CHILE PEO & EOR
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DID YOU KNOW
- Chile is the longest country in the world from North to South, and it stretches over a whopping 4,300 kilometers (2,670 miles).
- Famous for its over 1,000 iconic statues, Chile is home to Easter Island (Rapa Nui), and the area is shrouded in mystery due to its incredible archaeological sites.
- Chile is also home to the world’s driest desert – the Atacama Desert. Some areas of the Atacama have recorded no rainfall for decades. The desert houses breathtaking landscapes, including the Valle de la Luna.
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Working in Chile
Financial Year Dates
Chile’s financial year runs from January 1st to December 31st.
Minimum Wage
As of January 1, 2025, the minimum monthly wage in Chile is CLP 510,500.
Standard working hours
The standard workweek in Chile is currently 45 hours, typically distributed over five or six days. However, a new law is gradually reducing the maximum weekly working hours:
- April 26, 2024: Reduced to 44 hours
- April 26, 2026: Will reduce to 42 hours
- April 26, 2028: Will reduce to 40 hours
These changes aim to improve work-life balance without reducing employees’ wages.
Overtime
Overtime is compensated at 150% of the regular hourly wage for hours worked beyond the standard workweek. Employers can extend the workday by a maximum of two hours, capped at ten additional hours weekly.
Holiday Allowance
Employees are entitled to a minimum of 15 consecutive working days of paid annual leave after completing one year of continuous service. In the regions of Arica and Parinacota, Tarapacá, and Magallanes, employees receive an additional 5 days, totaling 20 days of annual leave.
Annual leave must be taken in a single block unless otherwise agreed upon. Employers are required to schedule vacations within the year following the employee’s eligibility.
Sick Leave
Employees are entitled to sick leave upon presentation of a medical certificate (licencia médica). The process is as follows:
- Days 1–3: No compensation is provided.
- Days 4–10: Employees receive sick pay equivalent to their regular salary.
- Beyond Day 10: Compensation is retroactively applied to cover the initial three days, ensuring full coverage from the first day of illness.
Sick pay is funded by the employee’s health insurance provider, whether public (FONASA) or private (ISAPRE). Employers are prohibited from terminating an employee’s contract during a certified sick leave period.
Maternity & Paternity Leave
- Maternity Leave: Female employees are entitled to 30 weeks of paid maternity leave—six weeks before and 24 weeks after childbirth.
- Paternity Leave: Fathers are entitled to five consecutive days of paid paternity leave, which must be taken within the first month after the child’s birth.
Public Holiday
Chile observes 19 public holidays, encompassing national, religious, and regional observances. The key public holidays are:
- New Year’s Day
- Good Friday
- Holy Saturday
- Labour Day
- Navy Day
- Battle of Arica (Regional holiday in Arica and Parinacota)
- National Day of Indigenous Peoples
- Saints Peter and Paul
- Our Lady of Mount Carmel
- Assumption of Mary
- Nativity of Bernardo O’Higgins (Regional holiday in Chillán and Chillán Viejo)
- Independence Day
- Army Day
- Columbus Day
- Reformation Day
- All Saints’ Day
- Presidential and Congress Elections
- Immaculate Conception
- Christmas Day
Social Contributions
Chile’s social security system mandates contributions from both employers and employees to fund various benefits, including pensions, health insurance, and unemployment insurance. Recent reforms have adjusted these contributions to enhance the system’s sustainability and equity.
Employee Contributions
- Pension Fund (AFP): Employees contribute 10% of their gross monthly salary to a private pension fund administrator (AFP).
- Health Insurance: A mandatory 7% of the gross salary is allocated to health insurance. Employees can choose between the public health system (FONASA) or a private health insurer (ISAPRE).
- Unemployment Insurance: Employees contribute 6% of their gross salary to the unemployment insurance fund.
Employer Contributions
- Pension Fund: Following the 2025 pension reform, employer contributions are set to gradually increase from 5% to 8.5% over nine years. As of 2025, the employer contribution stands at 3.5%.
- Unemployment Insurance: Employers contribute 4% of the employee’s gross salary to the unemployment insurance fund.
- Work Accident Insurance: The contribution rate varies based on the company’s industry and risk level, typically ranging from 93% to 3.4% of the employee’s gross salary.
- Disability and Survivors Insurance: Employers contribute approximately 15% of the employee’s gross salary to cover disability and survivors’ benefits.
These contributions are subject to a maximum taxable income cap, which is adjusted annually.
Income Tax
Chile employs a progressive income tax system for residents, with rates ranging from 0% to 40%. The tax brackets for the 2025 fiscal year are as follows:
Annual Taxable Income (CLP) | Tax Rate
- Up to CLP 11,021,508: 0%
- CLP 11,021,508.01 – CLP 24,492,240: 4%
- CLP 24,492,240.01 – CLP 40,820,400: 8%
- CLP 40,820,400.01 – CLP 57,148,560: 13.5%
- CLP 57,148,560.01 – CLP 73,476,720: 23%
- CLP 73,476,720.01 – CLP 97,968,960: 30.4%
- CLP 97,968,960.01 – CLP 253,086,480: 35.5%
- Over CLP 253,086,480: 40%
Key Points:
- Residents are taxed on their worldwide income.
- Non-residents are taxed at a flat rate of 15% on Chilean-sourced income.
- Mandatory social security contributions (e.g., pension and health insurance) are deductible from gross income, effectively reducing taxable income.
Health Care
Chile offers a dual healthcare system:
- Public System (FONASA): Funded by mandatory contributions, providing coverage through public hospitals and clinics.
- Private System (ISAPRE): Allows individuals to choose private healthcare providers, often offering shorter wait times and more personalized services.
Employees contribute 7% of their monthly income to either FONASA or ISAPRE. Employers do not contribute to the employee’s health insurance.
Visas
Foreign nationals seeking employment in Chile must obtain the appropriate visa:
- Work Visa (Visa Sujeta a Contrato): Tied to a specific employer and job contract, valid for up to two years.
- Temporary Residence Visa: Allows individuals to live and work in Chile for up to one year, with the possibility of renewal.
- MERCOSUR Residence Visa: Available to nationals of MERCOSUR countries, offering simplified residency procedures.
13th salary
Chile does not have a statutory requirement for a 13th salary. However, it is common for companies with profits to provide an annual bonus, known as “gratificación,” to their employees. Employers can choose between two methods to calculate this bonus:
- Legal Gratification: 30% of the company’s net profits are distributed among employees.
- Alternative Method: A fixed amount equivalent to 25% of the employee’s annual salary, capped at 4.75 monthly minimum wages.
For more information on 13th and 14th salary practices worldwide, refer to 13th & 14th Salary: The Complete Guide.
Cultural Information
Chile’s culture is as diverse as its landscapes. Its foundations lay in its rich history, which is influenced by a variety of indigenous and European traditions. Family, community, and relationships are very important to Chileans, and this is also often present in business relationships.
Sharing many similarities with neighboring Argentina, football is a very important part of Chilean culture, and brings families, friends, and communities together.
Most Chileans identify with Christianity, with the majority of those adhering to Catholicism. Like most of Latin America, Chile’s official language is also Spanish; this is spoken by 99.3% of the population.