How to hire in Chile through an EOR

Chile requires all employment contracts in writing, signed by both parties within 15 days of the employee's start date. Miss that window, and courts can presume an indefinite term, which makes termination importantly harder.

Contract types

Most companies default to indefinite contracts, and for good reason. They're straightforward, fit ongoing roles, and avoid the renewal traps that catch out a lot of foreign employers with fixed-term arrangements.

For most hires, stick with indefinite. If you misuse a fixed-term contract, it automatically converts to indefinite status, and you'll owe the full remaining term if you end it early.

What has to be in the contract

Labor Code Article 10 sets the minimums. Your contract needs to include the date and place of signing, both parties' identities (name, nationality, contact details), job title and description, work location, pay amount and schedule (max monthly), workday length and distribution, contract duration, and any additional benefits like housing or meals.

Contracts must be in Spanish. There's no legal requirement for a bilingual version, but including an English translation is worth doing to avoid disputes later. Sign within 15 days of the start date and file a copy with labor authorities if required.

Probation runs up to 1 month, or 3 months for executive roles. You don't need to give notice to end employment during this period. After probation, terminations require cause or a payout. Make sure you state the probation terms clearly in the contract.

Contractor vs. employee

Chile uses a broad test: if the worker is under your direction, in a relationship of subordination, and providing personal services, they're an employee. Courts look at who controls the hours, who provides the tools, and how integrated the person is into your business. Misclassification is common in tech and remote roles.

If you get it wrong, you're looking at reclassification, back wages, social security contributions (pension, health, unemployment at 2.4-3% of pay), unpaid vacation, and 13th-month bonuses. Fines can reach 60 UTM (around $4,000 USD in 2025) per violation, and workers may also be entitled to dismissal indemnity.

Non-competes require you to pay the worker during the restriction period, typically 50-100% of their salary. Keep the scope to 1-2 years, specific roles, and a defined geography. Courts will strike down anything too broad.

IP assignment is enforceable when it's written into the contract and tied to the employee's job duties. Without that, workers own their inventions. Add clear clauses covering work product from day one.

Getting the classification right upfront is the safest move. Use contractors only for genuinely independent workers with multiple clients. If you're not sure, classify as an employee, and consider using an EOR to keep things on solid ground.

Chile gives employees 15 working days of paid annual leave after one year of service. That's the legal floor, but skilled workers in Santiago and tech hubs typically expect 20-25 days. If you're hiring competitively, you'll need to go beyond the minimum.

Time off

Employees earn 15 working days (Monday-Friday, Saturdays excluded) of fully paid annual leave after 12 months of continuous service. Leave accrues at 1.25 days per month, so someone with 7 months has around 9 days banked.

After 10 years of total service across all employers, they earn 1 extra day for every 3 years worked. You're required to let them take at least 10 days consecutively, with the remainder by mutual agreement. Carryover is allowed up to two years, but unused leave must be taken by the third year or paid out on exit.

In southern regions like Aysén, Magallanes, and Palena, the minimum is 20 days. Chile also has 16-18 public holidays per year, all paid by you. Most fall on Mondays.

All leave types

Here's what the law requires. Depending on the leave type, pay comes from you, social security, or the employee's health fund. Job protection applies across the board.

Mandatory benefits

You're required to make social security contributions on gross salary. Employers cover roughly 70-80% of the total cost, employees 20-30%. As of 2025, key rates include health (7% employer / 7% employee), pension (10% employee contribution withheld and remitted to AFP, plus admin fees), and unemployment insurance (3% employer / 0.6% employee / 0.6% state).

There are no mandated meal vouchers or transport allowances under Chilean law. That said, once you factor in all contributions, expect your total employer cost to run about 25-30% above base salary.

What people actually expect

Legal minimums won't get you far with experienced candidates. Tech and professional roles typically expect 20-25 days of annual leave, and many companies offer 10-15 days upfront in year one rather than making new hires wait. Private health insurance matters too. Most employees prefer Isapre over the public Fonasa system for faster access and more choice.

Remote work stipends of $50-100/month have become standard since the post-2023 shift to hybrid work. A 13th-month bonus, paid in two installments in June and December, is widely expected even where it's not legally required for every employer. Meal cards (tickets restaurante, around $5-10/day) and education vouchers are also common and help with both tax efficiency and retention.

Candidates who know their market will notice if you're only offering the bare minimum. Aiming for around 25% above the legal floor is a reasonable benchmark to stay competitive.

Terminating someone in Chile isn't straightforward. You can't fire at will, and courts have been getting stricter about what counts as a valid reason.

Accepted grounds include business needs (like drops in productivity, restructuring, or market changes), serious misconduct (theft, violence, sexual harassment), employee resignation, mutual agreement, contract expiry, or force majeure. For business needs terminations, you'll need to give 30 days written notice or pay one month's salary in lieu. Misconduct terminations take effect immediately, but you must notify in writing within three days and file with the Labour Ministry.

Unfair dismissal gets expensive fast, especially if you can't back up your reasoning or if the employee falls into a protected group. That includes pregnant women, union leaders, employees on leave, or those exercising constitutional rights. Penalties range from 30-100% surcharges on severance, plus attorney fees and fines up to 11 months' salary if rights are violated. If you owe social security or benefits, the contract isn't considered ended until those are paid. Document performance issues early, get everything in writing, and work with an EOR that knows how Chilean courts operate.

Notice periods

For business needs terminations, employers always give 30 days. Employees are expected to give 30 days notice when resigning, but there's no penalty if they don't. During probation it's different: one week in the first month, up to one month after that.

Severance pay

If you're terminating for business needs and the employee has been with you for at least a year, you owe severance. The formula is one month's average salary per year worked, capped at 11 years. Payment goes through a finiquito (settlement agreement) within 10 days, signed before a notary or the Labour Ministry. Mutual agreement terminations often include severance too. There's no severance owed for misconduct, resignation, or fixed-term contract expiry.

Average salary is calculated from the last three months, including bonuses and extras. As a quick example: 2.5 years tenure at a $2,000 monthly average works out to $5,000 (2 full years plus 0.5 prorated). If payments are late or the dismissal is found to be wrongful, surcharges can reach 150%.

Work permits and visas

You can hire foreign nationals through an EOR. They act as the legal employer and handle sponsorship. Non-residents need a work visa to work in Chile, and tourists aren't permitted to work.

The main visa categories are: Resident Visa with Work Contract (for employees, valid 1-2 years and renewable), Temporary Work Visa (short-term projects, up to 1 year), and the Mercosur visa for Brazilian and Argentinian nationals (easier to obtain, valid 1 year). Chile also launched a digital nomad visa in 2022 for remote workers earning at least $2,500/month from outside Chile, valid for 1 year. Key requirements across most categories include a job offer, clean criminal record, health certificate, and proof of qualifications. Your EOR submits the application to the Immigration Service.

Standard processing takes 1-3 months. Express options are available in 15-30 days for an additional fee. Start the process early. Also worth knowing: remote workers on a nomad visa can't switch to local employment without applying for a new visa.

Compliance risks to watch

Chile's termination process has specific steps, and skipping any of them opens you up to claims. The dismissal letter needs to include the grounds, supporting facts, and a payment offer. Register with the Labour Board the same day. The finiquito must itemise everything owed: severance, unused vacation, and notice pay. Employees can reserve their rights on it, and late payments can balloon by 150% through court.

Data protection is governed by Law 19.628, which has been updated to align more closely with GDPR-style rules. You'll need explicit consent in contracts for processing personal data. From 2026, tighter templates will be required for privacy authorisations.

Unions carry real weight in Chile, with over 25% of the workforce unionised. If a collective agreement applies to your employees, you're bound by it. Respect negotiation rights or you risk strikes and fines.

A few things to keep track of: the workweek is being reduced progressively, dropping from 44 hours (since April 2024) to 40 hours by 2028. Courts are also applying harassment as grounds for instant dismissal more consistently. No major legislative overhauls have landed in 2024-2026 yet, but a February 2026 bulletin flags a new political cycle with proposed labour changes, particularly around union power and dismissal rules. Working with an EOR helps you stay on top of these shifts without having to monitor them yourself.