Country Spotlight: Employer of Record in Chile

Stretching from the Atacama Desert to the southern glaciers of Patagonia, Chile stands out as one of Latin America’s most stable and resource-rich economies. Known globally for its copper dominance and growing lithium reserves, Chile combines natural wealth with a highly skilled workforce and a business-friendly outlook. For global organizations looking to expand into South America, Chile presents strong opportunities, but also a regulatory environment that requires careful navigation. 

Hiring in Chile involves detailed payroll regulations, statutory contributions, employment mandates, and compliance requirements. Without a local entity, this complexity can slow expansion plans. This is where an Employer of Record in Chile becomes a practical and strategic solution.

Why Chile Attracts Global Employers

Resource-Driven Economic Strength
Chile is the world’s leading producer of copper, with production reaching 5.2 million metric tons in 2022. In addition, the country holds significant reserves of lithium, gold, iron, and silver, making it a key destination for mining, energy, and related industries.

Skilled and Professional Workforce
Alongside its natural resources, Chile has invested heavily in education and professional development. Employers gain access to a workforce with strong technical and operational expertise across engineering, manufacturing, services, and emerging sectors.

Stable Operating Environment
With a clear fiscal year running from January 1 to December 31, standardized payroll practices, and defined labor laws, Chile offers predictability for long-term workforce planning. However, compliance obligations remain detailed and strictly enforced.

The challenge lies in meeting local labor requirements without an established legal presence in the country.

What Is an Employer of Record and Why Use One in Chile

An Employer of Record is a third-party organization that legally employs workers on behalf of a foreign company. While the business directs the employee’s day-to-day responsibilities, the EOR manages employment contracts, payroll processing, statutory deductions, benefits administration, and compliance with local labor laws.

• Hire employees without setting up a local legal entity
• Ensure compliance with payroll taxes and labor regulations
• Simplify onboarding, payroll, and statutory reporting
• Reduce operational risk and administrative overhead

This model allows companies to focus on growth while maintaining confidence in compliance.

Payroll and Tax Framework in Chile

Understanding payroll fundamentals is critical before hiring in Chile.

Payroll Cycle
Employees in Chile are typically paid on a monthly basis. There are no legal provisions mandating a 13th-month salary.

Employee Payroll Contributions
Employees contribute a total of 17.60 percent of their salary, which includes:

• 10.0 percent toward pension
• 0.60 percent toward unemployment insurance
• 7.00 percent toward health plans

Income Tax
Effective January 1, 2026, monthly income tax rates range from 0 percent for lower income brackets to 40 percent for income exceeding CLP 10,462,650. Tax is applied progressively based on monthly taxable income.

Employer Contributions
Employers contribute a total of 4.39 percent of gross salary, covering:

• 2.40 percent for unemployment insurance
• 1.99 percent for disability and survival insurance

Accurate calculation and timely remittance of these contributions are essential to avoid penalties.

ALSO READ | Chile: A Guideline to Payroll and Employer of Record

 

HR Mandates and Employment Practices

Chile’s labor framework includes several mandatory requirements that employers must observe.

Minimum Wage
As of January 1, 2026:

• Workers aged 18 to 65 earn a minimum of CLP 539,000
• Workers under 18 and over 65 earn a minimum of CLP 402,082

Overtime Rules
Overtime is paid at 150 percent of the regular hourly wage when work exceeds eight hours per day or 45 hours per week. Employees may work a maximum of two overtime hours per day, with total daily hours not exceeding 10. Certain roles, such as managers and employees in positions of trust, are not eligible for overtime.

Data Retention
Tax records must generally be retained for a minimum of three years. Employers with five or more employees must maintain a remuneration log, and employee contracts must be kept on public record.

Hiring and Workforce Composition
Companies with more than 25 employees must ensure that at least 85 percent of their workforce consists of Chilean nationals. Organizations with 100 or more employees must reserve at least 1 percent of roles for differently-abled individuals or disability pension beneficiaries.

Leave and Statutory Benefits

Chile provides comprehensive statutory leave entitlements.

• Public Holidays: 16 public holidays annually
• Annual Leave: 15 paid days after one year of service, with regional exceptions granting 20 days
• Maternity Leave: Six weeks before and 12 weeks after delivery, with extensions in specific cases
• Paternity Leave: Five days of paid leave
• Sick Leave: Government-paid sick leave is subject to contribution requirements
• Other Leave: Bereavement, marriage, vaccine leave, parental leave, family care leave, and medical examination leave

These benefits add complexity to benefits administration and payroll planning.

Termination and Severance in Chile

Termination must be supported by a legally valid reason, such as mutual agreement, contract expiration, breach of contract, or company needs and reorganization.

• Notice Period: One month, often paid in lieu
• Severance Pay: One month’s salary per year of service, up to 11 years, applicable after one year of employment

Severance is payable only in cases of dismissal, not resignation.

Hiring Foreign Talent and Work Visas

Anyone working in Chile must hold a valid work visa. The two main options include:

• Visa Subject to a Contract: Valid for two years and renewable, leading to permanent residency
• Working Holiday Visa: One-year, non-renewable visa for eligible nationalities aged 18 to 35

Visa processing requires a locally incorporated employer, compliance history, and supporting documentation, making immigration a key consideration for foreign companies.

TUNE IN NOW | Payroll Passport Ep 23. Chile

Why Use an Employer of Record in Chile

Partnering with an Employer of Record simplifies expansion into Chile by removing the need for a local entity and ensuring compliance across payroll, HR, and labor laws.

• Enter the Chilean market faster
• Manage payroll, taxes, and statutory benefits accurately
• Reduce compliance risk
• Focus internal resources on core business operations

Why Choose Neeyamo for EOR in Chile

Neeyamo supports global organizations in hiring and managing talent across 150+ countries, including Chile. With expertise in payroll, compliance, and workforce management, Neeyamo enables seamless expansion without administrative complexity. 

Talk to our country EOR expert at irene.jones@neeyamo.com or explore Neeyamo’s Global Employer of Record solutions.