident coverage.