Employer of Record Guide in 

Chile

Vacation Leave

• Standard Entitlement: 15 working days of paid vacation after 12 months of continuous employment
• Progressive Increase: One additional day for every 3 years of service (maximum 20 days)
• Vacation Bonus: Employees receive 50% additional salary when taking vacation
• Payout Rules: Unused vacation must be paid out on termination

Sick Leave

• Medical Leave: Paid sick leave through social security (FONASA or ISAPRE)
• Coverage: Up to 100% of salary depending on the medical condition
• Duration: Varies based on medical certification and condition severity
• Employer Responsibility: First 3 days may be employer-funded in some cases

Maternity Leave

• Prenatal Leave: 6 weeks before expected due date
• Postnatal Leave: 12 weeks after birth
• Total Duration: 18 weeks of paid leave
• Payment: Funded by social security, not the employer
• Job Protection: Position must be held during leave period

Parental Leave

• Paternal Leave: 5 working days for fathers
• Shared Parental Leave: Mothers can transfer up to 6 weeks of postnatal leave to fathers
• Adoption Leave: Same entitlements as biological parents
• Payment: Through social security system

Bereavement Leave

• Duration: 7 calendar days for death of spouse, children, or parents
• Extended Family: 3 days for siblings, grandparents, or grandchildren
• Payment: Employer-funded
• Documentation: Death certificate required

Personal & Family Leave

• Family Emergency: Up to 5 days per year for family emergencies
• Marriage Leave: 5 working days for employee's wedding
• Study Leave: Available for continuing education (unpaid unless specified in contract)

Summary

Termination Types

Termination With Cause (Despido por Causa Justificada):

• No severance required
• Must involve serious misconduct or performance issues
• Requires proper documentation and due process

Termination Without Cause (Despido sin Causa Justificada):

• Allowed with proper notice and severance
• Most common form of termination
• Requires payment of severance compensation

Notice Period Requirements

Chilean law requires written notice for termination:

Employers may pay in lieu of notice.

Severance Pay

Severance compensation varies by reason for termination:

Economic Dismissal:

• 1 month's salary per year of service
• Maximum 11 months' salary
• Minimum 30 days' salary

Unjustified Dismissal:

• 1.5 months' salary per year of service
• Maximum 11 months' salary
• Additional penalties may apply

Probationary Periods

• Standard Period: Up to 6 months for most positions
• Managerial Roles: Up to 12 months for executive positions
• Termination Rights: Either party may terminate without cause during probation with minimal notice

Final Pay Requirements

Employers must provide final payment within 60 days of termination, including:

• Outstanding salary
• Proportional vacation pay
• Severance compensation
• Any other accrued benefits

Anti-Discrimination & Retaliation Laws

Chilean labour law prohibits termination based on:

• Pregnancy or maternity
• Union membership or activities
• Filing labour complaints
• Discrimination based on protected characteristics

Violations can result in additional compensation and legal penalties.

National Public Holidays

Chile observes the following national holidays:

Regional Variations

Some regions may observe additional local holidays or patron saint days, but these are typically not mandatory for private employers.

Holiday Pay Rules

• Employees receive regular salary for public holidays
• If required to work on a public holiday, employees receive double pay
• Holidays falling on weekends are typically moved to the following Monday

Religious Observances

Chile respects religious diversity, and employers should accommodate reasonable requests for religious observances, though specific days may not be statutory holidays.

Required Documents for Employment

• Employment Contract: Must include salary, working hours, job description, and termination clauses
• RUT (Tax ID): Chilean tax identification number required for all employees
• Work Visa: Foreign employees need appropriate work authorization
• Health Certificate: May be required for certain positions
• Educational Certificates: Verification of qualifications may be necessary

Work Authorization Requirements

Foreign nationals need proper work authorization:

• Work Visa: Required before starting employment
• Temporary Residence: For longer-term employment
• Professional Visa: For skilled workers with job offers

Background Checks & References

• Criminal Background: Permitted for relevant positions
• Employment Verification: Standard practice
• Educational Verification: Common for professional roles
• Credit Checks: Limited to financial positions

Data Protection & Privacy

Chilean data protection laws require:

• Employee consent for data collection
• Secure storage of personal information
• Limited use of personal data for employment purposes
• Right to access and correct personal information

IP Assignment & Confidentiality

• Intellectual Property: Work-related IP typically belongs to employer
• Confidentiality Clauses: Standard in employment contracts
• Non-Compete: Limited enforceability, must be reasonable in scope and duration

Probation Period Setup

• Probationary periods must be clearly stated in the employment contract
• Performance expectations should be documented
• Regular feedback during probation is recommended

Onboarding Timeline (Sample)

What the EOR Handles

Borderless AI will handle:

• Employment contract preparation
• Tax and social security registration
• Compliance with Chilean labour law
• Payroll processing and contributions
• Local legal representation

Worker Classification: Employee vs Contractor

Chilean law strictly distinguishes between employees and independent contractors:

• Employees: Work under employer control, receive benefits, and are protected by labour law
• Contractors: Provide services independently, issue invoices, and handle their own taxes
• Misclassification Risks: Can result in back payments, penalties, and legal liability

The Chilean Labour Directorate evaluates classification based on subordination, exclusivity, and economic dependence.

Unionization & Collective Agreements

Chile has strong union traditions:

• Employees have the right to form and join unions
• Collective bargaining is protected by law
• Strikes are legal under specific conditions
• Employers must negotiate in good faith with recognized unions

Cultural Norms & Workplace Expectations

Chilean workplace culture emphasizes:

• Respect and Hierarchy: Formal communication with superiors
• Work-Life Balance: Family time is highly valued
• Personal Relationships: Building trust through personal connections
• Punctuality: Expected for meetings and deadlines

Remote Work Considerations

Chile has embraced remote work, especially post-pandemic:

• Legal Framework: Remote work is regulated under Chilean labour law
• Equipment: Employers typically provide necessary tools
• Health and Safety: Employers remain responsible for workplace safety
• Tax Implications: May affect tax treatment depending on employee location

Seasonal Considerations

• Summer Holidays: Many businesses reduce operations in January-February
• Independence Day: September celebrations significantly impact business operations
• Year-End: December bonuses and vacation time affect cash flow planning

Note: Please verify all information above is accurate for Chilean employment law, as the research provided contained some discrepancies regarding the country focus.