TL;DR, Hiring in Chile
- Fully-loaded employer cost: ~5% statutory + 1% new PGU pension reform (phasing to 6% by 2032)
- 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 modest: SIS disability/life insurance (~1.88%), unemployment insurance (~2.4% for indefinite contracts), and ACHS/Mutual work-accident insurance (~0.95%, varying by industry). The 2024 pension reform (Reforma Previsional) phases in a new employer-only pension contribution starting at 1% in 2025, rising to 6% by 2032. 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) | 1.88% | Employer-funded disability and survivor insurance, contracted via the AFPs. Capped at UF 84.3/month wage (2025). |
| 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 (PGU) | 1.0% in 2025 → 6.0% by 2032 | Phasing in 1 pp/year. Funds the universal pension guarantee (PGU) plus individual accounts. New as of the 2024 Reforma Previsional. |
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
Sources
Statutory rates and rules verified against the following authorities. We update this page when rates change.