Global HR Compliance in Сhile
Understanding Chilean labour legislation is crucial for companies planning to hire internationally. This guide provides a thorough overview of the essential aspects of compliant employment practices in Chile.
Expanding Your Business into Chile
- Market Entry Strategy: When entering the Chilean market, the foremost consideration is the strategy for hiring local nationals.
- Local Employment Insights: Navigating the nuances of Chilean labour laws is critical to ensure successful and lawful operations.
Global Employer of Record Service in Chile
- Outsourcing Global Employment: Our Global Employer of Record (EOR) service simplifies the management of your international workforce by outsourcing employment responsibilities to our organization.
- Comprehensive Support: We manage the employment of your global sales force in Chile and over 180 other countries, handling payroll, benefits, and business expenses.
Advantages of Our EOR Solution
- Compliance with Local Legislation: Our service guarantees full compliance with Chilean labour laws, protecting your business from potential legal issues related to non-compliance and employee misclassification.
- Risk Management: As your Employer of Record, we assume all employment-related risks, allowing you to focus purely on your business development.
- Operational Efficiency: By leveraging our infrastructure in Chile, you avoid the complexities of setting up local entities, thus reducing overhead costs and administrative burdens.
Benefits of Using Our Services
- Focus on Core Business: Similar to employing in-house talent, our service allows you to concentrate on global business development while we manage your global HR operations.
- Long-Term Employee Engagement: Employees hired through our service are more likely to remain with your company longer than independent foreign sales representatives, providing stability and consistency.
- Tailored Global Employment Solutions: We offer customized labour solutions that are legally compliant and specifically designed to meet your business’s unique needs.
Expertise in Local Employment
- Local and Global Knowledge: Our team of English-speaking professionals is equipped to handle all aspects of employment management, ensuring that your workforce meets all local tax, social security, and immigration requirements in Chile.
- 24/7 Assistance: Acumen International operates around the clock, ready to support your needs across different time zones.
Our commitment to providing a single-provider solution for global workforce employment in Chile simplifies your international operations. We ensure that your business meets all local requirements, allowing you to expand globally with confidence.
Global Payroll Calculator – Your Precision Tool for Global Employment Cost Analysis
The Global Payroll Calculator (GPC) offers a sophisticated solution for instantly calculating employment costs across 190 countries, streamlining your global hiring strategy and ensuring cost-effective decisions.
Key Features & Benefits
- Instant Cost Calculations: Quickly determine total employment costs, factoring in real-time tax rates and benefits for local and foreign talent in 190 countries.
- Precision & Clarity: Achieve precise payroll calculations with detailed breakdowns of all payroll variables, ensuring transparency and preventing unexpected costs.
- Cross-Country Comparisons: Utilise GPC’s capability to perform instant comparisons between countries, helping you identify the most advantageous locations for hiring.
Core Capabilities
- Total Employment Cost Analysis:
- Monthly and yearly costs.
- Gross-to-net and net-to-gross calculations.
- Detailed breakdowns, including employer liability and employee taxes.
- Full Tax Breakdown:
- Comprehensive coverage of social contributions, personal income tax, and automated tax caps.
- Employer and employee tax splits with allowances and holiday entitlements.
- Built-in Compliance:
- Ongoing validation against trusted government sources.
- Updates in real-time to reflect the latest tax and labour laws.
Advantages of Global Payroll Calculator for Employers
- For Employers:
- Manage complex global payroll budgets effectively.
- Identify tax-friendly, cost-effective global talent hotspots.
- Ensure compliance with international regulations to avoid legal issues.
- For Agencies:
- Overcome data complexity and reduce proposal inefficiency.
- Navigate global compliance challenges, enhancing accuracy and reputational trust.
Unique Solutions for Global Expansion Challenges
- Express Global Employment Support: Backed by 20+ years of expertise, GPC is integrated with global EOR solutions to support your international workforce management.
- Robust Methodology: Standardises diverse data into a clear, unified format, enhancing decision-making clarity across multiple jurisdictions.
With Global Payroll Calculator, you gain a powerful tool at your fingertips, designed to optimise your global employment strategies and ensure that your international operations are cost-effective and compliant. Enjoy a free trial to experience firsthand how GPC can transform your global payroll processes.
Hiring and Firing in Chile Guide
Chile stands out among South American countries for its active foreign trade, solid financial institutions, sound policy, and social protection. Should Chile be your business destination, here are some insights on your Chilean staff onboarding.
Types of Employment Agreements in Chile
Types of employment agreements
- Permanent employment contracts
- Casual employment contracts
- Fixed-term contracts
The parties may either agree on an indefinite contract or place limits on terms (to the completion of a particular job to be performed by the employee or else agree on a fixed period of time). In this last case, the contract’s term cannot exceed one year or two years in the case of managers, professionals and technicians.
However, local law allows term extension (which cannot surpass the overall time previously mentioned). If the employee continues rendering services for the same employer after the contract term’s expiration, it will automatically become indefinite.
Employment Termination and Severance Pay in Chile
The Labor Code establishes provisions regarding the termination of the labour contract and employment stability. Under this statute, the labour contract may only be terminated by agreement of both employer and employee, by the employee’s resignation, by the employee’s death, by the expiry of the fixed term agreed upon in the contract, by the completion of the work for which the employee was hired, by an act of God or circumstances beyond the control of the parties (force majeure), and upon dismissal by the employer.
The employment contract may be terminated by the employer on the grounds of business necessity, such as those arising from the rationalization and modernization of the business, low productivity, changes in market conditions or the economy that make it necessary to dismiss one or more workers. However, the employment contracts of employees who have the power to represent their employer (such as managers, deputy managers, agents or attorneys of the law), or who have been granted general powers of management may be terminated without invoking any cause.
Notice Period in Chile
When the relationship is terminated for reasons associated with the needs of the company, the employer must inform the employee in writing about the termination of the contract one month in advance unless the employer pays compensation equivalent to 30 days of work.
The period of notice or payment of compensation is not required if the employer invokes the grounds for termination set forth in the Labor Code in Chile, including gross misconduct or dishonesty and other serious violations of the contract as described above.
If the termination occurs based on the needs of the company or the reasons set forth in the Labor Code, or without invoking any cause, the employer must personally or by certified mail send the employee a written notice informing them of the termination of the employment contract.
The employer must indicate in the notice the grounds invoked and the facts on which the termination of the contract is based.
Severance Payments Overview
When an employment relationship is terminated either due to business needs or without a specific reason cited, severance payments are required under certain conditions. Here’s a breakdown of how these payments are calculated and what limits apply according to the type of employment contract.
General Calculation of Severance Payments
- Basis of Calculation: Employees are entitled to one month’s salary for each year of service.
- Limitations:
- The total severance pay cannot exceed the equivalent of 11 months’ salary.
- The base salary used for calculating severance must not exceed 90 inflation-indexed units.
Specifics Based on Contract Type
- Open-Ended Contracts: The general calculation applies as detailed above.
- Fixed-Term Contracts:
- Compensation equals the remaining salary due until the contractual end date, capped at one year’s salary.
- For professionals, this cap may be extended to up to two years.
Considerations at Termination
- Inclusions: When calculating severance, all financial compensations received by the employee as of the termination date are considered. This includes social security contributions, bonuses, and other monetary benefits.
- Exclusions: Intermittent benefits that the employee receives sporadically are not included in the severance calculation.
Exceptions to Severance Payments
- Certain scenarios outlined in Chilean law permit the employer to terminate the employment without the need to pay severance. One such example is the breach of employment contract terms by the employee.
Understanding these guidelines is crucial for employers and employees to ensure compliance with Chilean labour laws and ascertain employment termination’s financial implications.
Employee Benefits and Contributions
The Social Security system covers all employees, including independent employees. The latter are legally obliged to contribute to mandatory insurance that covers old age, disability and survivorship insurance. In the case of foreign employees, as a general rule, they must also pay social security contributions, as indicated above.
Probationary Period in Chile
The Labor Code does not provide for a probationary period except in the case of domestic workers, who may have a probationary period of two weeks at the outset of employment.
Overtime in Chile
All employees who are not excluded from the ordinary workday limits (discussed in the previous title) are entitled to overtime pay. This payment is calculated at 1.5 times the hourly wage for ordinary work. An employee can work a maximum of two overtime hours per day.
Working Hours
The Labor Code provides a maximum work schedule of 45 hours per week, distributed over no more than six and no fewer than five days. The following types of employees may be excluded from the general hours of work requirement:
- Managers, administrators, legal representatives with administrative powers, and all those who work without direct supervision.
- Workers hired to provide services from their own homes or in a place freely chosen by them and
- Agents, brokers and insurance agents, travelling salesmen, collectors and similar workers who do not exercise their functions on-site at the employer’s establishment.
In all other cases, an employee cannot choose to be excluded from those restrictions or limitations.
Annual Leave
Employees who have worked for more than one year have the right to an annual vacation of 15 working days. After working ten years, continuously or not, for the same or different employers, vacations are extended by one working day for every three years of service.
In the case of employees who work in the 11th and 12th Regions of the country and the province of Palena, the basic vacation period is 20 days.
During the period of time in which an employee is engaged in military service, the employer must maintain the employee’s work without pay.
Sick Leave
During the sick leave period, the employee will receive a wage equivalent to the amount paid by its health insurance. Absences for work-related accidents will be paid by a special entity called “Mutual Security”. If an employee is sick for more than 10 days, they are not entitled to sick pay for the first three days they were out.
However, if they are out for less than 10 days, they are paid from the first day. There are no set time limits for sick leave. The employer suspends payment of remuneration, and the employee instead receives compensation from the relevant health insurance institution but is subject to the monthly caps on remunerations used to calculate the social security contributions.
Parental Leave
Maternity Leave
Employees are entitled to paid maternity leave from six weeks before birth (prenatal maternity leave) and continuing 12 weeks after birth (maternity leave after delivery). Moreover, there is an additional 12-week “allowance” immediately after the completion of maternity leave after delivery, during which workers receive the same subsidy as prenatal and postnatal leave.
The employees can choose between this allowance and working half of their normal working hours for 18 weeks (part-time). If they choose the latter, they are entitled to receive 50% of their salary and all their variable compensation (e.g., commissions). An employee can also decide to transfer this allowance under the same alternative chosen for the child’s father, beginning on the seventh day of the week. The additional allowance mentioned above shall also apply to one of the parents (mother or father) of an adopted child.
Adoption: If an employee adopts a child under the age of six months, the employee is entitled to 12 weeks of maternity or paternity leave.
Paternity leave
Workers are entitled to five working days of leave, which they can use as they wish during the month following the birth. This paid leave is also granted in the case of a child’s adoption.
Adoption: If an employee adopts a child under the age of six months, the employee is entitled to 12 weeks of maternity or paternity leave.
Acumen International can help you fast-track your possibilities of entering and expanding your business in Chile by providing you with an Employer of Record solutions that allow you to jumpstart your global operations almost immediately, cost-effectively and compliantly.