Labor Aspects in Chile

Below, we will provide a brief summary of the types of employment contracts that are currently in force in Chile. From UR Global We will answer all your questions.

1. Indefinite Term Employment Contract

This contract has no set deadline and may be terminated by either party following legal procedures.

2. Fixed-Term Employment Contract

Unlike the previous one, this contract establishes a specific period for the employment relationship. That is, a deadline is agreed upon to terminate the employment relationship.

– Its minimum duration is one day and maximum one year.
– The employer has the power to renew or terminate said contract at the end of its term.
– The fixed-term contract becomes indefinite when it is renewed for the second time, that is, when a third document is signed.

3. Contract for Work or Task

This contract is tied to the completion of a specific work or task, not a period of time. This implies that the duration of the contract is subject to the time it takes for the worker to complete a specific task or task. YesIf the tasks or stages of a work or job are successively assigned in separate contracts, the contract is legally considered to be for an indefinite period.
In Chile, there is no trial period.

Cost to the Company

The business cost is equivalent to 6-7% of the worker’s gross salary and includes the costs of insurance provided by the company, which is covered by ACHS, such as accident insurance and the worker’s unemployment insurance.

The corresponding social charges (such as health, pensions and unemployment, etc.) that guarantee coverage are deducted from the worker’s gross salary. They usually represent around 25% of the gross salary.

Remuneration is divided into 12 annual payments and workers have the right to 15 working days of vacation per year. In addition, the equala includes labor advice, with which we will take care of registrations/deregistrations, contracts, payrolls and their payments, among other services.

In each payment, the employer is obliged to deduct a percentage of the worker’s remuneration (Legal Discounts) and transfer these contributions to the corresponding institutions. This guarantees coverage for the worker during the duration of their employment contract and until it remains valid.
Below, we are pleased to offer you a more detailed exposition of the business services in Chile.

Social Security and Pension in Chile: Contributions and Benefits

• Pension contributions for health can be allocated to Fonasa (public health system) or Isapres (private health system).
• For pension contributions, they are quoted in the AFP (Pension Fund Administrator) and Social Security Institute (IPS).
• The employer contributes to Mutual Security, where it pays a part directly and deducts another part from the worker’s salary.
• Likewise, the employer pays directly to the SIS (Disability and Survival Insurance), this is not deducted from workers.
• Unemployment Insurance (economic protection in case of unemployment) in which the employer pays a part directly to the institutions and another part that also implies a discount on the worker’s salary.

Additionally, if you are interested in opening a company in Chile, we explain everything you need to know in our webAt UR Global we advise you.