Labor, social security and immigration

LEGAL FRAMEWORK

Legal framework and principles

Private sector labor relations are governed by the Labor Code (consolidated text set by DFL No. 1 of 2002 of the Ministry of Labor and Social Security). The right to work and to a non-discriminatory environment has constitutional rank under Article 19 No. 16 of the Constitution, and Article 2 of the Labor Code prohibits discrimination on grounds of race, sex, age, marital status, union membership, religion and nationality, among others.

Administrative enforcement and interpretation fall to the Labor Directorate, through the Labor Inspectorates, whose rulings set criteria binding on the employer, though not on the courts. Disputes are resolved before the Labor Courts, with challenges through the annulment appeal and, exceptionally, the unification of case law before the Supreme Court.

The organizing principle of the field is the primacy of reality. What defines an employment relationship is not the contract’s name, but the effective presence of subordination and dependence. Article 7 of the Labor Code defines the individual contract as one under which the worker renders personal services under the employer’s direction and dependence in exchange for remuneration. When a “fee-based” contractor keeps a schedule, receives instructions and depends economically on the company, courts tend to recognize an employment relationship with all its consequences, whatever the invoice says.

EMPLOYMENT CONTRACT

The employment contract

The contract must be in writing and Article 10 of the Labor Code lists its minimum clauses, including identification and nationality of the parties, nature of the services, place of work, working hours, remuneration and start date. The employer must make the contract available to the worker within 15 days of starting, or 5 days if it is for a specific job or service or for less than 30 days. Failure to do so exposes the employer to a fine and creates a presumption that the worker’s account of the terms is true. After signing, the employer must register it electronically on the Labor Directorate’s portal within 15 days.

Under Article 10 of the Labor Code, the contract must contain, at a minimum, the following stipulations.

· Place and date of the contract

· Identification of the parties, indicating the nationality, domicile and email address of both, if any, and the worker’s dates of birth and start of employment.

· Description of the nature of the services and the place or city where they are to be rendered; the contract may specify two or more specific functions, whether alternative or complementary.

· Amount, form and payment period of the agreed remuneration.

· Duration and distribution of working hours, unless the company operates a shift system, in which case the internal regulations apply.

· Any other terms the parties agree upon.

Where applicable, the contract must also state any additional benefits provided by the employer in the form of housing, electricity, fuel, food or other in-kind benefits or services.

EMPLOYMENT CONTRACT

Hiring modalities

The law prefers the indefinite-term contract, but admits temporary modalities. The fixed term has a maximum of one year, extendable to two for managers or persons with a professional or technical degree, and becomes indefinite upon a second renewal, upon continuation with the employer’s knowledge after expiry, or upon 12 or more months of discontinuous service within 15 months of the first hiring. The contract for a specific job or task lasts as long as the work does, but chaining stages of the same work into successive contracts makes the relationship indefinite. There is no general probationary period, except for domestic workers (up to two weeks); in practice it is replaced by an initial fixed term that, if satisfactory, becomes indefinite.

WORKING HOURS

Working hours

Ordinary working hours are being gradually reduced by Law No. 21,561, published on April 26, 2023 (the 40-Hour Law). The current cap and its evolution are as follows.

44 h 42 h 40 h 44 hours per week from April 26, 42 hours per week from April 26, 40 hours per week from April 26, 2024. 2026 (the cap in force as of this 2028. report’s cutoff date).

The reduction does not authorize cutting remuneration, and the Labor Directorate clarified that Law No. 21,561 does not require a proportional reduction for relationships whose hours are already below 40 (Ruling ORD. No. 886/34, of December 26, 2024). The same law narrowed the categories that may be excluded from the hours limit to managers, administrators, attorneys-in-fact with management powers and those rendering services without immediate senior supervision.

Overtime Overtime is capped at two hours per day with a surcharge of at least 50% over the agreed salary. It may only be agreed for the company’s temporary needs, in writing and for a term of no more than three months, renewable. The 40-Hour Law also allowed overtime to be compensated with rest days, up to five per year.

Remote work and telework Remote work and telework, regulated since 2020, require a written agreement specifying the modality, the place of performance, supervision, treatment of working hours and a disconnection of at least 12 continuous hours of rest in every 24-hour period. Law No. 21,561 also added, for workers with children up to 12 or with their personal care, whatever their work modality, the right to a two-hour band within which they may bring forward or push back the start of their day by up to one hour.

REMUNERATION

Remuneration

The base salary cannot be lower than the monthly minimum wage for a full ordinary workweek. Law No. 21,751, published on June 28, 2025, set the value in force from January 2026, and Law No. 21,830, published on June 22, 2026, provided the adjustment applying from May 2026.

$553.553 $412.938 Workers over 18 and up to 65. CLP 539,000 gross per Workers under 18 and over 65. CLP 402,082 from month from January 1, 2026 (Law No. 21,751) and CLP January 1, 2026 and CLP 412,938 from May 1, 2026. 553,553 from May 1, 2026 (Law No. 21,830).

From January 1, 2027, the minimum wage will be adjusted automatically per accumulated CPI variation between May 1 and December 31, 2026, so confirm the value in force when setting salary bands.

Statutory profit-sharing bonus The statutory profit-sharing bonus is an annual benefit that a for-profit company must pay when it earns net profits, and there are two alternatives. Article 47 of the Labor Code requires distributing among workers no less than 30% of those profits. Article 50 offers the alternative most companies adopt: paying each worker 25% of monthly remuneration accrued in the year, with an annual cap of 4.75 monthly minimum wages, which exempts the company from the 30% rule whatever the profit and makes the cost predictable. Remuneration is subject to the Second Category Single Tax, which the employer withholds and remits to the Treasury, progressive from 0% to 40%. See Taxation.

VA C AT I O N A N D L E AV E

Annual vacation and leave

Annual vacation is 15 business days (Monday to Friday, excluding holidays) with full pay, for workers with more than one year of service, and 20 business days in the Magallanes and Chilean Antarctica and Aysén regions and the province of Palena. The excess over ten days may be split by agreement, and up to two consecutive periods may be accumulated.

Progressive vacation. Grants one additional day for every three further years to anyone with ten accumulated years of work, with a limit of ten creditable years from previous employers.

Collective vacation allows the establishment to close by aligning the closure with staff vacation.

Law No. 21,645, on work-life balance, added preferential vacation timing during school holidays for those with personal care of a child under 14 or an adolescent under 18 with a disability or dependence.

Only absences for illness, pregnancy and maternity or paternity leave carry a right to pay or subsidy; any other absence must be agreed between the parties. Subsidized medical leave has no annual limit, subject to prior affiliation and contribution to the health system.

TERMINATION

Termination of the employment relationship

Dismissal in Chile always requires cause. At-will dismissal does not exist, and the company must invoke an express legal ground, even when terminating several workers at once, since the law has no special rules for collective dismissal. The grounds are in Articles 159, 160, 161 and 163 bis of the Labor Code, and severance depends on which is invoked.

Article 159 · objective grounds. Mutual agreement, resignation with 30 days’ notice, death of the worker, expiry of the term, completion of the job or service, and acts of God or force majeure. None gives a right to years-of-service severance.

Article 160 · forfeiture for acts attributable to the worker. Lack of probity, sexual harassment, physical assault, insults, unjustified absence, abandonment of work, intentional material damage and serious breach of contract. It also gives no right to years-of-service severance.

Article 161 — grounds generating severance. Needs of the company, establishment or service (rationalization, modernization, falling productivity or market changes); and written notice of termination, applicable to workers with management powers or positions of exclusive trust, dismissable by notice without stating cause. Article 163 bis. The employer’s entry into liquidation insolvency proceedings.

The settlement and its components Upon termination, amounts owed must be paid in the settlement (finiquito), which includes: Outstanding remuneration and statutory or proportional vacation. Always payable, whatever ground is invoked.

Pay in lieu of notice. Applies only under Article 161 when the 30-day notice is not given; equal to the last monthly remuneration, capped at UF 90.

Years-of-service severance. Also under Article 161; accrues for each year and fraction over six months of continuous service with the same employer; equal to one month of remuneration per year, subject to the caps of Article 172 of the Labor Code, i.e. a maximum of 11 years of service and a base limited to UF 90 of monthly remuneration.

TERMINATION

Formalities, the Bustos Law and surcharges

Dismissal formalities and the Bustos Law Dismissal must be communicated in writing, stating the ground and the facts, within three business days of separation, and reported to the Labor Inspectorate and registered electronically within the same period, extended to ten days in cases of mutual agreement, resignation or death.

Social security contributions must be up to date at the time of dismissal. If they are not, the Bustos Law applies, incorporated into Article 162 of the Labor Code by Law No. 19,631: the dismissal does not end the contract until the owed contributions are paid in, so the employer keeps paying remuneration until validation. The same Article 162 provides a narrow exception when the amount owed does not exceed the lesser of 10% of the social security debt or 2 UTM and is paid within 15 business days of service of the claim. The settlement must be signed before a certifying officer (notary) to be enforceable.

Surcharges for unjustified dismissal If the court declares the dismissal unjustified, undue or improper, the years-of-service severance is increased with the following surcharges:

+30% +50% +80% undue invocation of company improper application of Article 159 for unjustified application of Article needs (Art. 161) grounds 160 grounds; may reach 100% when the court also declares that the invoked ground lacks any plausible basis.

The deadline to claim is 60 business days, extended to 90 days with a prior administrative complaint.

RIGHTSIMMIGRATION

Job protection (fuero) and fundamental rights action

Certain workers enjoy fuero, which prevents their dismissal without prior judicial authorization. Protected groups include union leaders, pregnant and postpartum women, those involved in collective bargaining and members of the joint health and safety committee. In maternity matters, Article 201 of the Labor Code covers from pregnancy and, in general, up to one year after maternity leave ends.

Added to this is the fundamental rights action, which safeguards fundamental rights in the employment relationship, such as integrity, honor and privacy, freedom of conscience and expression, and non-discrimination. It lightens the worker’s burden of proof — they need only show indications of the violation — after which it falls to the employer to justify the proportionality and reasonableness of its conduct. If it occurs in connection with dismissal, the employer pays additional compensation set by the court, of six to eleven months of the last remuneration.

SUBCONTRACTING

Subcontracting and staffing services

Subcontracting is the arrangement in which a contractor habitually performs works or services, at its own account and risk and with its own employees, for a principal company, under a civil or commercial agreement. It is lawful, but the principal company is not insulated from the contractor’s labor and social security obligations toward its workers, including termination severance.

Liability is joint and several as a general rule, so the worker may pursue the principal or the contractor for the full amount. It softens to subsidiary when the principal exercises its information and retention rights — requiring the contractor to prove compliance with its labor and social security obligations and, upon breach, withholding from payments what is needed to cover the debts; it then answers only in subsidy, once enforcement against the contractor is exhausted.

Staffing services Staff supply through temporary services companies is allowed only in the cases the law authorizes, for limited periods, and the temporary services company must be registered with the Labor Directorate and post a guarantee; outside those cases, the user company is deemed the direct employer.

COLLECTIVERELATIONS

Unions and collective bargaining

The Constitution and the Labor Code recognize the right to form unions, federations and confederations without prior authorization, and the rights to bargain collectively and to strike. Membership is personal, voluntary and non-delegable; a worker may belong to only one union per job.

Forming a company union requires minimum quorums depending on size and whether another union already exists.

In companies with more than 50 workers, a minimum of 25 representing at least 10% of the total is required; with no existing union, one may be formed with 8, but it must reach the ordinary quorum within a year, on pain of forfeiting its legal personality.

In companies with 50 or fewer workers, a minimum of 8 representing at least 50% of the total is required.

Collective bargaining takes place, as a general rule, between the company and the union, with guarantees such as job protection for those involved and the right to strike within the regulated procedure. The resulting instrument binds the company and the covered workers for the agreed term.

LEY KARIN

Workplace harassment, sexual harassment and violence

Law No. 21,643, published on January 15, 2024 and known as the Karin Law, amended the Labor Code on the prevention, investigation and sanctioning of workplace harassment, sexual harassment and violence at work. It took effect on August 1, 2024 and was complemented by Law No. 21,687, published on July 31, 2024. It requires every company to have a prevention protocol, defines the investigation procedure upon a complaint and incorporated workplace violence by third parties outside the employment relationship.

A company receiving a complaint must adopt immediate protective measures and conduct an internal investigation with impartiality and defined deadlines, or refer the file to the Labor Inspectorate, applying any applicable sanctions. A worker who is a victim of harassment retains the right to constructive dismissal for serious employer breach, with the corresponding severance. Article 154 bis requires the employer to keep confidential the worker’s personal information obtained in connection with work.

SOCIAL SECURITY

Social security

The system rests on four pillars: pensions (old age, disability and survivorship), health (illness and maternity), workplace accident and occupational disease insurance, and unemployment insurance. As a general rule, pension and health contributions are borne by the worker, deducted and remitted monthly by the employer, while accident insurance and part of the other contributions are borne by the employer.

Pensions and the 2025 reform The system was built on the individual capitalization of DL No. 3,500 of 1980, administered by the AFPs. The worker contributes 10% of taxable remuneration to their individual account, plus the AFP’s commission. The legal retirement age is 65 for men and 60 for women, with no obligation to retire.

The 2025 pension reform operated on that base. Law No. 21,735, published on March 26, 2025, created a mixed pension system and a social insurance component in the contributory pillar, and improved the Universal Guaranteed Pension. Its core is a new employer contribution, phased up to 7%; added to the Disability and Survivorship Insurance contribution, the employer’s total pension-related burden reaches 8.5% of taxable remuneration at full phase-in toward 2033. Of that total, 4.5% goes to the worker’s individual capitalization account and the remaining 4% to the new Social Pension Insurance, administered through the Autonomous Pension Protection Fund (FAPP). Implementation began with an additional 1% contribution from August 2025; some benefits, such as the benefit for years contributed, are paid from January 2026. The reform also strengthened the Universal Guaranteed Pension, a non-contributory benefit created by Law No. 21,419 of 2022.

Health, accidents and unemployment The health contribution is 7% of taxable remuneration, borne by the worker, under a public (FONASA) or private (ISAPRE) regime, the latter with additional contributions for greater coverage. Workplace accident and occupational disease insurance is governed by Law No. 16,744 and borne exclusively by the employer, with a basic contribution plus an additional one based on risk; the Disability and Survivorship Insurance (SIS), covering the worker’s disability or death before accumulating retirement funds, is also employer-funded. The unemployment insurance of Law No. 19,728 is mandatory for all Labor Code workers, administered by the Unemployment Fund Administrator (AFC) with contributions from employer, worker and State depending on the contract type; it operates whatever the cause of termination and allows monthly withdrawals once unemployed, supplemented by a Solidarity Fund.

2026 CONTRIBUTIONS

2026 contributions and taxable caps

Item Reference rate Borne by 2026 taxable cap

Pension (individual account) 10% Worker UF 90

Health (FONASA or ISAPRE) 7% Worker UF 90

Unemployment, indefinite contract 0.6% worker and 2.4% employer Both UF 135.2

Unemployment, fixed-term contract 3% Employer UF 135.2

Disability and Survivorship (SIS) Borne by the employer Employer UF 90

Workplace accidents (Law 16,744) Basic plus additional based on risk Employer UF 90

Pension reform / SIS (employer) Phased up to 8.5% toward 2033 Employer UF 90

The taxable caps are set annually by the Superintendence of Pensions. For 2026, the cap for pensions, health and Law No. 16,744 is UF 90.0 per month, and for unemployment insurance UF 135.2, effective from February 2026 payrolls. The additional accident contribution rates and AFP commissions vary by activity and administrator, so the exact cost is calculated case by case.

FOREIGN WORKERS

Foreign workers and the immigration regime

Hiring foreigners is unrestricted, save for two limits. First, Article 19 of the Labor Code requires that in companies with more than 25 workers at least 85% of the workforce be Chilean nationals. For the calculation, the law provides softening rules: the total workforce in the country is considered, not per establishment; specialist technical staff irreplaceable by nationals are excluded; and a foreigner who is the spouse, civil partner or parent of a Chilean child, the widow or widower of a Chilean spouse, or has more than five years of residence counts as Chilean. The second limit is immigration authorization: the foreigner needs a residence permit authorizing work, governed by the Migration and Aliens Law.

RESIDENCE PERMITS

Authorization to work

The usual route to work is Temporary Residence in the subcategory of persons carrying out lawful paid activities, which requires, among other documents, a valid passport, a criminal record certificate from the country of origin or residence covering the last five years, an employment contract and proof of funds, and is applied for online through SERMIG. Once applied for in Chile and admitted to processing, the certificate of temporary residence in process authorizes a person over 18 to work while it is resolved.

From an employment perspective, what matters is which category authorizes work. The holder of a Transitory Stay Permit may not perform paid activities, except under an exceptional work authorization from SERMIG for specific, sporadic activities.

Category Authorizes work Reference duration

Yes, exceptional, specific and sporadic Work authorization (Transitory Stay) Up to 90 days, extendable once activities

Yes, dependent work with an employer in Temporary Residence · lawful paid activities Temporary and extendable Chile

Temporary Residence · seasonal workers Yes, for the authorized seasonal activity Limited to the seasonal work

Temporary Residence · multiple-entry business Does not replace a dependent work permit Up to six months per year

Temporary Residence — investors / Mercosur Depends on the subcategory or permit Temporary and extendable (reciprocity)

Permanent Residence Yes, any lawful activity Indefinite, subject to retention rules

Other temporary residence subcategories (seasonal workers, investors, multiple-entry business and Mercosur) are summarized in the table above. Family members obtain residence as dependents, but may not work unless they obtain their own authorization. After five years, an adult foreigner may access the vote and apply for naturalization.

Categories, requirements and timelines may change, so check the SERMIG portal before starting the process.