Chile

While there are generally four ways of employing people across borders, not all are legal or sensible. Here is an overview of each way to employ a worker in Chile, outlining the potential cons.

HQ country employment & payroll

While the person is in Chile, they are employed and payrolled directly by the company’s HQ entity.
Cons: This may appear attractive, but it generally isn’t legal in the long term. HQ payroll won’t be possible if the person is not a tax resident in the HQ country.

Independent contractor agreements

People are locally registered as sole traders or limited liability company owners in Chile and invoice for their work. There is no direct employment relationship.
Cons: In Chile, this is not a compliant or legal way to engage full-time workers who work solely for your company. There will be challenges in attracting and retaining talent.

Direct local employer setup

The company sets up as a fully-compliant local employer. This often involves setting up a local entity and local tax registration.
Cons: Expensive, time-consuming, high-level of complexity. Unknowns around how obligations and costs will evolve over time. There will be a need to stay on top of changes in regulations.

Partnering with an Employer of Record Chile /full-service Professional Employer Organisation

Employment is handled by a platform that specialises in employing people on behalf of customer companies. The Employer of Record helps to hire and pay employees.
Cons: For some countries, the ongoing costs may be higher than direct employment. Some education is needed to inform employees about how the employment relationship will work.

Setting up a local company in Chile is relatively straightforward. However, the difficult part comes after the initial setup when the employer needs to run payroll for their Chile employees every month, file taxes, extend and manage employee benefits, and follow changes in rules and regulations to employment law.

When you hire employees in Chile, you have certain obligations as an employer. HR compliance is about ensuring your policies and procedures respect all applicable laws and regulations regarding employment and work practices. Complying with local employment law in Chile is fundamental for the correct running of your business – not only because these laws are in place to protect employees and guarantee their rights are safeguarded, but to minimise your risk of liabilities as an employer. Being compliant means respecting and following all local labour laws, sick leave and illness benefits, annual leave, minimum wage, tax credits, working hours regulations.

As with every other country, there are certain costs associated with employing a worker in Chile that come on top of the gross salary you are offering. A Chile employer must contribute to social insurance, unemployment insurance and professional illness insurance. To view the exact percentages and amounts given the salary you are planning to offer, you can use our handy calculator tool.

Boundless as the Employer of Record Chile files all pertinent taxes, and other contributions to the social system for the Chile employee to be compliant.

We carefully choose employment lawyers or advisories to partner with in each country we operate in, including Chile. They ensure the Chile employment contracts, and any other relevant documents required for new employees comply with the local jurisdiction. We have thorough discussions on specific norms such as payroll services, social protection, data protection, notice period or work-from-home regulations. Whenever a potentially sensitive issue arises in Chile, our internal team contacts the relevant firm to ensure all steps are taken to resolve it promptly.

The company remains responsible and informs employees of the day-to-day management of the people and teams that are employed through Boundless, including any disciplinary or performance issues.

Boundless ensures compliance with Chile-specific procedures, practices and labour laws while employing people and teams on behalf of the company.

Any new employee that is locally employed through an Employer of Record gets full employment rights and benefits as specified in Chilean employment law. They get a locally compliant employment contract, statutory maternity leave, annual leave, illness benefits, any relevant tax credit, and many more.

In Chile, both employers and employees have to pay taxes. For employers, these include social insurance, unemployment insurance and professional illness insurance contributions. For employees, these are social insurance contributions, as well as income tax. To get a clear overview of both employee and employer taxes, use our salary breakdown calculator.