Find all the information about the regulation of Chile's labor matters.
Work contract
The work contract must stipulate the nature of the services to be provided and the place where this will occur, the amount, form, and date of payment of the agreed remuneration, the length and distribution of the working day, and the duration of the contract. Workers’ legal rights are inalienable.
Types of work contract
Indefinite contract
These contracts do not have an end date previously established by the parties. They may be terminated on the grounds established in the Labor Code, which include dismissal, resignation, and mutual agreement between the parties.
Fixed-term contract
The duration of these contracts is set at the time of signing. They have a maximum duration of one year or, exceptionally, two years in some cases.
Project-related contract
In this case, the employee is hired for a specific material or intellectual task whose duration is also that of the contract.
Social Security
Every employer in the private system must deduct the gross wage -and in certain cases contribute- of their workers to guarantee their social security, including pensions, health, and unemployment insurance.
Pension Funds
All employees must be affiliated to an Administradora de Fondos de Pensiones, AFP
(Pension Fund Administrator) and the employer must deduct the amount of their contribution from their earnings and pay it into the corresponding AFP.
Health System
There is a minimum legal deduction of 7% of the gross wage for health care coverage, although the employee may agree a higher amount with the insurer. The employee can choose between the public system Fonasa (National Health Fund) or the private system Isapre (Health Insurance Institution).
Unemployment Insurance
Law 19.728 created an unemployment insurance scheme for employees with an indefinite contract to use if this is terminated for any reason. The scheme is financed with contributions from the employee, the employer, and the state.
Outsourcing
Chilean labor legislation permits outsourced work which it understands as that carried out by an employee under a work contract for an employer, referred to as a contractor or subcontractor
Remunerations
Remunerations are a matter of agreement between the employer and employee but cannot be less than the minimum monthly wage (IMM) set annually by law for workers over 18 and less than 65 years of age, except those exempts from compliance with a
working day. Since 1 May 2021, the minimum monthly wage has been set at 337,000 pesos.
Holidays
Employees with more than one year of service are entitled to 15 working days’ holiday a year on full pay. However, employees in the Magallanes and Aysén Regions and the
Palena Province is entitled to 20 working days’ holiday a year.
Collective bargaining
This is the procedure through which one or more employers negotiate with one or more unions and/or with employees who act together for this purpose to sign a collective contract establishing common working conditions and remunerations for a specific period of time.
What are the main Labor Laws and Social Security in Chile?
Find key information about Chile's law system.
