Chile PEO Employment Services

Velocity Global’s International PEO (Professional Employer Organization) solution helps your company establish a legal presence in Chile without having to go through the costly and time-consuming entity setup process. Our Chile PEO solution guarantees full compliance, so you conduct business in your new market with speed, efficiency, and the peace of mind that comes with expert support.

By choosing International PEO to streamline your expansion into Chile, you enlist Velocity Global as your Employer of Record. This partnership allows you to maintain full oversight of your supported employees and their day-to-day operations while we take care of all the details necessary to ensure compliance. From global payroll and employee benefits to tax codes and risk mitigation, we handle it all—so you can focus on growing your business.

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Chile Fast Facts

Currency: Chilean Peso
Capital: Santiago
Population: 19.4 million
Economy: $475.9 billion
Top Sectors: Mining, business services, personal services, manufacturing, wholesale and retail trade
National Holidays:

  • New Year’s Day
  • Good Friday
  • Holy Saturday
  • Labour Day
  • Navy Day
  • Our Lady of Mount Carmel
  • Feast of Saints Peter and Paul
  • Assumption
  • National Unity Day
  • Independence Day
  • Army Day
  • Discovery of Two Worlds Day
  • All Saint’s Day
  • Immaculate Conception
  • Christmas Day

Hiring Considerations in Chile

Benefits of hiring in Chile:

  • Chile is the most economically competitive economy in Latin America and the Caribbean, according to the World Economic Forum. Chile’s economic prominence stems from its low inflation rate, low public debt, and competitive and open markets.
  • Chile is renowned for its business-friendly legislation and economic freedom. Only Singapore has more Free Trade Agreements than Chile.
  • Thanks to Chile’s historically stable economy and its continued integration into international markets, Chile holds an A+ credit rating from Fitch.
  • Chile is part of the Pacific Alliance, a Latin American trade bloc that includes Colombia, Mexico, Peru, and 55 observer states. The bloc supports free trade in terms of goods, services, capital, and people, and accounts for about 35% of Latin America’s GDP. Over recent years, the Pacific Alliance has increased integration with Mercosur, South America’s other large trade block. If wholly joined with Mercosur, the Pacific Alliance would nearly double its size, expand its international reach, and vastly increase its economic potential.

Challenges when expanding into Chile:

  • Companies doing business in Chile are required to make a minimum of 15 tax payments per year. Completing these taxes is a time-consuming and detail-intensive process. Both employment taxes and VAT (value-added tax) require an average of 124 hours to complete annually.
  • Despite the Chilean government’s business-friendly approach, legal bureaucracy still exists. Obtaining a construction permit, for example, requires 12 steps and can take 133 days to complete. Meanwhile, Chile ranks only 55th globally in terms of ease of starting a business, according to the World Economic Forum.
  • Chile lags behind other countries in Latin America and across the world in terms of resolving insolvency. In Chile, companies average a recovery rate of about 42 cents on the dollar, while the OECD high-income countries average above 70 cents on the dollar. Additionally, companies must invest more time (an average of two years) and cost (an average of 14.5% of estate value) to resolve insolvency than they would in other OECD high-income countries.

Cultural nuances and must-knows for doing business in Chile:

  • Be patient when conducting business in Chile. The Chilean business world values developing relationships and moving methodically. As is true in several South American countries, Chileans prefer taking their time than feeling pressured to rush.
  • Build relationships from the top down. Senior executives are responsible for making decisions and expect you to deal with them before interacting with more mid-level personnel.
  • Balance formality with warmth. While the Chilean culture is welcoming and expressive, people in the business world tend to be more conservative until you’ve earned their trust.
  • Establish eye contact and shake hands upon initial greeting. Expect your Chilean associates to stand closer to you than do people in other countries. Do not be offended if interrupted by a Chilean colleague–this is a sign of enthusiasm rather than disrespect.
  • Dress formally and conservatively. Chilean men wear suit jackets in all situations, even to lunch or in exceptionally hot temperatures. Women favor dresses or suits. Outside the major cities, the dress code is more relaxed.
  • Be punctual, but do not be surprised or offended if your Chilean peers arrive late. It is common for Chileans to run 15 to 30 minutes late to meetings.

Employment Contracts in Chile

Minimum wages and salaries:

  • For workers between the ages of 18 and 65, the monthly minimum wage is 320,500 Chilean pesos (about $375 USD).
  • For any worker outside of the 18 to 65 age bracket, the monthly minimum wage is 239,085 Chilean pesos (about $302 USD).

Probation periods:

  • Chile’s Labour Code does not include a probationary period outside of a two-week period provided for domestic workers. Either party may terminate the employment contract during this window, as long as 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.

Bonuses:

  • 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 of their organization. Legal Gratification consists of 25% of the employee’s base salary but cannot exceed 4.75 times the Chilean minimum wage.
  • To account for Legal Gratification, Chilean employers commonly adjust the base salary they offer employees.

Termination and severance considerations:

  • 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.

Paid Time Off & Benefits

Maternity leave:

  • Female employees have the right to maternity leave spanning six weeks before childbirth and 12 weeks following delivery.

Paternity leave:

  • 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.

Vacation:

  • 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.

Sick 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.

Payroll

Average workweek hours:

  • Chile’s Labour Code mandates that employees work no more than 45 hours per week. Employees must log these hours over no more than six days and no fewer than five days. Managers, employees with managerial capabilities, and those who work from home or in a location outside the workplace are exempt from these limits.
  • An employee’s ordinary workday cannot exceed 10 hours plus two hours of overtime.

Overtime considerations:

  • Employees who exceed the aforementioned limits are entitled to 150% pay for their overtime hours.

Employer Contributions

Employer Contribution

Burden

Disability and Survival Insurance

1%-1.5%

Unemployment Insurance

2.4%*

Pension

0.95%**

Total

3.35-3.85%

*For fixed-term contracts, employers owe a 3% unemployment contribution.
** Employers must pay an additional pension contribution based on the activity of employment and the company’s level of risk (between 0% and 3.4%).

Choose Velocity Global

Growing your business into Chile presents significant potential for new revenue, clients, and market share. Expanding also brings considerable challenges. That’s why we’re here. Partnering with a global expansion expert like Velocity Global helps you enter Chile efficiently, compliantly, and confidently. From answering questions about local customs and business culture to ensuring you’re up-to-date on the latest legal requirements, we’re with you every step of the way.

When you partner with Velocity Global, we become your Employer of Record. That means we handle all the nuances of your expansion, from employee benefits and payroll management to risk mitigation and ensuring compliance. Through our international PEO solution, you’ll be up-and-running 90% faster and with up to 60% less costs than you would incur by establishing a foreign entity.

Ready to embrace all that expansion into Chile has to offer? Let’s move forward together.

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