Hire Employees in Chile as a Foreign Company Using an EOR.
Chile is Latin America's most stable business environment and the first South American OECD member. RecruitGo handles employment contracts under the Codigo del Trabajo, AFP pension enrollment, health insurance (FONASA or Isapre), unemployment insurance, gratificacion legal, and payroll in CLP.
What Is an Employer of Record in Chile?
An Employer of Record (EOR) is a locally registered company that legally employs workers in Chile on your behalf. RecruitGo's Chilean entity becomes the legal employer under the Codigo del Trabajo. We sign the employment contract within the required 15-day window, register the employee with their chosen AFP (pension fund) and health insurance (FONASA or Isapre), enroll them in unemployment insurance (Seguro de Cesantia), manage monthly payroll in CLP, calculate and pay the gratificacion legal, and handle all reporting to the SII and Direccion del Trabajo.
You retain full control over the employee's work, schedule, and responsibilities. They report to you, work on your projects, and function as part of your team.
Why EOR matters in Chile: Chile's employment system is unique in Latin America. Unlike Colombia, Brazil, or Peru, Chile has no mandatory 13th month salary. Instead, it has a gratificacion legal (profit-sharing obligation). The social security burden falls primarily on the employee (~17.6%), but a major pension reform is phasing in new employer contributions starting at 1% (August 2025) and rising to 8.5% by 2033. The working week is being progressively reduced from 45 to 40 hours. Termination without cause triggers severance of 1 month per year capped at 11 months, with surcharges up to 100% if a court finds the dismissal unjustified.
Who Should Use EOR in Chile?
What It Costs to Hire Through EOR
Chile's employer burden is lower than Brazil, Colombia, or Peru because most social security contributions fall on the employee (~17.6%). Current employer contributions total approximately 5 to 8% of gross salary, but this is rising significantly under the 2025 pension reform.
| Component | Monthly (CLP) | Rate / Basis |
|---|---|---|
| Gross salary | 2,000,000 | — |
| Unemployment insurance (employer) | 48,000 | 2.4% |
| Disability & survivor insurance (SIS) | 30,800 | 1.54% |
| Work accident insurance (mutualidad) | 18,600 | 0.93% base (varies by risk) |
| New employer pension contribution (2026) | 20,000 | 1% (rising to 8.5% by 2033) |
| Gratificacion legal provision | ~106,000 | ~25% of monthly salary, capped at 4.75 IMM |
| Total employer cost | ~2,223,400 | ~111% |
* 2026 minimum wage is CLP 539,000/month. Working hours reduce to 42/week from April 2026. Social security contributions capped based on UF. The new employer pension contribution (1% for 2026) rises annually to 8.5% by 2033. EOR management fee not included above.
Rising employer costs ahead: Chile's 2025 pension reform introduces a new mandatory employer contribution that starts at 1% and increases annually to reach 8.5% by 2033. For a CLP 2,000,000 salary, this means employer pension costs will rise from CLP 20,000/month in 2026 to approximately CLP 170,000/month by 2033. Your EOR tracks each annual increase.
How Hiring Works Through EOR
You share the role, salary in CLP, location, and start date. We confirm the work accident insurance risk classification, check for applicable CBAs, and return a full cost breakdown within 24 hours.
We draft an employment contract compliant with Article 10 of the Codigo del Trabajo. We register the employee with their chosen AFP, enroll them in FONASA or Isapre, activate unemployment insurance, and set up income tax withholding with the SII.
We run monthly payroll in CLP by the last working day. We deduct employee AFP (~10% + commission), health (7%), unemployment (0.6%), and income tax. We remit employer contributions (unemployment 2.4%, SIS 1.54%, mutualidad, new pension contribution). We calculate and pay the gratificacion legal.
We track minimum wage adjustments, working hour reductions under Ley 21.561 (42 hours from April 2026, 40 hours from April 2028), the phased pension reform increase, UF-based cap adjustments, and the new Data Protection Act (effective December 2026).
EOR vs Chilean Entity vs Contractors
| EOR | SpA / SRL | Contractor (Boleta) | |
|---|---|---|---|
| Time to first hire | 3 to 5 days | 3 to 6 weeks | Immediate |
| Setup cost | None | USD 2K to 8K+ | None |
| Social security | Handled by EOR | Your responsibility | Contractor invoices via Boleta (17% withholding) |
| AFP, health, unemployment | Managed by EOR | Your responsibility | Not applicable (risk if misclassified) |
| Gratificacion legal | Calculated and paid by EOR | Your responsibility | Not applicable |
| 85% Chilean workforce rule | EOR manages compliance | Your responsibility (25+ employees) | Not applicable |
| Best for | 1 to 20 people, speed | 30+, permanent ops | Defined projects, true independence |
Boleta de Honorarios contractor risk: If the Direccion del Trabajo determines the contractor relationship is actually employment (based on subordination, fixed schedule, exclusive dedication), it will be reclassified. This triggers retroactive AFP, health insurance, unemployment insurance, severance, and fines. Unpaid social security at termination makes the dismissal null and void (nulidad del despido), requiring continued salary payments until settled.
Employee Benefits and Leave Entitlements
Mandatory benefits
Leave entitlements
Termination Rules and Severance
Chilean termination law requires valid legal grounds. Dismissals courts deem unjustified trigger the base severance plus surcharges of 30% to 100%. If social security contributions are unpaid at termination, the dismissal is null and void (nulidad del despido).
Severance for company needs (necesidades de la empresa)
Court surcharges for unjustified dismissal
| Scenario | Surcharge |
|---|---|
| Company needs deemed unjustified | 30% surcharge |
| Employee fault (causa imputable) deemed unjustified | 50% to 80% surcharge |
| Discriminatory or anti-union dismissal | 80% to 100% surcharge + 6 to 11 months additional |
Probation period
Chilean labor law does not define a formal probation period. Employers commonly use fixed-term contracts (up to 12 months) as a practical trial. A second renewal or continued work after expiry automatically converts to indefinite-term.
Working Hours and Overtime
Chile is progressively reducing its workweek under Ley 21.561. Current maximum is 44 hours (since April 2024). From April 2026: 42 hours. From April 2028: 40 hours. Daily maximum is 10 hours (including up to 2 hours overtime).
| Scenario | Rate |
|---|---|
| Overtime | 150% of hourly rate (50% surcharge) |
| Maximum overtime | 2 hours/day. Written agreement required. Max 3-month term |
| Sunday / holiday work | 200% or compensatory day off |
| Night work | No specific surcharge under Labor Code (common in CBAs) |
| Working hours phase-down | 44 hrs (2024) → 42 hrs (Apr 2026) → 40 hrs (Apr 2028) |
Frequently Asked Questions
Current total employer cost is approximately 111 to 120% of gross salary, making Chile one of the lower-cost markets in Latin America. This includes unemployment insurance (2.4%), SIS (1.54%), mutualidad (~0.93%), the new pension contribution (1% in 2026), and gratificacion legal provision (~5%). By 2033 the employer pension contribution alone will reach 8.5%.
Chilean companies with profits must pay employees a profit-sharing bonus. Method B (most common): 25% of annual wages per employee, capped at 4.75x minimum monthly wage (CLP 2,560,250 annual cap for 2026). Can be paid monthly or annually.
No. Unlike Colombia, Brazil, and Peru, Chile does not mandate a 13th month salary. The gratificacion legal is a profit-sharing obligation, not an extra month's pay.
Termination for company needs requires 30 days' notice plus severance of 1 month's salary per year of service, capped at 11 months. Salary base capped at 90 UF (~CLP 3,420,000). Court surcharges of 30-100% apply if dismissal deemed unjustified.
Starting August 2025, employers must make a new mandatory pension contribution of 1%, increasing annually to 8.5% by 2033. Split between employee's AFP account and the Autonomous Pension Protection Fund.
Companies with 25+ employees must ensure at least 85% of their workforce are Chilean nationals. Your EOR monitors compliance as your team grows.
Yes, through Boleta de Honorarios (17% withholding tax in 2026). If the relationship is actually employment, it will be reclassified with retroactive AFP, health, unemployment, severance, and fines. Unpaid social security at termination makes the dismissal null and void.
Typically 3 to 5 business days. Setting up your own SpA or SRL takes 3 to 6 weeks. Employment contracts must be signed within 15 days of start.
Employer and Employee Contributions
Chile's social security system is unusual in Latin America because the employee bears the larger share (~17.6% vs ~5-8% employer). However, the 2025 pension reform is gradually shifting more cost to the employer (rising from 1% to 8.5% over 9 years).
Employer contributions
Employee contributions (deducted from salary)