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If you plan to hire in Chile, you need to understand how the country’s Labour Code regulates employment relationships. Employers and employees must agree to and sign employment contracts that clearly outline job duties, salary, benefits, working hours, and contract duration.
Chile has a regulated minimum wage that employers must follow, along with strict payroll, tax, and social security obligations. Employers must withhold income tax and contribute to pension funds, health insurance, and unemployment insurance.
Chile offers access to a skilled workforce and a stable business environment, but employment laws are detailed and strictly enforced. Before hiring, companies should familiarise themselves with local compliance requirements, contract registration rules, and employee protections to avoid penalties.
Chile is one of Latin America's most developed economies, making it an attractive destination for hiring remote talent.
The country has a highly educated workforce, particularly in sectors like technology, finance, and engineering. Many professionals have experience working with international companies and are comfortable working remotely.
Chile also benefits from strong infrastructure, reliable internet connectivity, and a growing remote work culture. Time zone alignment with North America makes collaboration easier for global teams.
Additionally, Chile’s legal framework supports flexible working arrangements, including remote work, while ensuring employees receive full labour protections. Combined with government support for business and foreign investment, Chile is a strong option for building distributed teams.
Native Teams’ Employer of Record services help you hire and pay your team through an owned infrastructure in Chile. We handle everything from legal employment to ensuring your team is paid and managed compliantly and with care, without any third parties involved.
Hire your first Chilean employee with Native Teams.
Here are the most important legal aspects to consider when hiring employees in Chile:
Employment contracts in Chile are primarily regulated by the Labour Code (Código del Trabajo). It distinguishes between individual employment contracts and collective instruments, while also establishing special employment contracts with rules specific to certain sectors.
Under Chilean law, an individual employment relationship is defined by two key elements:
The nature of the working relationship matters more than how the parties describe it. If services are provided under these conditions, the Labour Code presumes that an employment contract exists.
However, certain arrangements do not qualify as employment relationships. These include specific services provided directly to the public, intermittent or occasional services performed at home, and certain internships that form part of educational or professional training requirements.
The Dirección del Trabajo (Labour Authority) oversees compliance with employment regulations. Employers are required to register employment contracts electronically through its website. The authority also uses this information to conduct inspections and carry out its statutory responsibilities.
Chilean legislation establishes three main categories of employment contracts: individual employment contracts, collective labour agreements and special employment contracts.
Individual employment contracts
An individual employment contract is a written agreement between an employer and an employee. Under this agreement, the employee provides personal services under the employer’s dependency and subordination, while the employer pays remuneration in return.
Collective labour agreements
Collective labour agreements are concluded between employers and employees to establish common working conditions, remuneration and other benefits, whether monetary or in kind, for a specified period.
These agreements must meet several legal requirements:
The Labour Code also allows employers and one or more trade unions to negotiate collective agreements voluntarily, without following a formal legal negotiation procedure. These agreements are also recognised as collective labour instruments.
Article 10 of the Labour Code establishes the minimum information that must be included in an individual employment contract:
Where applicable, the contract must also specify any benefits provided in kind or as services, such as housing, electricity, fuel, food or similar benefits.
If the employee is required to relocate as a condition of employment, the contract must also record their place of origin.
Download a free employment contract for Chile through Native Teams.
Under Chile’s Labour Code, employment contracts are consensual. This means an employment relationship exists when an employee provides personal services under the employer’s dependency and subordination in exchange for remuneration, even if no written agreement has been signed. The law also presumes that an employment contract exists when these conditions are met.
Although a written agreement is not required to establish the employment relationship, employers are legally required to document the contract in writing and obtain signatures from both parties. Two copies must be signed, with one retained by the employer and the other given to the employee.
Deadlines for written employment contracts
Employers must prepare and sign employment contracts within the following deadlines:
Failure to meet these deadlines may result in an administrative fine of one to five monthly tax units (UTM).
What happens if an employee refuses to sign?
If an employee refuses to sign the written contract, the employer must submit it to the Labour Inspection office, which will request the employee’s signature.
If the employee continues to refuse to sign before the Labour Inspection office, the employer may dismiss them without severance pay. However, this does not apply if the employee can prove that they were hired under different terms from those stated in the written contract.
If the employer fails to follow this procedure within the statutory deadline, the absence of a written contract creates a legal presumption that the employment terms are those declared by the employee.
Storing and managing employment contracts
Employers must keep a copy of the employment contract at the workplace or at another location designated in advance and authorised by the Labour Inspection office.
In certain circumstances, employers may request permission from the Dirección del Trabajo (Labour Authority) to centralise employment and social security documentation and maintain digitised copies. This may apply when:
The Dirección del Trabajo must respond to the request within 30 days. If approved, the authorisation sets out the conditions for centralising and digitising the documentation.
This authorisation may cover employment and social security records arising from the employment relationship, but does not extend to the working time and attendance register.
Working hours in Chile are regulated by the Labour Code and the 40-Hour Law (Law No. 21.561), which is gradually reducing the standard working week from 45 to 40 hours. As of April 2026, the maximum ordinary working week is 42 hours, with additional rules covering daily working limits, rest periods, overtime and flexible working arrangements.
Ordinary working hours
Under Law No. 21.561, Chile is gradually reducing the maximum ordinary working week according to the following schedule:
Ordinary working hours can generally be distributed across four to six days per week, with a maximum of 10 working hours per day.
Distribution of working time
Employers and employees can agree to organise working hours through a fixed weekly schedule or an average calculated over cycles of up to four weeks.
When using a working-time cycle, the following conditions apply:
Breaks and rest periods
Meal breaks are generally excluded from working time unless the employer and employee agree otherwise.
Employees are also entitled to daily and weekly rest periods under the Labour Code. Sunday is generally the designated weekly rest day, although exceptions apply to certain types of work permitted by law.
Attendance and working-time records
Employers must maintain a reliable system for recording employee attendance and working hours, including both ordinary hours and overtime.
This can be done through an attendance register, time clock or electronic time-recording system.
The Labour Code establishes specific restrictions on night work for minors employed in industrial and commercial establishments. The prohibited night period covers 11 consecutive hours, which must include the period between 22:00 and 07:00.
The Labour Directorate also establishes specific timing rules for weekly compensatory rest, including for night watch workers (nocheros). This rest period runs from 21:00 on the preceding day until 06:00 on the following day. These rules concern rest entitlements rather than additional pay for night work.
Restrictions and employee protections
Chilean labour law establishes several protections for employees working at night:
Night work compensation
Chile's Labour Code does not establish a universal night-shift premium solely because an employee works at night.
Additional compensation may be provided through an individual employment contract or collective agreement. Employees may also qualify for additional pay when their night-time hours constitute overtime or work performed on rest days or public holidays.
The supplied legal guidance also references a 25% premium on base salary, equivalent to 125% of regular pay, for standard night work compensation. However, this should be clarified with Legal before publication, as it appears to conflict with the statement that no universal statutory night-shift premium applies.
Chile’s Labour Code establishes minimum requirements for rest breaks, annual leave, sick leave and family-related leave. These entitlements are legally binding and enforced by the Labour Directorate, helping protect employees’ health, well-being and work-life balance.
Under Chilean labour law, the working day must be divided into two periods by a meal break, known as colación.
Employees are entitled to a minimum 30-minute meal break, which is generally unpaid and does not count towards their working hours.
In practice, many employers provide a one-hour lunch break, particularly in office environments. Certain sectors, including restaurants, hotels and clubs, may require longer breaks due to the nature of the work.
The gradual reduction of the working week under the 40-Hour Law cannot be used to shorten or eliminate meal breaks. These are separate entitlements: the meal break allows employees to rest during the working day, while the reduction in working hours provides additional time outside work.
As a result, employers cannot reduce or absorb the mandatory meal break to accommodate shorter working hours.
Employees are entitled to minimum rest periods between working shifts and throughout the working week:
These requirements help prevent excessive working hours and employee fatigue and are enforced by the labour authorities.
Under Article 67 of the Chilean Labour Code, employees who have worked for the same employer for more than one year are entitled to 15 working days of paid annual leave. Leave is calculated in working days, typically Monday to Friday.
During annual leave, employees must receive their full remuneration (remuneración íntegra).
Extended annual leave in certain regions
Employees working in the following locations are entitled to 20 working days of paid annual leave, rather than the standard 15 days:
Taking annual leave
Annual leave must generally be taken as one continuous period. However, the employer and employee may mutually agree to divide the portion exceeding 10 working days into separate periods.
This means the first 10 working days must be taken consecutively, while the remaining days may be split by agreement.
Under Chilean labour law, remuneración refers to all payments an employer provides to an employee in exchange for work performed, whether in cash or in kind.
This includes:
Pure expense reimbursements are excluded from remuneration. This distinction is important when calculating employment-related payments, including overtime and leave compensation.
Salary payments
Salaries must generally be paid in Chilean pesos (CLP), unless a collective agreement permits payment in another currency with equivalent legal value.
Employers must provide employees with a detailed payslip showing:
Minimum wage
Chile has a statutory minimum wage, which is established by the government and adjusted periodically.
As of January 2026, the minimum monthly wage is:
Different minimum wage requirements apply to certain categories of employees, including minors aged 15 to 18 who work with parental consent.
Salary payment frequency
Salaries are typically paid monthly, although employers and employees may agree to different payment schedules.
The Labour Code permits weekly, fortnightly or monthly payments, provided the agreed frequency is established in the employment contract or collective agreement.
Regardless of the payment schedule, salaries must be paid regularly and correspond to the most recent ordinary working period.
To calculate the salary and taxes in Chile, click here.
In Chile, employees are entitled to paid sick leave if they provide a valid medical certificate, known as a Licencia Médica, and meet the applicable social security requirements. The payment period depends on the duration of the employee’s absence.
Sick leave duration and payment
Paid sick leave is funded by the employee’s health insurance provider, with payments starting on different days depending on the length of the absence:
Employers may choose to cover the first three days of sick leave as an additional employee benefit when the absence lasts 10 days or less. In this case, the employer is responsible for the cost.
Eligibility requirements
To qualify for paid sick leave through the health insurance provider, employees must:
In Chile, parents are entitled to additional paid parental leave following maternity leave, with financial support from the social security system. Mothers can choose between full-time and part-time leave and may transfer part of their entitlement to the child's father.
Parental leave duration and payment
Parental leave begins immediately after the standard 12-week postnatal maternity leave period.
Mothers can choose between two options:
Sharing parental leave with the father
Mothers may transfer part of their parental leave entitlement to the child's father, depending on the leave arrangement they choose:
In Chile, employees are entitled to paid maternity and paternity leave following the birth or adoption of a child. Additional protections include extended maternity leave in certain circumstances, protection against dismissal and paid breastfeeding breaks.
Female employees in Chile are entitled to 18 weeks of paid maternity leave, divided into:
Maternity leave is funded through the social security system at 100% of the employee’s average salary, subject to the applicable social security contribution cap.
Eligibility requirements
To qualify for maternity benefits, employees must have:
Extended maternity leave
Additional maternity leave applies in certain circumstances:
Protection against dismissal
Pregnant employees benefit from fuero maternal, a special form of employment protection that begins at the start of pregnancy and continues until one year after the end of parental leave.
During this protected period, employers must obtain prior authorisation from the Labour Inspectorate before terminating the employee’s employment.
Additional parental leave
After the standard 12-week postnatal period, mothers are entitled to additional parental leave. They can choose between:
Transferring parental leave to the father
From the seventh week of parental leave, a mother may transfer part or all of her remaining entitlement to the child’s father, provided he is also employed.
The maximum transferable entitlement is:
The transferred leave is funded through the social security system.
Breastfeeding breaks
Mothers are entitled to one hour of paid breastfeeding time per working day until their child reaches two years of age.
This entitlement allows employees to take time away from their regular duties to feed their child.
Under Article 195 of the Labour Code, fathers are entitled to five working days of fully paid paternity leave following the birth or adoption of a child.
This leave must be taken within the first month after the child's birth and may be used either consecutively or as separate days, depending on the employee's preference.
Paternity leave is paid directly by the employer at the employee's regular salary.
The entitlement applies regardless of the employee's contract type or length of service. There is no minimum employment period, and employers cannot refuse this statutory leave.
Employees who adopt a child are entitled to paid adoption leave, with the duration depending on the child's age:
Adoption leave follows the same social security funding arrangements as postnatal maternity leave.
Both mothers and fathers may qualify for adoption leave, and the same parental leave transfer rules apply.
Chilean labour law recognises the following grounds for terminating an employment relationship:
In Chile, employers may dismiss employees due to redundancy or serious misconduct, but poor performance alone is not sufficient grounds for termination. Notice periods and severance entitlements depend on the reason for dismissal.
Dismissal due to redundancy
Redundancy is one of the most common grounds for dismissal without employee fault in Chile. Employers may terminate employment for business-related reasons, including economic difficulties, organisational restructuring or modernisation.
When dismissing an employee due to redundancy, employers must meet the following requirements:
Dismissal due to misconduct or poor performance
Under Chilean labour law, poor performance alone is not sufficient grounds for dismissal. To justify termination on disciplinary grounds, the employee must have committed a serious breach of their contractual obligations.
Examples of conduct that may justify dismissal include:
Unlike redundancy, dismissal for serious misconduct is based on the employee's conduct rather than the employer's business circumstances.
In Chile, employers must follow formal notice and payment requirements when terminating employment. Employees also have the right to challenge dismissals they believe are unfair, unlawful or improperly handled.
Notice requirements
Employers must communicate the termination of employment in writing. The dismissal notice must be delivered either personally to the employee or by certified mail to their registered address.
In most cases, employers must provide advance notice before terminating employment. If the required notice is not given, the employer must pay compensation equivalent to 30 days' remuneration in lieu of notice.
The applicable notice period and other obligations may vary depending on the legal grounds for termination.
What must the dismissal letter include?
The written termination notice must clearly explain the reason for dismissal and outline the payments the employee is entitled to receive, including:
In addition to notifying the employee, the employer must notify the Labour Authority and register the termination through the official Labour Board system.
Final settlement (finiquito)
Following termination, the employer must prepare a final settlement document known as a finiquito.
This document outlines all payments owed to the employee upon termination, including any applicable severance, outstanding leave payments and other compensation.
The employer must provide the finiquito within 10 working days of termination, and the corresponding payment must be made when the document is signed.
Challenging dismissal
Employees who disagree with the grounds for dismissal or the payments offered may challenge the termination.
They can either refuse to sign the finiquito or sign it with a reservation of rights, allowing them to dispute the dismissal or specific payments.
Employees may then bring their claim before the labour courts to challenge a dismissal they consider unfair, unlawful or improperly executed.
Chile's unemployment insurance system, known as Seguro de Cesantía, provides financial protection to employees who lose their jobs. It combines individual unemployment savings accounts with a solidarity fund to support workers during periods of unemployment.
Unemployment insurance benefits
Employees may access the funds accumulated in their individual unemployment savings accounts when their employment relationship ends, provided they meet the minimum contribution requirements.
These requirements depend on the type of employment contract:
The accumulated funds belong to the employee and can be accessed through scheduled withdrawals, subject to the applicable eligibility conditions.
Support through the solidarity fund
Employees who have insufficient savings in their individual unemployment accounts may qualify for additional financial assistance through the solidarity fund, particularly if they were dismissed through no fault of their own.
These benefits are calculated as a percentage of the employee's previous salary and gradually decrease over the benefit period.
Obligations of unemployed persons
Alongside financial support, unemployed individuals are expected to remain connected to the labour market and available for new employment opportunities.
They are typically included in national job-seeker registries, which help facilitate their return to work.
Chile's unemployment protection system therefore aims to provide temporary income support while encouraging and supporting re-employment.
In Chile, severance pay is mandatory when an indefinite employment contract is terminated on certain legal grounds, particularly for business-related reasons or dismissal without cause under Article 161 of the Labour Code. The amount depends on the employee's length of service and any applicable contractual agreements.
When is severance pay required?
Severance pay generally applies when an employer terminates an employment contract for business-related reasons, including:
It may also apply in certain cases where senior employees or employees in positions of trust can be dismissed without cause.
How is severance pay calculated?
Employers must generally pay the severance amount established in the employment contract.
However, if the contract does not specify an amount, or the agreed amount is lower than the statutory minimum, the employer must pay the legally required severance.
Statutory severance is calculated as follows:
Notice period and additional compensation
In addition to severance pay, employers must either:
Final settlement (finiquito)
Severance and any other payments due upon termination are formally recorded in a final settlement document known as a finiquito.
This document confirms the end of the employment relationship and sets out the payments owed to the employee, including applicable severance and compensation in lieu of notice.
Unlike many other countries, Chile does not formally recognise probationary periods for most employees. This means employees hired under standard employment contracts are entitled to full employment rights and legal protections from their first day of work.
Exceptions for domestic workers
The main exception applies to domestic workers, who may be subject to a probationary period of up to two weeks.
Fixed-term contracts as an alternative
In practice, employers often use fixed-term contracts to assess an employee's suitability for a role before offering an indefinite employment contract.
These contracts typically last two to three months, allowing employers to evaluate the employee's performance during the agreed period.
However, if an employer terminates a fixed-term contract before its scheduled end date without valid legal grounds, they may be required to pay the employee the salary they would have received for the remaining contract period.
Employees hired under fixed-term contracts or similar probation-like arrangements generally have the same statutory employment rights and protections as permanent employees.
Intellectual property (IP) in Chile includes inventions, creative works, trademarks, industrial designs and other intangible assets protected by law.
In an employment relationship, these rights determine who owns and can commercially use inventions or creative work developed by an employee.
Ownership of intellectual property
The general rules for intellectual property ownership depend on the nature of the employee's work:
Intellectual property in employment contracts
Clearly defining intellectual property ownership in employment contracts is particularly important for employers operating in technology, innovation and creative industries.
Employment agreements should establish how intellectual property rights are allocated between the employer and employee, helping both parties understand their rights over work-related inventions and creations.
Under Chilean labour law, employers may collect, access and process employees' personal data only when necessary for legitimate employment-related purposes. These include:
Employer obligations and confidentiality
Article 154 bis of the Chilean Labour Code requires employers to maintain the confidentiality and protection of personal information obtained during the employment relationship.
Employers must ensure that employee data is processed for legitimate purposes and in a way that respects employees' privacy and dignity.
Although the Labour Code does not establish a specific sanctions regime for data protection violations, employees may challenge unlawful processing or misuse of their personal information through the fundamental rights protection procedure under Articles 485 and subsequent provisions of the Labour Code.
Data security and employee information
Employers must implement appropriate measures to protect the confidentiality, integrity and security of employee personal data.
These measures should prevent unauthorised access, disclosure or misuse and apply to both physical and electronic employment records.
Data protection obligations are particularly important in remote and hybrid working arrangements, where employers may use digital communication platforms, employee monitoring tools and electronic data transfers.
Employers must also provide employees with clear information about:
Data privacy clauses in employment contracts
Employment contracts should include a data privacy information and authorisation clause explaining how the employer processes personal information for employment-related purposes.
Where legally required, employees should acknowledge and authorise the processing of their personal data for activities such as:
These clauses should clearly identify the categories of personal data processed, the purposes of processing and employees' rights regarding their information.
Any employee authorisation must comply with the applicable legal requirements for processing personal data.
In Chile, employees generally cannot engage in activities that directly compete with their employer during employment. Restrictions that continue after employment ends must be reasonable in duration, geographical scope and the type of work they restrict.
Restrictions during employment
Employees are generally prohibited from conducting business or performing work that directly competes with their employer while the employment relationship is ongoing.
Breaching these obligations may result in disciplinary action or claims for damages by the employer.
Post-employment non-compete clauses
Employers may include non-compete clauses in employment contracts to restrict certain competitive activities after the employment relationship ends.
However, these restrictions must comply with Chilean law to be enforceable. Courts generally assess whether the restrictions are reasonable in terms of:
Non-compete clauses that are excessively broad or prevent employees from earning a livelihood may be considered unenforceable.
Employers may also offer financial compensation in exchange for an employee's agreement to comply with post-employment non-compete obligations.
In Chile, Law No. 21.220 regulates remote work (teletrabajo) and amended the Labour Code to set rules for employees working outside the employer's premises. Employers and employees must agree to remote working arrangements, which must be formally documented and registered with the Labour Directorate.
Remote work agreements
Remote work must be mutually agreed between the employer and employee. The arrangement can be established when the employee is hired or introduced later through an amendment to the existing employment contract.
Employers must register the remote work agreement with the Labour Directorate within 15 days.
Working hours and flexibility
Employers and employees may agree on how working time is divided between remote and on-site work, including fully remote or hybrid arrangements.
They may also agree on how working hours are organised, provided that the arrangement complies with the statutory limits on maximum working time.
What must a remote work agreement include?
The employment contract or an accompanying amendment should specify:
In Chile, remote employees are entitled to the same fundamental employment rights as on-site employees, including remuneration, social security coverage and paid leave. Employers must also provide the necessary work equipment, cover associated costs and respect employees' right to disconnect.
Working hours and the right to disconnect
Remote employees are generally exempt from fixed working schedules and are therefore not entitled to overtime pay.
However, employers must ensure that remote employees receive at least 12 consecutive hours of disconnection within every 24-hour period.
Employees must also observe this rest period to maintain the required separation between working time and personal time.
Equipment and operating costs
Employers are responsible for providing the tools and equipment employees need to perform their duties remotely.
They must also cover the associated operating costs of the remote working arrangement.
Employees cannot be required to use their personal equipment for work-related purposes.
Remote working arrangements do not exempt employers from their duty of care. Employers must take the necessary measures to ensure safe working conditions, regardless of where employees perform their duties.
This includes providing employees with appropriate information about occupational accidents, work-related illnesses and workplace safety risks, helping them understand and maintain safe working conditions.
Employee responsibilities
Remote employees also have a responsibility to maintain a safe working environment. They must:
Both employers and employees must fulfil their respective health and safety obligations, even when work is performed outside the employer's premises.
Hiring employees from Chile provides access to a highly skilled, educated workforce with strong international experience.
Compared to North America or Western Europe, labour costs can be more competitive while maintaining high-quality output. Chile’s stable economy, strong legal system, and business-friendly environment also make it a reliable hiring destination.
Additionally, Chile’s time zone alignment with the US and growing remote work ecosystem make it ideal for global teams.
Native Teams helps you employ and pay your team in Chile directly through owned entities and infrastructure.
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