Currency
Chilean Peso (CLP)
EOR IN Chile
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A guide to employing and growing your team in Chile
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Chile is recognized as one of South America’s most stable and market-oriented economies, with strong sectors in mining, agriculture, and services. The labor market is strictly governed by the Chilean Labor Code, which emphasizes formal contracts and mandatory social security participation. As of January 1, 2026, the national minimum wage in Chile is CLP 539,000 per month for workers aged 18 to 65. A unique payroll feature is Legal Gratification (Gratificación Legal), a mandatory profit-sharing bonus. Most employers choose to pay this monthly as a 25% surcharge on the base salary (capped at 4.75 times the minimum wage per year) to fulfill their legal obligation to share 30% of company profits with staff.
Employer Contributions
Survival and Disability Insurance (SIS): 1.54%
Work Accident Insurance: 0.93% – 3.4% (Varies by industry risk)
Unemployment Insurance (AFC): 2.4% (For indefinite contracts)
New Mixed Pension Contribution: 1.0% (Starting 2026; part of a gradual increase to 6% by 2033)
Total Employer Contribution: ~5.87% – 8.34%
Employee Payroll Taxes
Pension Fund (AFP): 10% (Plus administrative fees ranging from 0.46% to 1.45%)
Health Insurance: 7% (Paid to public FONASA or private Isapre)
Unemployment Insurance (AFC): 0.6% (For indefinite contracts)
Total Employee Contribution: ~18%
Employee Income Tax Rates
Chile uses the Unidad Tributaria Mensual (UTM), an inflation-indexed unit, to determine tax brackets. The following progressive rates apply to the monthly taxable base:
Up to 13.5 UTM: 0%
13.5 – 30 UTM: 4%
30 – 50 UTM: 8%
50 – 70 UTM: 13.5%
70 – 90 UTM: 23%
90 – 120 UTM: 30.4%
120 – 310 UTM: 35%
Above 310 UTM: 40%
Statutory Leave
Employees are entitled to 15 working days of paid annual leave after one year of service. In Chile’s southern regions or for employees with over 10 years of service, additional “progressive” vacation days may apply. Chile also observes approximately 16 to 18 public holidays per year. Unused leave can be carried forward for up to two consecutive years, but the law mandates that it must be taken as rest rather than paid out, except upon termination.
Pregnancy and Maternity Leave
Female employees receive 18 weeks of maternity leave (6 weeks prenatal and 12 weeks postnatal). This is typically extended by an additional 12 weeks of postnatal parental leave, totaling 30 weeks of protection. These benefits are funded by the health insurance system (FONASA/Isapre), not the employer. Chilean law provides strong “maternity immunity” (fuero maternal), prohibiting dismissal without court authorization during pregnancy and for up to one year after the postnatal leave ends.
Paternity Leave
Fathers are entitled to 5 business days of paid leave upon the birth of a child, which can be taken immediately or distributed within the first month. Additionally, the mother can choose to transfer a portion of her postnatal parental leave (from the 7th week onward) to the father.
Work-Related Injury Leave
Sick Leave: Paid by the health insurance system (not the employer) from the first day if the leave is 11 days or longer; for shorter leaves, the first 3 days are unpaid.
Marriage/Civil Union: 5 working days of paid leave.
Bereavement: 7 days for a spouse or child; 3 days for a parent or sibling.
Childcare: Up to 10 days per year for parents to care for a child under 18 with a serious illness.
Termination Process
Dismissal in Chile must be justified under specific articles of the Labor Code, such as “Business Needs” (Necesidades de la Empresa), misconduct, or contract expiration. If terminated for business needs, the employer must pay severance equal to one month’s salary for every year of service, capped at 11 years. Unjustified dismissal often results in a 30% to 100% surcharge on the severance amount if challenged in labor court.
Notice Period
For terminations based on “Business Needs,” the employer must provide 30 days’ notice. If they wish the termination to be immediate, they must pay a “notice indemnity” equal to one month’s salary. For resignations, employees are expected to provide 30 days’ notice, though there is no financial penalty if they fail to do so.
Probation Period
Chilean law does not recognize a formal “probation period” in the Labor Code. All contracts, including those for a trial phase, are considered standard employment. However, employers frequently use Fixed-Term Contracts (e.g., for 3 months) to evaluate performance before transitioning the employee to an indefinite contract.