If expanding your business to Latin America has been on your mind, then Chile may be an option. According to the central report, Chile experienced its fastest growth in five years during the first quarter of 2018.
Chile has one of South America’s largest natural resources reserves and is a major exporter of copper and lithium (the latter which is currently in high global demand). Chile’s business friendly government provides foreign investors with policies to promote growth, development and sustainability.
When expanding internationally, corporations often notice that each country has unique rules and regulations when it comes to statutory leave, employee expenses and taxation that make expansion into a new country challenging. If your company is planning to expand this year, we list below a few things to consider when you are hiring either locals or expat workers in Chile.
1. Fixed-term contracts extensions
Employment contracts must be written in Spanish but may also be dual language.
A fixed-term contract must not exceed 12 months and may be renewed only once. The total term must not exceed two years. After two years or a second renewal, whichever comes first, or if the employment is renewed twice for a total duration of 12 months in any 15-month period, the employment relationship is considered indefinite. Fixed-term contracts may be terminated earlier than the agreed expiry date, but the employer still has to pay a salary to the worker until the end date stipulated by contract.
2. Annual holiday leave
Employees are entitled to 15 days of holiday leave after 1 year of employment. This does not include public holidays. After ten years of employment, employees are entitled to one additional day for every three years of employment worked.
3. Notice periods and termination
There are no notice periods during probation in Chile.
Both employers and employees must give 30 days’ notice in advance when terminating an employment contract. Payment in lieu of notice is permitted. Upon termination proportional salaries, annual holiday leave as well as compensation for the years worked is due. The compensation for seniority in the workplace is the equivalence to 1 month of salary for each year worked, which is capped at 330 days for a maximum of an 11-years contract.
4. Additional benefits
• Christmas bonus
Unlike the other LAM countries, the Christmas bonus is not mandatory in Chile. Although it is commonly offered by companies.
• Meal and transportation benefits
In Chile, companies commonly offer their employees monthly non-taxable benefits such as meal and transportation allowances. (Movilización and Colación)
• Profit sharing
Profit Sharing (Gratificación Legal) is also commonly offered to employees. This is taxable and usually equal to 25% of the employee’s base salary. Gratificación Legal is paid monthly and capped according to local regulations.
Use Capital’s GES International PEO/EOR services to expand into Chile
Capital GES can help you expand into Chile and other countries in South America without the need to immediately establish a corporate entity. By choosing to use our International PEO/EOR services you can expand your business in a fully compliant and cost-effective way. Our in-country experts will be able to help you navigate the different regulations and labour laws and assist you with employing staff legally and compliantly in Chile. For further information you can contact our LATAM office on + 55 31 3194 8150 or email us at firstname.lastname@example.org to see how you can expand your business and hire staff in Chile.