Hire in Chile

• For other employees, a fixed-term agreement is commonly employed as an informal probationary period. The employer has the option to extend this ‘probationary period’ up to a maximum duration of one or two years, depending on the job’s nature.
• Following successful evaluation, the labor contract may be renewed, or an indefinite (permanent) contract can be established if the employee is deemed suitable for the position.

• The maximum weekly working hours are limited to 45, spread over a minimum of five and a maximum of six days.
• Exempted from these restrictions are employees with managerial authority, those working without direct supervision, and those working remotely or at locations other than the central workplace.
• Furthermore, the standard duration of a workday must not surpass 10 hours.

• Work exceeding 10 hours per day or 45 hours per week is classified as overtime.
• However, a maximum of two hours of overtime is permissible daily, preventing any employee from working beyond a total of 12 hours in a single day, given the standard ‘ordinary’ limit of 10 hours.
• Employees excluded from the hourly limitations, such as managers, do not qualify for overtime pay. Overtime agreements are temporary and must not extend beyond three consecutive months. Any additional hours worked must be documented in writing, and parties cannot waive overtime pay through mutual agreement.
• Overtime compensation is set at 1.5 times the regular hourly wage.

Businesses are required to possess an internal regulation handbook (Reglamento Interno) outlining the health and safety regulations of the country. This includes:

• The Internal Regulations on Organization, Health, and Safety, as stipulated and governed by the Chilean Labor Code. Employers are mandated to draft this document, and any company with 10 or more permanent employees is legally obliged to have it in effect.

• Additionally, every company, irrespective of its workforce size, must adhere to the regulations outlined in the Industrial Accidents and Occupational Hazards in the Workplace Law.

• Mutual agreement of both employer and employee
• Employee’s voluntary resignation
• Death of the employee
• Expiry of the agreed fixed-term in the contract
• Fulfillment of the project or work for which the employee was hired
• Circumstances beyond the control of both parties (force majeure)
• Company needs arising from changes in market conditions or the economy
• Dismissal by the employer

It is important to note that, as a general principle, employers in Chile are not allowed to terminate a labor contract arbitrarily. Terminations must be justified by a legitimate business need related to the company. In recent times, courts have shown increasing strictness in evaluating whether the cited business grounds are sufficient to warrant a termination.

Positions of trust, such as managers or employees authorized to broadly represent the company, can be terminated without the necessity of citing business needs. A written notice of termination is sufficient.
 

• Employees may face dismissal without compensation in instances of severe misconduct or contractual breaches.
• Special protection is afforded to employees during specific periods, such as maternity leave (and one year thereafter) and when involved in various trade union activities. When under this special protection, termination requires prior court authorization.
• Upon termination of an employment contract, the employer must adhere to specific procedures, including the creation of a “final settlement” within ten working days. This document confirms the conclusion of the employment relationship and verifies that the employee has received all due payments.
• In certain situations, such as when the employer seriously breaches the employment contract, an employee has the right to terminate the agreement and seek compensation through the courts, referred to as an “indirect” dismissal.
• Should a court deem the termination of an employee’s contract as unjustified, unfair, or lacking legal grounds, the employee is entitled to compensation.

If dismissal occurs on specific grounds, such as redundancy, the employer is obligated to provide the employee with a minimum of 30 days’ notice or, alternatively, one month’s pay in lieu of this notice. Conversely, in the case of resignation, an employee is typically required to give at least 30 days’ notice.

Chile lacks explicit labor regulations that specifically address or forbid restrictive covenants. Nevertheless, the country’s Constitution explicitly safeguards the employee’s right to work and their freedom of choice.

Within an employment agreement, the following restrictive covenants can be incorporated and may be legally enforceable:

• Non-compete clauses
• Non-solicitation of customers
• Non-solicitation of employees

Post-employment non-compete clauses have been acknowledged as valid when documented in writing, accompanied by compensation to the employee, and possess a reasonable duration. However, practical enforceability of such clauses can be challenging.

If a labor contract is terminated due to the company’s needs, such as downsizing or changes in economic conditions, or in the case of termination at will (where permitted by law), the employer is required to provide severance pay in the following manner:

• An amount equivalent to one month of salary for each year worked, prorated if the employee’s service exceeds six months.
• If the termination notice is less than 30 days, the employee is entitled to severance compensation equivalent to one month’s remuneration.

In both scenarios mentioned above, the severance payment can be waived if mutually agreed upon by both parties.

In Chile, the general principle is that the payment of severance is governed by the contractual agreement. If no agreement exists or if the agreed amount is lower than the legally mandated severance pay, the legal severance must be provided.

However, if an employee is dismissed for cause, such as a serious breach of contract or material misconduct, the right to severance compensation does not apply.

Upon termination of the labor contract, the employer must specify the total sum, inclusive of social security contributions, bonuses, or any monetary valued items. This sum excludes occasional benefits received by the employee.

• The ability to form labor organizations (unions, federations, or confederations) without prior authorization is recognized. These unions are subject to regulation outlined in the Labor Code, and membership is both personal and voluntary.
• The primary objective of these organizations is to represent employees in the exercise of their rights, facilitate collaboration between employers and employees, promote educational initiatives, and enhance workplace safety.
• Employees are allowed to be affiliated with only one union for each position of employment they occupy.
• Multiple unions have the possibility to coexist within a single company.
• According to the law, the union is the sole entity authorized to represent employees in a collective bargaining process.
• Strikes are prohibited in utility sectors, such as those providing electricity or water, as well as in activities with the potential for significant harm to the country’s security or economy. In such instances, mandatory arbitration is enforced.

• The duration of fixed-term contracts is established at the time of their initiation.
• These contracts are limited to a maximum duration of one year or, under exceptional circumstances, two years for individuals in managerial roles or those possessing professional or technical qualifications from a higher education institution.
• Renewal of fixed-term contracts is permissible only once. If renewed for a second time, they automatically convert into indefinite contracts. This condition also applies if an employee continues to provide services beyond the contract’s expiration, and the employer is aware of such continuation.
• If an employer terminates the contract before the agreed-upon date, they are obligated to compensate the employee for the full contractual period.
• Tasks or stages within a specific job are not considered separate successive fixed-term contracts; instead, they are presumed to constitute an indefinite contract.
• Contracts that engage an employee for permanent services are not categorized as contracts for a specific job.
• Fixed-term contract employees are entitled to vacation and special termination severance, provided specific requirements are met.

Salary statements must be provided at least once a month, presenting a comprehensive breakdown of the remuneration disbursed.

Employees who have worked for a year or less have the right to the annual paid vacation of 15 working days. The holiday must be continuous but an excess over 10 days can be divided by mutual agreement.

After working 10 years, regardless of whether the tenure is continuous or for the same or different employers, vacations are increased by one working day for every three years of service with the current employer.

In the 11th region (Región de Aysen del General Carlos Ibañez del Campo) and 12th region (Región de Magallanes y Antartica Chilena) of Chile

There is no annual limit on the duration of sick leave an employee can take, but the entitlement depends on the medical certificate provided by a doctor. To qualify for sick leave, employees must submit a medical certificate to the employer within two working days from the onset of the sick leave.

Within three working days, the employer is required to submit the medical leave certificate to the health insurance institution (ISAPRES or FONASA), which covers the sick leave expenses, potentially subject to certain limits.

The sick leave rules are as follows:

• For three or fewer days of sick leave, employees are not eligible for sick pay.
• For sick leave lasting between four and 10 days, employees are entitled to sick pay.
• If sick leave extends beyond 10 days, employees are entitled to sick pay for all working days during the sick leave period.

Workers are entitled to receive compensation for bereavement leave under the following circumstances:

• In the event of the death of a child or spouse/civil partner, employees have the right to take seven calendar days of leave, in addition to their annual leave entitlement, and this can be availed regardless of their tenure with the employer.
• If an employee experiences the death of a parent, they are entitled to a three-business-day leave starting from the date of the parent’s demise.
• In the unfortunate event of the death of an unborn child, both male and female employees are eligible for three business days of leave, which commences from the confirmed date of death with a valid fetal death certificate. Furthermore, employees who suffer the loss of a child or spouse are granted tenure protection for one month, beginning from the date of death.

Family Care Leave: In situations where the employee’s spouse, civil partner, father, or mother is in a terminal state, the employee may be granted 10 working days of paid leave, contingent upon providing a valid medical certificate.

Marriage/Civil Union Leave: Each employee is entitled to five consecutive working days of paid leave for marriage or civil union ceremonies, in addition to their annual leave. The employee can opt to use this leave on the day of the ceremony and on the days immediately preceding or following the event.

Military/Training Leave: During military service or mobilization in the national reserves, an employee has the right to retain their job without pay. However, if reserve personnel are called in for less than 30 days, employers are obligated to provide compensation equivalent to regular wages.

Medical Examination Leave: Employees aged 40 and above for females and 50 and above for males, with employment terms exceeding 30 days, are entitled to half a day’s leave annually for essential preventive health examinations.

Vaccination Leave: In instances of public vaccination programs or campaigns aimed at controlling and preventing communicable diseases, all employees are entitled to half a day’s leave for vaccination.

Maternity Leave: Women employees are entitled to a six-week prenatal leave before delivery and a 12-week postnatal leave after childbirth. If delivery occurs more than six weeks after the maternity leave commencement, the prenatal leave extends until delivery. In instances where delivery occurs before the 33rd week of gestation or if the newborn weighs less than 1,500 grams, the postnatal leave is extended to 18 weeks.

During pregnancy and for one year from the conclusion of postnatal leave, female employees cannot be subject to dismissal.

In the case of multiple births, the postnatal rest period increases by seven consecutive days for each child born after the second.

If both parents are employees, either parent, as chosen by the mother, may take parental postnatal leave starting from the seventh week for the duration specified by the mother. In the event of the mother’s death during childbirth or the postnatal leave period, the leave will be granted to the father or the child’s legal guardian.

Breastfeeding Breaks: Employees are entitled to a minimum of one hour per day to feed their children under two years of age. This right can be implemented in any of the following ways, subject to agreement with the employer:

• At any time during the working day;
• Divided into two portions at the employee’s request;
• Postponed or advanced by half an hour or an hour at the beginning or end of the workday.

The time spent breastfeeding is considered working time and is non-negotiable for employees with children under the age of two years.

Adoption Leave: Employees who adopt a child, including women, single men, or widowers, are entitled to one year of unpaid adoption leave from the date when the court grants custody. If the adopted child is under six months old, the parent is entitled to an adoption allowance for 12 weeks.

Paternity Leave for Adoption: Fathers involved in the adoption process are entitled to paternity leave, starting from the notification of the resolution granting personal care or welcoming the adoption of the child.

Paternity Leave: Fathers are entitled to five continuous working days of paternity leave, usable at their discretion from the delivery date. This permission is also extended to fathers in the adoption process, with the leave counted from the notification of the resolution granting personal care or fostering the adoption of the child.

Shared Parental Leave: Fathers can also participate in parental leave, with the option of up to six weeks of full-time leave or 12 weeks of part-time leave.

Childcare Leave: A mother with a child under one year of age facing a serious illness is permitted leave during the period specified by the health service. This right is also extended to the spouse or civil partner. If both parents are eligible for leave, it is the mother’s decision on who takes the leave.

Employees (both parents) with a child older than one year and below 18 years, suffering from a serious accident or life-threatening illness, are entitled to paid leave equivalent to 10 working days per year. This can be distributed at the employee’s discretion in full, partial, or combined days.

• In the event of the company generating profits, it is required to distribute 30% of the net profits among employees in proportion to their respective salaries. This distribution can occur on a monthly or annual basis.
• As an alternative to the aforementioned obligation, the company has the option to provide a bonus equivalent to 25% of the annual salary. However, irrespective of the salary level, the bonus cannot surpass the monthly minimum wage.
• A distinct profit-sharing agreement may be negotiated between the company and its employees, but any payment made to employees under such an agreement must not fall below the thresholds mentioned earlier.

The 13th salaries (Gratificación de Fiestas Patrias and Navidad) are required to be disbursed annually in two installments. The initial installment is paid during Fiestas Patrias (in September), while the second installment is paid at Christmas (in December).

There are a total of 17 paid public holidays in Chile. In cases where a holiday coincides with a weekend, the Chilean government may opt to extend the holiday to either Friday or Monday. Presidential and parliamentary elections are conducted every four years on the third Sunday of November, and the election days for both Presidential and Municipal/Regional positions are designated as holidays.

Additionally, there are two local/regional holidays:

• June 7th – Battle of Arica (observed solely in the Arica and Parinacota Region)
• August 20th – Nativity of Liberator Bernardo O’Higgins (celebrated exclusively in the communes of Chillán and Chillán Viejo)