The Republic of Chile is a country in western South America. It shares land borders with Peru, Bolivia, Argentina, and the Drake Passage in the far south. It is a long, narrow country with an average width of about 177 km. Chile is a high-income developing country that ranks 43rd on the Human Development Index. It is one of South America’s most economically and socially stable countries, ranking first in Latin America in competitiveness, per capita income, globalization, peace, and economic freedom.
*Please note that the official currency is the currency of remuneration when employed through WorkMotion in Chile.
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Fast-track your talent onboarding while ensuring 100% compliance with local regulations. using an Employer of Record in Chile
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The Republic of Chile is a country in western South America. It shares land borders with Peru, Bolivia, Argentina, and the Drake Passage in the far south. It is a long, narrow country with an average width of about 177 km. Chile is a high-income developing country that ranks 43rd on the Human Development Index. It is one of South America’s most economically and socially stable countries, ranking first in Latin America in competitiveness, per capita income, globalization, peace, and economic freedom.
*Please note that the official currency is the currency of remuneration when employed through WorkMotion in Chile.
The national holidays mentioned below are valid for the year 2026 and are critical for hiring in Chile planning:
The holidays mentioned below are valid for the year 2026.
| January 1 | New Year's Day | |
| April 3 | Good Friday | Movable |
| April 4 | Holy Saturday | Movable |
| May 1 | Labor Day | |
| May 21 | Naval Glories Day | |
| June 20 | National Day of the Indigenous Peoples in Chile | |
| June 29 | The Feast of Saints Peter and Paul | |
| July 16 | The Feast of Our Lady of Mount Carmel | |
| August 15 | Assumption of Mary | |
| September 18 | Independence Day | |
| September 19 | The Day of the Glories of the Army | |
| October 12 | Day of the Races | |
| October 31 | National Day of the Evangelical and Protestant Churches | |
| November 1 | All Saints' Day | |
| December 8 | The Feast of the Immaculate Conception | |
| December 25 | Christmas Day |
The approximate time for sharing the contract with an employee in Chile is 14 business days assuming no special requests or changes to our standard employment contract. Any such requests or changes would need to undergo internal and external review, directly leading to a time delay.
NOTE: This number is subject to change and is only an estimation of the Contract Sharing Time. The estimated Contract Sharing Time begins from the moment that WorkMotion has received all required information from both the client and the employee.
All employees are covered by the Social Security system. Employees are required by law to contribute to a mandatory insurance program that covers old age, disability, and survivorship. Foreign employees are generally required to pay social security contributions, though certain exceptions may apply.
An overview of the contributions towards Social Security is presented below:
|
Benefits |
Employer Contributions |
Employee Contributions |
Cap |
|---|---|---|---|
|
Pension Fund System |
– |
10% |
|
|
Health Insurance |
– |
7% |
|
|
Unemployment Insurance |
2.4% |
0.6%* |
131.9 UF |
|
Mutual ACHS (Occupational Accidents |
0.93% |
– |
87.8 UF* |
|
Disability Insurance (SIS) |
1.38% |
The maximum ordinary working hours per week is 45 hours, divided into five or six days. Standard working hours are usually 9 hours per day, from Monday to Friday.
Work contracts with a part-time working day may be agreed upon, taking into account those with a working day that does not exceed two-thirds of an ordinary working day.
Extraordinary working hours are those that exceed the legal maximum or, if less, the contractually agreed maximum. Overtime is limited to two hours per day or 10 hours per week.
Overtime is paid at a 50% surcharge on the regular day’s salary and must be settled and paid in conjunction with the regular remuneration for the respective period.
Chilean companies typically use fixed-term agreements as a probationary period, which often lasts 12 months.
An employer must give at least 30 days’ notice before terminating an employee. The notice period is frequently waived, and payment is made in lieu. The payment cannot exceed 90 inflation-indexed units (UFs). During this time, either party may terminate the employment contract with three days’ notice, paying the employer for the time served.
The maximum ordinary working hours per week is 45 hours, divided into five or six days. Standard working hours are usually 9 hours per day, from Monday to Friday.
Work contracts with a part-time working day may be agreed upon, taking into account those with a working day that does not exceed two-thirds of an ordinary working day.
Extraordinary working hours are those that exceed the legal maximum or, if less, the contractually agreed maximum. Overtime is limited to two hours per day or 10 hours per week.
Overtime is paid at a 50% surcharge on the regular day’s salary and must be settled and paid in conjunction with the regular remuneration for the respective period.
Chilean companies typically use fixed-term agreements as a probationary period, which often lasts 12 months.
An employer must give at least 30 days’ notice before terminating an employee. The notice period is frequently waived, and payment is made in lieu. The payment cannot exceed 90 inflation-indexed units (UFs). During this time, either party may terminate the employment contract with three days’ notice, paying the employer for the time served.
All employees are covered by the Social Security system. Employees are required by law to contribute to a mandatory insurance program that covers old age, disability, and survivorship. Foreign employees are generally required to pay social security contributions, though certain exceptions may apply.
An overview of the contributions towards Social Security is presented below:
|
Benefits |
Employer Contributions |
Employee Contributions |
Cap |
|---|---|---|---|
|
Pension Fund System |
– |
10% |
|
|
Health Insurance |
– |
7% |
|
|
Unemployment Insurance |
2.4% |
0.6%* |
131.9 UF |
|
Mutual ACHS (Occupational Accidents |
0.93% |
– |
87.8 UF* |
|
Disability Insurance (SIS) |
1.38% |
WorkMotion operates in Chile through its partner network, giving you access to compliant employment in the country without setting up a local entity.
Here is how the process works from contract to payroll.
Chilean law requires employers to prepare written employment contracts within 15 days of hire, specifying:
WorkMotion generates a locally compliant employment contract in Spanish – the language recommended for inspection purposes under Chilean labor practice – covering all mandatory terms required by the Chilean Labour Code.
The contract reflects whether the role is indefinite-term or fixed-term and captures the correct working-hours framework, including Chile’s ongoing reduction toward a 40-hour workweek.
Employers must register new employees with the social security system immediately upon hiring.
This includes enrollment in:
WorkMotion handles this registration through its partner network in Chile, ensuring the employee is enrolled in the AFP pension fund, their chosen health plan (FONASA or a private ISAPRE), and the unemployment insurance fund (AFC) – from day one of employment.
Employers in Chile are responsible for withholding income tax and social security contributions from employee salaries and submitting these payments to the appropriate authorities on a monthly basis.
Salaries must be paid in Chilean pesos (CLP), and payslips must be issued for every payroll period.
WorkMotion configures payroll in CLP, applies the correct statutory deductions, and processes monthly declarations through Previred – Chile’s social security platform – and the Servicio de Impuestos Internos (SII).
All employees must contribute to Chile’s private pension system (AFP).
Employers are responsible for deducting 10% of an employee’s salary for pension contributions, plus administrative and disability insurance fees.
For employees under indefinite contracts, employers must also contribute 2.4% of the employee’s salary to unemployment insurance.
WorkMotion manages enrollment in all statutory benefit programs and can support supplemental benefits where relevant to the role and market.
Chilean payroll operates under strict regulations set by the Labour Code and the Internal Revenue Service (SII), requiring employers to withhold taxes, remit social contributions to AFP pension funds and health insurance providers, and submit monthly declarations to tax authorities.
WorkMotion runs payroll on a monthly cycle, remits all contributions to the relevant Chilean authorities on time, and provides itemized payslips to employees – covering gross pay, social security contributions, income tax, and net pay.
Chile’s labor landscape is actively evolving.
A major pension reform enacted in March 2025 introduced an 8.5% increase in mandatory employer contributions, with gradual implementation starting August 2025.
Decree 44, effective February 2025, also imposes new preventive management obligations on employers regarding occupational risks and workplace safety.
WorkMotion monitors these regulatory changes and updates employment terms, contribution calculations, and contract conditions accordingly – so your team does not need to track Chilean legislative updates independently.
For most companies hiring one to a handful of employees in Chile, entity setup is not the right starting point. Here is how the two paths compare.
| Factor | WorkMotion EOR | Chile Entity Setup |
|---|---|---|
| Setup cost | Per-employee monthly fee — no incorporation cost | Legal, notarial, and registration fees plus ongoing accounting, local representation, and bank account costs |
| Time to first hire | Days from signed contract | Can be several weeks to months, including obtaining a foreign investor tax ID (RUT), notarizing documents, registering with the SII, and opening a Chilean bank account |
| Ongoing legal exposure | WorkMotion’s partner network assumes employer-of-record obligations under Chilean law | Your entity carries full employer liability — contracts, payroll accuracy, social security compliance, termination procedures |
| Ongoing admin burden | Payroll, contributions, and compliance filings handled by WorkMotion | Monthly SII declarations, Previred filings, payroll management, and statutory record-keeping are managed internally |
| Exit flexibility | Scale down or exit without entity dissolution | Dissolving a Chilean entity requires formal legal and tax procedures |
WorkMotion’s EOR fits companies that:
Traditional company registration suits businesses that have definite long-term expansion plans in Chile and require full operational control.
If your Chile headcount grows significantly and you need industry-specific licenses or want to acquire local assets, setting up an entity is worth evaluating. WorkMotion’s team can help you think through that transition.
Chile’s Labour Code is detailed, and several of its rules catch foreign employers off guard. These are the compliance gaps that come up most often.
Probationary periods are not recognized in Chile.
Businesses accustomed to a standard 90-day trial period often assume the same applies here – it does not. Companies often hire employees on fixed-term contracts for a maximum of 12 months, which can serve as a de facto probationary period before transitioning into a permanent contract.
WorkMotion structures contracts correctly from the outset, using the appropriate contract type for the role and duration.
If the employer fails to provide a written employment contract within 15 days, the law presumes that any work conditions alleged by the employee are valid.
This is a significant exposure for companies that rely on offer letters alone or delay formalizing employment. WorkMotion generates the written contract before the employee’s start date, removing this risk entirely.
At least 85% of a company’s workforce in Chile must be Chilean nationals, unless the company employs fewer than 25 workers. This restriction applies even for global companies and creates limitations when planning international transfers or hiring expat teams.
Foreign employers building out a team in Chile need to track this ratio carefully as headcount grows. WorkMotion flags this threshold and helps clients stay within the legal limits.
Severance pay is mandatory in Chile for qualifying dismissals under the Chilean Labour Code, mainly for terminations based on company needs or employer breach.
Severance pay is one month per year of service, with any partial year longer than six months counting as a full year for this calculation.
Severance must usually be paid at the time you formalize the termination and sign the settlement (finiquito) before a notary, labour inspector, or authorized official.
Companies who underestimate this obligation – or fail to prepare the finiquito correctly – face surcharges of up to 150% of the statutory amount.
WorkMotion manages termination procedures end-to-end, including the finiquito documentation.
A law entered into force in 2024 reducing the weekly working hours progressively — starting at 44 in 2024, 42 hours in 2026, and finally 40 hours in 2028.
Employment contracts that reference a static weekly hours figure without accounting for this reduction schedule may fall out of compliance as the law progresses. WorkMotion updates contract terms in line with each legislative milestone.
The Pension Reform published in March 2025 establishes an increase in mandatory employer contributions amounting to 8.5% of the employee’s taxable remuneration, with gradual entry into force over eight years starting from the fifth month following the law’s publication.
Foreign employers who built their Chile hiring budgets before this reform may be underestimating total employment costs. WorkMotion’s cost calculations reflect the current and phased contribution rates, so your finance team can forecast accurately.
A B2B SaaS company headquartered in Germany or the Netherlands wants to hire a senior software engineer or product manager in Santiago, without opening a Chilean subsidiary.
Chile faced an estimated shortfall of 28,000 cybersecurity and IT professionals in 2024, which means skilled tech talent is available but competitive.
WorkMotion’s EOR in Chile lets these companies move from offer acceptance to payroll in days, not months – keeping them ahead of competitors still navigating entity paperwork.
A UK-based fintech or a US e-commerce company wants a local sales or business development hire in Chile to support regional growth.
Chile ranks first in Latin America for competitiveness and economic freedom, making it a natural first market for companies entering South America.
Rather than incorporating locally for one or two hires, these companies use WorkMotion’s Employer of Record to test the market, hire compliantly, and scale when the business case is proven.
A remote-first company – typically 50 to 300 employees – has a distributed team across Europe and the Americas. They want to hire a marketing lead or customer success manager in Chile because the candidate is exceptional and the time zone works.
WorkMotion handles the employment relationship in Chile through its partner network, so the People team manages the person, not the compliance infrastructure.
You have found the right person in Chile. The question is how quickly and compliantly you can get them started.
WorkMotion handles the employment relationship through its partner network in Chile. There is no entity to set up, no Previred account to open, and no local legal team to retain. Your new hire can be onboarded in days.
To estimate the full cost of employment in Chile — including salary, social security contributions, and the phased pension reform impact — use WorkMotion’s Employment Cost Calculator before your next hiring conversation.
When you are ready to move forward, Book a Demo and speak with a WorkMotion expert about hiring your first – or next – employee in Chile.
WorkMotion provides employer-of-record services in Chile through its partner network rather than a wholly owned local entity. This means your employee is employed through a locally established partner that holds the necessary registrations and operates under Chilean labor law, giving you compliant employment without the need to incorporate locally. The compliance obligations, payroll processing, and statutory benefit enrollment are all managed through this network on your behalf.
Unlike many countries, Chile does not recognize a statutory probationary period – so the standard 90-day trial arrangement that foreign employers often expect does not apply here. A common approach is to use a fixed-term contract for up to 12 months, which provides a defined engagement window before transitioning to an indefinite contract. WorkMotion structures the initial contract to reflect the appropriate contract type for your situation, ensuring you are not inadvertently creating permanent employment obligations from day one.
Employer contributions in Chile include 2.4% of gross salary for unemployment insurance for employees on indefinite contracts, plus contributions to the employee’s chosen health plan. Chile’s Pension Reform, enacted in March 2025, also introduces an additional 8.5% employer contribution to the pension system, phased in over 8 years starting in August 2025. Companies building Chile hiring budgets now need to account for these phased increases.
Severance pay in Chile is mandatory for qualifying dismissals and is calculated at one month’s salary per year of service, with any partial year exceeding six months counted as a full year. The termination must be formalized through a finiquito – a settlement document signed before a notary, labor inspector, or other authorized official – and severance must typically be paid at the time of signing. Employers who fail to follow this process correctly face surcharges of up to 150% of the statutory severance amount, which is why having an experienced EOR in Chile manage terminations end-to-end significantly reduces your legal exposure.
Once the employment contract is signed, WorkMotion can typically onboard a new hire in Chile within days – covering contract generation in Spanish, social security registration across the AFP pension system, health insurance enrollment, and payroll setup in Chilean pesos.
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