Hiring Talent And Managing Payroll In Chile?

Agreements

• In Chile, official employment agreements must be written in Spanish. If both parties like it, an English translation may work. It must, however, always be accompanied by a Spanish translation.
• Contracts that have a start, as well as an end date, are known as fixed-term agreements. The fixed-term agreement can only have a one-year term limit (or a limit of two years for specific highly skilled professionals). This will become a contract with an indeterminate term when:

  • If the responsible parties have decided and shown their consent to more than two employment contracts within 12 months or more contracts within 15 months
  • If in case the contract exceeds the specified maximum term permitted (one or two years based on the qualification of the employee)
  • After its second renewal
  • Immediately as the term gets over if the employer does not terminate the employment on the basis of completion of the term

Onboarding Process

• The onboarding process differs from company to company.
• After the employee signs the Statement of Work, onboarding takes place within two business days.
• There are some general requirements to keep in mind:

  • Visa
  • Work Permit
  • Tax Identification Number
  • Bank Account
  • Health Insurance

Minimum Wage

• Staff members who are over 18 and under 65 receive CLP 410,000
• Employees under the age of 18 and those over 65 receive CLP 305,851

Payroll Cycle

Annual Bonus

Health Benefits

• FONASA, which stands for 'Fondo Nacional de Salud,' is the National Health Insurance program that underpins Chile's public healthcare system.
• Employers are responsible for paying the costs of their employees' medical care after deducting a required 7% of their employee's wages. An employee may receive treatments under this plan at reduced costs.

Working Hours and Overtime

• Work hours: 9 hours per day, or 45 hours per week, are considered standard working hours. People work from Monday to Friday.
• Break: Workers are entitled to 11 hours between workdays and at least a 30-minute break during the workday. Except in certain industries, including retail, work is prohibited on Sundays and federal holidays, and employees are required to take at least one rest day each week.
• Overtime: Employees in Chile are compensated for overtime hours worked during a typical workday at a rate of 150% of their hourly wage. Employees get paid 130% of their regular rate for working on a rest day.

Social Security

Taxes for Employees

• Up to 40% - personal income tax rate (vary based on salary and other variables)

  • 0% tax for income upto 690,268.50 CLP
  • 4% tax for 1,533,930 CLP
  • 8% tax for income upto 2,556,550 CLP
  • 13.5% tax for income upto 33,579,170 CLP
  • 23% tax for income upto 4,601,790 CLP
  • 30.4% tax for income upto 66,135,720
  • 35% tax for income upto 15,850,610
  • 35% tax for income above 15,850,610
• 0.6% - unemployment insurance
• 10% - pension contribution
• 7% - health insurance

Termination

Severance Pay

Employees or Contractors

• The sole distinction between full-time employees and contractors is the type of service they offer. Employers are in charge of how full-time employees provide their services. They also determine the working hours of the workforce.
• Contractors frequently work on their own. They are not under the direct supervision of their employers. An agreement between the parties specifies the planning and signing of a project that has been agreed upon by both sides.
• Full-time employees are treated differently than contractors. Misclassifying them can lead to fines.

Final Words