Employer of Record Chile

Employer of Record Chile

Infotree Global Solutions assists organizations planning for expansion in Chile by providing employer of record services in Chile. If you wish to recruit professionals in Chile, you can easily accomplish it with us without even having an establishment in Chile. Our team of dedicated professionals would take up all the recruitment and payroll management responsibilities for your organization. From searching for ideal employees to hiring and onboarding them, we take every step on your behalf in total compliance.

Table of Contents

Hiring In Chile

Operating business in Chile has its fair share of challenges. Having connections is required to secure business deals in a few areas of the Chilean economy. Being punctual is not necessary but imparts your business etiquette. It is important to establish a strong relationship with the local business associates. Another crucial factor includes following up on the agreements to meet the timeline.  While offering employment to a candidate, it is vital to state every detail carefully. The salary offered should be mentioned as a gross or net annual salary. It is a common practice in Chile to negotiate salaries in NET on monthly terms. If you are considering an employer of record, it will help you understand that employers need to be attentive towards negotiating terms of employment and everything should be clearly stated in the contract or offer letter.

Employment Compliance

Having a strong employment contract is a mandate in Chile. It should clearly state the compensation details of an employee including benefits, bonuses, and termination. The amount should be mentioned in pesos instead of a foreign currency. As your employer of record in Chile, we guide you on every step to understand employment compliance.

Working hours

  • A normal workweek in Chile is 45 hours with standard working hours from morning till evening
  • Workers are not encouraged to work on Sundays excluding exceptions
  • An employee’s normal workday should not exceed 10 hours along with two hours of overtime
  • Employees exceeding the aforesaid limits are eligible for 150% pay for their efforts in overtime hours

Compensation – Compensation in Chile depends on the age bracket an employee falls in. For employees between the 18 to 65 age group, the monthly minimum wage is settled as 320,500 Chilean pesos (about USD 375). For the mentioned age group, the monthly salary is 239,085 Chilean pesos (about USD 302).

Bonus – Both parties often outline bonus structures in the offer letter or employment contracts. In Chile, a bonus program called Legal Gratification mandated by the government is followed where employers are required to follow profit-sharing. An employer of record helps you understand the program that consists of 25% of the worker’s base salary and has an exceeded limit of 4.75 times the Chilean minimum wage. Chilean employers can adjust the base salary to account for this bonus system.

Probationary period – According to Chile’s Labor Code, two weeks is considered a probationary period for domestic workers. Any party may end the employment during this window with a three-day notice or the employer has to pay the candidate for the time invested. However, many Chilean organizations implement a de-facto probationary period where they offer all the employees an initial fixed-term agreement.

Termination and severance – Employment contracts in Chile usually have a termination clause stating the procedure. Employers are required to include a social security document along with the termination letter. It is mandated for employers to pay severance pay during termination. The compensation should be equal to one month’s pay for every year of service. In calculating severance, the monthly amount cannot exceed 90 UF (US$3,571). However, this limit can be waived depending on the mutual consideration of both parties, and hiring a Chile employer of record can save time and effort.

Employee Entitlements

Building a benefits system for your team is complicated if you are not aware of the employment laws. It may require several weeks to set up everything independently. However, outsourcing an employer of record Chile ensures complete adherence to the compliance and rules. Besides, it also helps in speeding up the process by providing your insight into the different entitlements for employees.

Maternity leaves – In Chile, employees are entitled to avail of 6 weeks’ leave for maternity including before and after childbirth. Besides, parental leave may also be granted if the new mother wants. Employees are eligible for a subsidy during leaves. It is less than a worker’s salary and companies can decide to make up the difference. However, the employee’s job is secured for one year after the completion of maternity leaves.

Sick leave – Employees can take sick leave by presenting medical proof to the employer within two working days. The employer can forward the medical leave document to the health insurance department within 3 working days to get paid for sick leave. However, it may be subjected to caps.

Vacation – Employees who have worked for more than one year are entitled to have 15 paid working days every year. Ten days’ leaves can be availed consecutively, and the remaining 5 are based on the mutual consent of both parties. Vacation time can be granted for up to 2 consecutive years. Employers may offer the statutory minimum. Having associated with a Chile employer of record can help you gain a clear understanding of the same.

Pension Benefits – In 1980, Chile shifted from a government-run pension program to a private pension system that is fed by workers’ contributions. According to this, 10% of the monthly salary has to be for pension. However, part of the earnings that exceed US$2,800 (60 Chilean Unit of Account) is considered non-contributory.

Health Benefits – Employees are required to pay for “Isapres’, which is a private health insurance scheme and the employer can withhold up to a ceiling of around USD 214 pre-tax monthly. Any extra amount offered towards health insurance is supplemental. The employer holds the right to compensate the worker via a taxable bonus for the difference.

Paternity Leaves – Fathers can avail up to 5 continuous working days of leaves once the child is born. They can also share the parental leave which can be up to 6 weeks of full-time leave or is equal to 12 weeks of part-time leaves.

Payroll Tax in Chile

While setting up payrolls in the country, you must understand the local regulations governing payroll taxes. In Chile, tax laws are more complex and harder to understand. However, partnering with an employer of record Chile can help in removing all the doubts. Most social security costs are held back from the employee than simply paid by the employer. Employer taxes above the labor costs are quite equitable for employers in Chile.

Employees are needed to contribute a part of their incomes to:

  • Pension contribution- 10% of salary
  • Health insurance fund- 7%
  • Life insurance – 2.84% to 3.4%
  • Unemployment insurance fund-0.6%

Employers are entitled to contribute to funds for work-associated accidents and sickness. It may vary from 0.9% to 4.4% of payroll, which depends on the firm’s domain. Employers must also need to pay 2.4% to the unemployment fund. As your employer of record in Chile, we can provide you with resources and insights about payroll tax in Chile.

Challenges When Expanding into Chile

According to the World Economic Forum, Chile ranks 55th globally for ease of starting a business. It is mandated for companies operating a business in Chile to make 15 tax payments every year. It is a time-consuming and detail-oriented process. Both employment taxes, as well as VAT (value-added tax), need an average of 124 hours to accomplish annually. Partnering with a Chile employer of record can prepare you to overcome the challenges.

Though the Chilean government follows a business-friendly approach yet legal bureaucracy cannot be avoided. It includes acquiring a construction permit that involves 12 steps and more than 100 days for completion. In Chile, companies have an average recovery rate of about 42 cents on the dollar and OECD high-income countries average above 70 cents on the dollar. In addition, companies are required to invest more time and cost to resolve insolvency than other high-income countries. Therefore, it is recommended to consider hiring the best employer of record in Chile to sail through the process in a hassle-free manner.

Benefits of Chile Employer of Record

To simplify your expansion process let Infotree Global assist you to deal with all the complexities. Be it hiring employees or distributing payroll or taking care of expenses, we are there to assist you at every step. Partner with us and start your global business without worries.

Market Access – Relying on the professional expertise of an Employer of Record is the best way to enter an unknown market quickly. By using EOR services, an international organization can avail the expertise of a Chilean employee to work for its company. Besides quick access to the Chile market, the employer of record also enables the client to ease off worries related to payroll and HR.

In Country Laws – It is hard to ignore the importance of regulations and compliance in a foreign country. If you are operating a business in Chile, you need to be well aware of the payroll and taxation rules. With Chile Employer of Record services, a company can hire a foreign individual or local employees and deal with the complexities of the country’s rules. Be it income tax, social security contribution, expanse management, withholding charges, or business tax, an EOR/PEO takes care of it all with total compliance.

Diverse Solutions – No matter whether you already have a company in an international location or you are going to establish the one, an employer of record can help you significantly. The EOR Company can hire staff on your behalf without having the need of setting up a subsidiary in Chile. If your firm is already operating, using EOR for managing payroll tasks can be a great idea as they can present an effective solution to tax and accounting responsibilities in the country.

Why Infotree Global Solutions?

Infotree Global is dedicated to providing professional assistance to help you set up business in Chile. We provide the support of our in-country team of professionals to undertake all the legal formalities associated with employment in Chile and help you stay compliant with country’s labor laws. Owing to our rich industry experience, we help you hire the most talented individuals for your company and embrace all the payroll-related jobs. Thus, we help you save time without worrying about legal hassles so that you can stay focused on your expansion endeavors. With our global payroll and employer of record solutions, you can experience professional assistance at every step and expand your business without worrying about legal complexities.

Make the most of our professional services and overcome the challenges associated with international hiring. If you want to hire our Chile Employer of Record and need assistance, connect with us!

How Can we help You?

Contact Us at Infotree office nearest to You or submit a business inquiry online.

Let's Discuss Your Project Now