TL;DR, Hiring in Chile
- Fully-loaded employer cost: ~5.35% statutory + Ley 21.735 employer pension contribution (3.5% from Aug 2026, phasing to 7% by 2033)
- Severance of 1 month/year (max 11 months) is the dominant exit cost
- Mandatory health insurance choice: Fonasa (public) or Isapre (private), employee 7%, no employer share
- AFP private pension: 11.45% employee-paid (no statutory employer match outside the new reform)
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Statutory employer costs in Chile
In Chile, employer statutory contributions are moderate: SIS disability/life insurance (2.0% for remuneraciones from July 2026), unemployment insurance (~2.4% for indefinite contracts), and ACHS/Mutual work-accident insurance (~0.95%, varying by industry). Ley 21.735 (the 2024 Reforma Previsional) phases in an employer-only pension contribution rising roughly one point a year toward 7% by 2033; it stepped up to 3.5% for August 2026 remuneraciones, lifting total employer cost to roughly 8.85%. The dominant exit cost is severance: 1 month's salary per year of service, capped at 11 months, on no-fault termination.
| Contribution | Employer rate | Notes |
|---|---|---|
| SIS (Seguro de Invalidez y Sobrevivencia) | 2.0% | Employer-funded disability and survivor insurance, contracted via the AFPs. Capped at 90 UF/month (Superintendencia de Pensiones Res. Exenta N°26, January 2026). |
| Seguro de Cesantía (unemployment insurance) employer | 2.4% | For indefinite-term contracts. 1.6% to Cuenta Individual del Trabajador (CIAT), 0.8% to solidarity fund. Capped at UF 126.6/month wage. |
| Mutual / ACHS (work accident insurance) | 0.95–6.8% | Industry-banded. Office work ~0.95% (0.95% base rate). Construction/mining higher. 100% employer-funded. |
| Pension reform employer contribution (Ley 21.735) | 3.5% (Aug 2026) → 7.0% by 2033 | Phasing in roughly 1 pp/year. Funds individual accounts plus the Pensión Garantizada Universal. New as of the 2024 Reforma Previsional; stepped up to 3.5% for remuneraciones from August 2026. |
Mandatory employee benefits
Beyond statutory contributions, Chile law requires the following benefits the employer must fund.
- Annual leave (feriado legal)
- 15 working days per year after 1 year of service. Rising to 20 days for workers in extreme regions (XII, XI, Aysén).
- Public holidays
- ~17 statutory days (varies year-to-year due to movable Catholic feasts). Among the highest in LATAM.
- Aguinaldo (13th-month)
- NOT statutory in Chile (unlike Mexico or Brazil). Some collective agreements include it; otherwise discretionary.
- Maternity / paternity
- Prenatal 6 weeks + postnatal 12 weeks paid at salary (capped at UF 84.3/month) via Sanna and ISL. Postnatal parental leave extended 12 weeks (Ley 20.545). Paternity: 5 days paid + share of postnatal leave.
Termination, notice and severance
Probation
Not formally regulated; typically structured as a 30-day initial period in the contract. Termination during probation still triggers Art. 161 indemnification rules.
Notice period
30 days written notice OR pay-in-lieu under Art. 161 (necessidades de la empresa) for no-fault termination. Notice waived for cause (Art. 160).
Severance
On no-fault termination (necesidades de la empresa, Art. 161): 1 month's last salary per year of service or fraction >6 months, CAPPED at 11 months total and at UF 90 per month base. Plus 1 month pay-in-lieu of notice. So a 5-year hire on $4,000/month is owed ~$24,000 in severance + notice. Self-resignation: no severance owed. Mutual agreement (Art. 159(1)) requires notarised acuerdo de mutuo acuerdo, also no severance.
Common compliance pitfalls
- Severance for 'necesidades de la empresa' is automatic and non-waivable. Reorganization, automation, or market decline all trigger Art. 161 + 1 month/year payout. Capped at 11 months but still substantial for senior hires.
- AFP pension is employee-funded (10% + 1.45% commission), NOT employer-funded in the traditional sense. EORs from Latin America sometimes assume an employer-side match; there is none, until the new 2024 reform phases in.
- The new 2024 Reforma Previsional adds 1 pp/year of employer pension contribution starting 2025, reaching 6% by 2032. Long-term hire models must include this escalator.
- 13th-month aguinaldo is NOT statutory in Chile (unlike Mexico or Brazil). Some sectoral agreements include it; many tech/finance MNCs pay one voluntarily. Skipping it is legal but lowers offer competitiveness.
Frequently asked questions
EOR platform fees for Chile range from $199–$699 per employee per month. On top, employer statutory contributions add ~5.35% (SIS + unemployment + work-accident), plus the Ley 21.735 employer pension contribution, 3.5% from August 2026, rising to 7% by 2033, for roughly 8.85% in total. The largest hidden cost is severance accrual at ~8.3% of salary per year (1 month/year capped at 11 months). Model the severance, not just the headline contributions.
No, the aguinaldo is not statutorily required. Many MNCs, banks, and tech firms voluntarily pay one in September (Fiestas Patrias) and/or December (Christmas), each typically 50–100% of monthly salary. EOR hires without an aguinaldo are legally fine but visibly less competitive than direct-hire offers in similar roles.
Under Art. 161 (necesidades de la empresa) of the Labour Code: 1 month of the employee's most recent monthly salary per year of service (or fraction over 6 months), capped at 11 months total and at a monthly base of UF 90 (~$3,300 in 2025). Plus 30 days' pay in lieu of notice if no notice given. Termination 'with cause' under Art. 160 pays no severance, but cause must be proven and is heavily scrutinised.
Chile's 2024 Reforma Previsional (effective 2025) introduces an employer-side pension contribution that phases in about one percentage point per year, reaching 3.5% for August 2026 remuneraciones and 7% by 2033. Part goes to individual accounts (matching AFPs) and part funds the Pensión Garantizada Universal. EOR users should model this escalator into multi-year cost projections.
Most EOR providers can onboard a Chilean hire within 7–10 business days once the candidate's RUT (national tax ID), AFP and Isapre/Fonasa elections, and bank details are collected. Setting up your own SpA or SA takes 4–8 weeks. Chile is generally one of the easier LATAM markets to operate in directly, but EOR remains the fastest path for 1–10 hires.
Sources
Statutory rates and rules verified against the following authorities. We update this page when rates change.