An Employer of Record (EOR) is a third-party organization that takes on the legal and administrative responsibilities of employing workers on behalf of another company. In Chile, an EOR handles payroll, benefits, taxes, and compliance with local labor laws, allowing businesses to hire and manage employees without establishing their own legal entity in the country.
Hiring workers from Chile can be highly beneficial for international companies. Chile is known for its stable economy, well-educated workforce, and business-friendly environment. The country has a population of approximately 19.1 million people, with a significant portion being skilled professionals in various sectors such as technology, mining, and agriculture. Chile’s labor force is growing steadily, with an increasing number of young professionals entering the job market each year. The country’s strong educational system and focus on technical skills make it an attractive destination for companies looking to hire talent in South America.
To effectively use an Employer of Record in Chile, follow these 6 steps:
- Find talent to hire in Chile
- Compare using an EOR to setting up a legal entity in Chile
- Get the information needed from your talent
- Choose an EOR provider with expertise in Chile
- Communicate your hiring needs to the EOR
- Have the EOR set up the contracts and hiring procedure
An EOR in Chile manages payroll processing, ensures compliance with tax regulations, and administers statutory benefits such as social security contributions and leave entitlements. They also handle the complexities of Chilean labor laws, including working hours, overtime pay, and termination procedures.
When hiring remotely in Chile, it’s crucial to consider various labor laws. The country has protective employment regulations, including rules on employment contracts, working hours, and paid time off. Chile mandates a 45-hour standard work week, with specific regulations for overtime and rest periods.
The hiring process in Chile typically involves identifying suitable candidates, conducting interviews, and ensuring compliance with local employment laws. Employment contracts must be in writing and include specific details such as job responsibilities, working hours, and compensation. The EOR facilitates this process, ensuring all legal requirements are met and managing the onboarding of new employees.
1. Find talent to hire in Chile
To find talent to hire in Chile, businesses should explore a variety of channels, emphasizing both local and global platforms to maximize reach. LinkedIn is a popular professional networking site in Chile, especially for managerial and technical roles.
Job posting websites like Trabajando.com, Laborum, and CompuTrabajo are popular local job portals in Chile. These platforms offer avenues for employers to advertise openings and are widely used by Chilean job seekers. Employers can post their candidate requirements on these portals, allowing applicants to access them remotely.
Specialized recruitment agencies can provide tailored solutions for industries requiring specific expertise, particularly in technology, mining, and engineering. These agencies manage the complexities of sourcing and vetting candidates, significantly easing the hiring process for companies.
Considering local job boards and regional networks can be advantageous for businesses hiring within specific industries or for particular roles. Chile’s diverse economy offers a wide range of talent across various sectors, with major cities like Santiago being particularly notable for their talent pools.
It’s important to note that in Chile, the hiring process often begins with drafting a detailed job description, followed by screening, shortlisting, interviews, and selection. Some roles may require candidates to provide additional documentation, such as educational certificates and professional qualifications.
2. Compare using an EOR to setting up a legal entity in Chile
When working with employees in Chile, you need to consider working with an EOR versus setting up your own legal entity. Here’s a comparison of the two options:
| Factor | Employer of Record | Setting Up Legal Entity in Chile | Shared Attributes |
|---|---|---|---|
| Setup Time | Quick, often within days | Can take several months | Both require compliance with Chilean regulations |
| Initial Cost | Lower upfront costs | Higher, includes registration fees and setup costs | Both involve some level of investment |
| Ongoing Cost | May become costlier with more employees | More cost-effective for larger teams | Both have ongoing operational costs |
| Complexity | Simpler, EOR handles most administrative tasks | Both require an understanding of Chilean labor laws | The company is responsible for all compliance |
| Control over Operations | Limited control, EOR is the legal employer | Full control over all aspects of employment | Both allow management of day-to-day activities |
| Compliance Management | Handled by EOR | Higher, the company bears all legal and financial risks | Both must adhere to Chilean labor regulations |
| Scalability | Highly Flexible (easy to add or remove employees) | Less Flexible (changes may require legal procedures) | Both can support business growth |
| Local Expertise Required | Minimal, provided by EOR | Extensive (need for local legal and tax advisors) | Both benefit from local market knowledge |
| Suitable for | Market entry, testing Chilean market, hiring < 10 employees | Long-term presence, hiring > 10 employees, full operations | Both support business operations in Chile |
| Risk | Lower, EOR assumes employer liabilities | Company must navigate a complex award system | Both involve some level of business risk |
| Customization of Employment Terms | Limited flexibility | Full flexibility to tailor policies | Both must comply with Chilean labor standards |
| Handling of Modern Awards | Managed by EOR | The company must navigate IP protection laws directly | Both must ensure fair compensation |
| Termination Process | Managed by EOR | Company must handle directly | Both must follow Chilean termination regulations |
| Intellectual Property Protection | Managed by EOR, may require additional agreements | Managed by EOR, it may require additional agreements | Both must protect company IP rights |
An Employer of Record offers a quicker, less complex route to hiring local staff, bypassing the need for a formal company presence. This approach suits companies looking to test the Chilean market or expand quickly without significant upfront investment.
On the other hand, setting up a legal entity in Chile offers greater control and the ability to customize business operations and policies. However, establishing a legal entity involves complex registration processes, significant upfront fees, and a deeper understanding of local laws and tax regulations.
In comparison, using an EOR is generally less expensive. It involves less risk, making it a suitable option for small to medium-sized businesses or those in the initial stages of market exploration. It eliminates the need for a local expert or dedicated legal and tax teams, as the EOR handles these aspects.
3. Get the information needed from your talent
You’ll need to collect essential personal information and employment details to hire employees in Chile. This typically includes:
- Employee’s full name
- Chilean ID number (RUT) or passport details for foreign nationals
- Date of birth
- Address
- Contact information
- Educational qualifications (certified copies may be required)
- Professional certifications (if applicable)
- Bank account details for salary payments
- Comprehensive job description, including title, duties, and place of work
Employment contracts in Chile must be in writing and should detail the terms of employment, such as:
- Job title and description
- Start date
- Salary and payment terms
- Working hours and days
- Vacation entitlement
- Notice period for termination
- Any probationary period (if applicable)
- Benefits and bonuses (if applicable)
It’s important to note that in Chile, collecting this data before the employee starts working is crucial for compliance with local labor laws and regulations, including social security registration and tax purposes.
4. Choose an EOR provider with expertise in Chile
When choosing an EOR provider to work with in Chile, selecting one with deep expertise in the Chilean market and a strong understanding of local labor laws is crucial to ensure compliance and smooth business operations.
Evaluate the provider’s experience managing employee onboarding, payroll, and legal compliance in Chile. Look for a provider with a proven track record of working successfully with companies similar to yours, and check their reputation through client case studies or reviews.
Assess the range of services offered to see if they align with your needs, such as work permit support, employee benefits management, and payroll processing. It is important to choose a provider that offers comprehensive employment services and is flexible enough to adapt to changes in Chilean labor laws.
Consider the provider’s technology and platforms, ensuring they offer secure, user-friendly systems with strong data protection measures. This is particularly important in Chile, where various laws and regulations govern data protection.
Evaluate their pricing models, looking for transparency in fees, whether they charge a fixed monthly fee or a percentage of the employee’s salary, and assess the cost-effectiveness for your business.
Finally, choose an EOR provider that demonstrates a commitment to staying up-to-date with Chilean employment laws and can provide proper guidance and support to ensure your business remains compliant while operating in Chile.
What are the best EOR providers to use in Chile?
| EOR Provider | Why Selected |
|---|---|
| Deel | Offers comprehensive global hiring solutions with strong presence in Latin America, including Chile |
| Remote | Known for its user-friendly platform and competitive pricing for the Chilean market |
| Multiplier | Provides tailored EOR services with expertise in Chilean labor laws and regulations |
| Oyster HR | Offers robust compliance support and localized benefits packages for Chilean employees |
5. Communicate your hiring needs to the EOR
Communicating your hiring needs to the EOR to ensure the process aligns with company goals and legal requirements is important. Provide a detailed job description, including title, responsibilities, required qualifications, and skills.
Specify the job’s expected start date, location, and whether it’s remote or onsite. Outline the proposed salary, bonuses, commission structures, and other compensation benefits. Clarify the contract length and detail the working hours, including flexibility or shift requirements.
Discuss the company culture, growth plans, and how the position fits into future expansion. Specify equipment needs and onboarding procedures. By accurately representing these aspects, the EOR can find the right talent and ensure legal and administrative compliance.
Additionally, communicate any specific requirements related to Chilean labor laws, such as the need for social security registration or any industry-specific regulations that may apply to your business. It’s also important to discuss any specific benefits you want to offer, as the EOR can help you design a competitive package that complies with local norms and regulations.
6. Have the EOR set up the contracts and hiring procedure
Once you have chosen which provider to work with and communicated your hiring needs, the EOR will set up the contracts and hiring procedure, ensuring compliance with local labor laws and employment practices.
The EOR will draft employment contracts that comply with Chilean labor laws, including specific terms regarding job details, working hours, and termination procedures. They’ll also manage the necessary documentation for social security registration, tax setup, and payroll, adhering to mandatory withholdings and reporting requirements.
The EOR also registers employment with relevant Chilean authorities, such as the Labor Directorate (Dirección del Trabajo), to ensure the company is properly licensed and authorized to operate and hire employees in Chile.
They’ll ensure your company complies with local regulations related to working hours, minimum wage, and leave entitlements. Additionally, the EOR administers benefits and handles formal onboarding, including the introduction to company systems and culture.
The EOR will also ensure that all necessary paperwork is completed, including registering the employee for social security purposes. They will handle setting up payroll systems to ensure timely and accurate payment of salaries and statutory contributions.
What help does an EOR provide in Chile’s payroll, taxes, and benefits administration?
The EOR will support Chile’s payroll, taxes, and benefits administration, ensuring compliance with complex local laws. It calculates and processes employee salaries, withholds the correct tax amounts, and handles social security contributions.
The EOR manages payslips that reflect mandatory withholdings and contributions, adhering to Chilean regulations. It files monthly tax returns and social security contributions with specific Chile deadlines and requirements.
For benefits, the EOR ensures compliance with statutory requirements, such as annual, sick, and maternity leave. It can also administer additional benefits common in Chile, such as meal allowances and transportation subsidies.
Specific tasks include:
- Calculating and processing salaries in Chilean Pesos (CLP)
- Managing contributions to the Chilean Social Security System (AFP, Fonasa/Isapre)
- Handling severance fund contributions (AFC)
- Ensuring compliance with the Chilean Labor Code regarding working hours and overtime
- Administering mandatory health insurance coverage
- Managing annual leave entitlements and other statutory leave types
- Handling year-end tax reconciliations and providing employees with necessary tax documents
What labor laws do you need to consider when hiring in Chile?
When hiring in Chile, there are several key labor laws to take into account. Chile’s approach to labor laws generally protects employees, offering extensive employee protections while maintaining a business-friendly environment.
Employment contracts
Employment contracts in Chile must be in writing and specify job details, including position, duties, working hours, salary, and termination conditions. There are two main types of employment contracts:
- Fixed-term contracts: For a specified period, usually up to one year (can be extended to two years in certain cases)
- Indefinite-term contracts: Open-ended duration
Working hours and paid holidays
The standard work week in Chile is 45 hours, typically 5 or 6 days. Employees are entitled to at least one day of rest per week, usually Sunday. Chile has several paid public holidays throughout the year.
Taxes
Employers and employees contribute to various social security programs. Income tax is progressive, ranging from 0% to 40%, depending on income level.
Severance pay
Employees in Chile are entitled to severance pay after completing at least one year of service. The amount depends on the length of service and the reason for termination.
Maternity and paternity leave
Female employees are entitled to 18 weeks of fully paid maternity leave (6 weeks before and 12 weeks after childbirth), and fathers are entitled to 5 days of paid paternity leave.
Vacation leave
Employees are entitled to 15 paid vacation days per year after completing one year of service.
| Labor Law | Key Points |
|---|---|
| Employment Contracts | Must be written, specifying job details and conditions |
| Working Hours | 45-hour standard work week, overtime regulations apply |
| Paid Holidays | Several public holidays, plus 15 working days annual leave |
| Taxes | Progressive income tax, social security contributions |
| Severance Pay | Based on length of service and reason for termination |
| Maternity/Paternity Leave | 18 weeks for mothers, 5 days for fathers |
How does the hiring process work in Chile?
When hiring staff in Chile, employers typically follow these steps:
- Identify the vacancy and create a detailed job description
- Advertise the position through various channels, including local job portals and recruitment agencies
- Review applications and shortlist candidates
- Conduct interviews and assessments, which may include skill tests or presentations for some roles
- Select the preferred candidate and make a job offer
- Negotiate and finalize the employment terms
- Prepare and sign the employment contract
- Register the employee with social security authorities
- Conduct any required pre-employment medical examinations
- Onboard the new employee
Employers must ensure compliance with Chile’s labor laws and regulations throughout this process, including anti-discrimination legislation and data privacy requirements. It’s also important to be aware of cultural nuances in the Chilean hiring process, such as the importance of personal relationships and formal educational qualifications.
Employers should also be prepared to discuss benefits beyond the statutory requirements, as Chilean employees often expect additional perks such as meal allowances, transportation subsidies, and supplementary health insurance.
Is Chile a relatively easy country to hire employees remotely through an EOR?
Chile is generally considered a relatively easy country to hire employees remotely through an Employer of Record. The country’s stable business environment, well-developed infrastructure, and skilled workforce make it an attractive destination for international hiring.
Pros
Cons
Chile’s labor laws, while protective of employees, are clear and well-established, making compliance manageable with the help of an experienced EOR. The country’s robust digital infrastructure facilitates remote work arrangements, especially in urban areas.
However, it’s important to note that while hiring through an EOR in Chile is relatively straightforward, employers still need to be mindful of local labor laws and cultural nuances. An experienced EOR can navigate these requirements effectively, ensuring compliance while simplifying the hiring process for foreign companies.
In conclusion, Chile’s combination of a skilled workforce, favorable business environment, and established legal framework makes it a viable option for companies hiring remote employees through an EOR. The country’s ongoing efforts to attract foreign investment and businesses, coupled with its strategic location and well-developed infrastructure, position it as an increasingly popular destination for international employment.
