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Labor Regulation

2 April, 2017
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What is the minimum monthly wage in Chile?

In Chile, the minimum monthly wage is set annually by law. As from 1 July 2017, the minimum monthly wage for employees aged from 18 to 65 will be 270,000 Chilean pesos and, for those under 18 and over 65, 201,561 Chilean pesos.

What must a company pay on account of social security (pensions, healthcare and insurance) for its employees?

In Chile, all workers must be affiliated to a Pension Fund Administrator (AFP) and a health insurance system which, depending on the employee’s preference, may be the state National Health Fund (FONASA) or a private Health Insurance Institution (ISAPRE). In the case of payroll employees (those with a work contract), social security contributions are compulsory and are deducted from the employee’s wages, except for Workplace Accident and Occupational Illness Insurance and the premium for Disablement and Surviving Dependents’ Insurance (SIS) which are borne by the employer. For Unemployment Insurance, employees with an indefinite work contract must contribute 0.6% of their wages while, if they have a fixed-term or project-related contract, the employer must pay all the contribution. The employer is responsible for making the corresponding deductions and paying them into the employee’s social security institutions: AFP, ISAPRE or FONASA, Mutual Society or Labor Safety Institute (ISL) and Unemployment Fund Administrator (AFC).

As a result, the social security costs borne by a company on behalf of employees range from 0.45% to 5.1% (but may be higher since Workplace Accident and Occupational Illness Insurance premiums vary depending on the level of risk related to the economic activity). For further information, see https://www.previsionsocial.gob.cl/.

Can I hire overseas employees for my company?

For companies with more than 25 employees, Chilean law requires that at least 85% be of Chilean nationality. The percentage of overseas employees is calculated taking into account the following: – It is calculated over the total number of employees that an employer has in Chile, not in each branch separately; – Specialized technical personnel are excluded; – A foreigner counts as Chilean if married to or with a civil union with a Chilean, the parent of Chilean children or the widower or widow of a Chilean; – Foreigners also count as Chileans if they have been resident in the country for more than five years, without taking into account involuntary absences. [Labor Code, Article 20]

What is the duration of the working week?

The working week may not exceed 45 hours. There are, however, exceptions which are established in the Labor Code. The maximum 45 hours may not be distributed over less than five or more than six days and in no case may the normal working day exceed ten hours, except in certain cases indicated in the Labor Code as, for example, as a result of force majeure or over the Christmas period. [Labor Code, Articles 21 and following]