Employer Of Record in Chile

Chile Country Facts

Considered one of the world’s best places to do business. Chile has more free trade agreements than any other nation, except Singapore. With a long-standing free-market orientation, Chile offers excellent commercial opportunities for U.S. products and services.

Facts to Consider Before Expanding Your Business

Before building your business expansion strategy, you need to know the economy, business laws, legal framework, and Chile’s working culture. SERVIAP gives you high-level facts to understand the risks and opportunities of doing business in Chile.

The Economy

The economy of Chile is a market economy and high-income economy as ranked by the World Bank, and is considered one of South America’s most prosperous nations, leading the region in competitiveness, income per capita, globalization, economic freedom, and low perception of corruption.

The Importance of Small and Medium-Sized Companies

Small and medium enterprises (SMEs) are essential to almost all economies globally, but especially to those in developing countries because of their employment and income distribution. Chile’s extraordinary economic growth record is based on nearly two decades of fiscal reform and monetary discipline. Between 1984 and 1998, the annual gross domestic product (GDP) growth rate ranged from 5% to 12%, with an average of 7.7%. Even in the face of external shocks between 1999 and 2002, Chile maintained a positive growth rate. Chile’s growth rate outpaced the average of the high-income member countries of the Organization for Economic Cooperation and Development (OECD). Such strong growth results from strong fiscal and monetary discipline, a relatively well-developed financial system, modern institutions, and a supportive business environment larger firms.

Opportunities and Investments of Chile Market

Characteristics of the Chilean population

 Key Tax and Labor Authorities

Laws	Brief Description
Internal Revenue Service (SSI-Servicio de Impuestos Internos)	Is   responsible   for    overseeing    and    providing services aimed at the correct application of internal taxes;     efficiently,      equitably,      and      transparently. Its purpose is to reduce tax evasion and provide taxpayers with excellent services to maximize and facilitate voluntary tax compliance.
Ministry of Finance of Chile	The state ministry responsible for directing Chile’s finances; its mission is to efficiently manage public resources through a modern state at the service of citizens; generating conditions of stability, transparency and competitiveness in an internationally integrated economy that promote sustainable and inclusive growth.
National Health Fund (FONASA- Fondo Nacional de Salud)	The financial entity in charge of collecting, administering, and distributing the state money destined to health in Chile, being one of its functions to finance the health benefits of its beneficiaries.
Pension Health (ISAPRES- Instituciones de Salud Previsional)	They are private entities that operate on the basis of an insurance scheme, which are empowered to receive and administer the mandatory health contribution of workers and individuals, who opted for them instead of the state health system (FONASA)
Pension Health Institutions (AFP- Administrado de Fondos de Pensiones)	All workers must deposit a percentage of their salary or income in a personal account with a Pension Fund Administrator (AFP) each month. These resources are aimed at financing the future pension that the person will receive at the retirement stage.
Disability and Survival Insurance (SIS- Seguro de Invalidez y Sobrevivencia)	Disability and Survival Insurance is a percentage of the employees’ taxable income that aims to pay them pension in case of disability or survival to the employees’ family in case of death.
Social Security Institute (IPS- Instituto de Previsión Social)	The IPS provides social security benefits and services, through its ChileAtiende service network, promoting excellence in its management and bringing the State in an inclusive manner to people, considering its officials and civil servants as the main assets of the institution.

Labor Contracts

The employment contract is a legal convention whereby the employer and the employee reciprocally bind themselves, the employee will provide services under dependency and subordination on an ongoing basis and, the employer, to pay for these services a certain remuneration. The employment contract is consensual; must be in writing within the deadlines established by law, and signed by both parties in two copies, leaving one in the possession of each contractor.

Types of Contracts

The labor relations may be for a fixed or indefinite period, a specific project, and/or may be subject to a part-time apprenticeship contract. In the absence of express stipulations to the contrary, labor contracts are assumed to be for an indeterminate period.

Indefinite Work Contract	The fixed term contract becomes indefinite when: •          The worker continues to provide services for the employer with his knowledge after the agreed date of termination. •          When it is renewed a second time. •          It is presumed that a worker has been hired indefinitely when he has provided discontinuous services for the same employer under more than two term contracts, for 12 months or more in a total period of 15 months.
Temporary Work or Task Contract	The that convention by which the worker is bound by the respective employer to execute a specific and determined work, whose validity is limited to its duration. The different tasks or stages of a work may not by themselves be subject to two or more continuous contracts, in which case the contract will be understood to be an indefinite term.
Part-time Contract	This type of work is when it has been agreed to not exceed two thirds of the ordinary workday. Part-time workers will enjoy all other rights provided for full-time workers. However, the maximum limit of legal gratification may be proportionally reduced, in accordance with the relationship between the number of hours agreed in the part-time contract and that of the ordinary working day.
Apprenticeship contract	Apprenticeship work is when the employer or a third party undertakes to impart to an apprentice in certain conditions, the knowledge and skill to fulfill a task or work and will receive an   agreed   remuneration.Only   workers   under   21 years of age may   enter   into   an   apprenticeship   contract. The following will be special obligations of the employer: 1.       Occupy the apprentice only in the work of the apprenticeship program, providing the appropriate work elements. 2.       Allow the controls that correspond to the National Training and Employment Service in contracts of this kind. The contract referred to in this chapter will be valid until the end of the learning plan, which may not exceed two years.

Basic Requirements

The information that the contract must contain is established in the Article 10 of Work Code:

•          Place and date of the contract

•          Indication of nationality and dates of birth and worker income

•          Determination of the nature of the services and the place or city in which they are to be provided

•          Amount, form and period of payment of the agreed remuneration

•          Duration and distribution of the workday, unless the company’s system exists shift work, in which case the provisions of the internal regulations will be followed

•          Term of the contract

•          Other agreements agreed by the parties.

Payroll

Workday, Holidays and Disabilities and Sick Days

On Sundays and those that the law declares holidays will be rest, except for the activities authorized by law to work on those days.

Public Holidays

Date	Holiday Name
January 1st	New Years
April 26th	Constitutional Plebiscite
May 1st	Labor Day
June 7th	Mayor’s Primary Elections (TDB)
September 18th	National Independence
September 19th	Day of the Glories of the Army
October 25th	Municipal Elections
December 25th	Christmas

Migration Process

For foreigners’ workers who have been hired by a company with residence in Chile, they have authorized work visa maximum of 2 years, and they can apply also for a resident visa for their family members. The process will take place in the Consulate of chile from their foreign residence and the Department of Immigration of the Ministry of Foreign Affairs, will analyzes the data of the applicant. Requirements: • Letter from the employer addressed to the Consul justifying the hiring. • Work Contract (notary, legalized and translated, if applicable). • Professional title (if necessary). • Certificates of Criminal Background. • Medical Certificate • Current Passport • 4 photos as small as a passport Requirements for the Contracting Company: • Its legal constitution in Chile • Proof of address • That the activity of the contractor is indispensable for the development of the country. • VAT paid for the last 3 months. • Paid worker forecast corresponding to the past 3 months. About the Work Contract: It must be drafted according to the Chilean legal norms and contain the following clauses: • Obligation of the employer to respond to the payment of the tax to the corresponding income in relation to the remuneration paid. • Obligation of the employer to pay the contributions to the Previsional System and to the Health Worker in Chile or abroad. • Responsibility to pay return shipping fees at the end of the employment contract, for the contractor and his family group.

Employee Termination

The employment contract will end in the following cases:

Misconduct of serious nature: •          Lack of work or performance of their duties •          Sexual Harassments •          Injuries issued by the worker to employer or employees •          Immoral conduct that affects the company

Negotiations executed by the worker within the business line and that would have been.prohibited

Non-attendance of the worker to their work without just cause for two days in a row

Abandonment of the work

Acts, omissions that affect safety or operation in the establishment

Intentional damage to facilities, machinery, tools, etc

Serious breach of the obligations imposed by the contract

The employer may terminate the employment contract by invoking as grounds the needs of the company, establishment or service, such as low productivity, changes in market conditions or the economy, which make the separation of one or more workers necessary. Invalidity, total or partial, is not just cause for the termination of the employment contract. The worker who is separated from his duties for this reason, will be entitled to a compensation. In case of termination, the employer must communicate it in writing to the worker, personally or by registered letter sent to the address indicated in the contract, expressing the cause (s) invoked and the facts on which it is based. Notwithstanding the foregoing, the employer must pay the worker the remuneration and other benefits set forth in the employment contract during the period between the date of dismissal and the date of sending or delivering the said communication to the worker.

Labor Termination Settlement

If the contract has been valid for a year or more and the employer terminates it in accordance with article 161 of the Labor Code, the worker must pay compensation for years of service that the parties have agreed individually or collectively, the employer must pay the worker a compensation equal to 30 of the last monthly remuneration for each year of service and fraction greater than six months, provided continuously. This compensation will have a maximum limit of 330 of remuneration. The employer will have to pay the provision of the holidays as well that the employee was entitle to at the time of the termination. The contract concluded for a specific work or task has been in force for a month or more, the employer may terminate it justifiably as long as it pays the worker, at the time of its termination, compensation equivalent to 2.5 days of remuneration for each month worked and a fraction greater than fifteen days […] (CDT. Art. 163).