So you’re scouting talent for your growing company. You’ve got your eye on markets beyond the usual suspects. Then Chile pops up on your radar, and suddenly the numbers start talking.
There’s a reason global companies are aiming to hire in Chile. While other markets feel unpredictable, this narrow slice of South America has quietly built something remarkable. The country’s economic freedom score ranks above both world and regional averages. GDP growth is projected to be above 2% for both 2025 and 2026. Despite inflation and external risk headwinds, Chile’s economy grew 0.7% in the first quarter of 2025, beating economists’ predictions.
Analysts expect the country’s IT services market to hit $2.74 billion by 2029, with Santiago ranking third in South America for digital talent availability. This city alone hosts 120,000 tech professionals, and the country graduates over 30,000 computer science students annually. The infrastructure backing all this talent? Chile boasts the fastest fixed broadband in Latin America at 298 Mbps, outpacing the United States. When over 90% of the population has internet access and mobile penetration hits 147%, you’re looking at a digitally native workforce.
But here’s where it gets practical for global employers. According to Glassdoor, Chilean developer salaries run about 57% below U.S. levels. A software developer’s median income in Santiago earns around US$48,141 annually, compared to a median of US$112,288 in the United States. Same talent pool, same time zone as the East Coast, similar work culture. If that’s not enough reason to explore hiring in Chile, this guide offers a wealth of insight into this cost-efficient talent pool.
Why Chile’s labor market checks out
On paper, you’ve got 10.2 million people who represent the Chilean labor force. That sounds like a lot of people, but what matters is who those people are and what they can do for your company.
Walk through Santiago’s financial district or the tech hubs in Las Condes, and you’ll meet software engineers who learned Python on YouTube and project managers who’ve worked with teams across four time zones. These are professionals who chose to build careers in industries that barely existed in Chile twenty years ago.
The country’s economic backbone still runs on copper and lithium mining up north, but that’s created something unexpected. Engineers who understand complex industrial processes. Data analysts who can predict equipment failures. Supply chain experts who coordinate shipments across continents. When those skills transfer to fintech, renewable energy, or software development, you get professionals who think systematically about problems.
And here’s the thing about stability that most hiring guides skip: Chile joined the OECD in 2010. That means when you hire someone there, you’re working within a system of institutions and business practices that developed countries recognize. Your employment contracts work the way you expect them to work. Your intellectual property gets protected. Your payroll processes follow rules that make sense.
The universities produce about 30,000 computer science graduates annually, but what’s interesting is how many of them end up working for international companies without ever leaving Chile. They’re building software for banks in Miami, managing customer success for SaaS companies in Stockholm, and analyzing data for eCommerce platforms in São Paulo. They’ve already figured out how to work across cultures and time zones before you even meet them.
Options for hiring Chilean talent
So you’ve found your people in Chile, and now comes the practical question: how do you actually employ them? You have two main paths, and the choice usually comes down to how fast you need to move and how much control you want over the process.
Opening a local entity
Setting up your own company in Chile means you become a Chilean employer in the fullest sense. You incorporate a subsidiary, get your tax numbers sorted, and handle everything from people management to payroll compliance.
The incorporation process takes about 30 to 60 days if everything goes smoothly. You’ll need to navigate the Chilean business registry, establish banking relationships, and set up accounting systems that comply with local standards. This route makes sense if you’re planning to hire dozens of people over the next few years, because the fixed costs get distributed across a larger team.
But here’s what most hiring guides don’t tell you: once you’re a Chilean employer, you’re responsible for understanding overtime calculations, mandatory benefits, and the complexities of Chilean termination procedures.
You’ll need local HR expertise, accounting support, and someone who can navigate the different payroll taxes required annually. It’s not impossible, but it’s a commitment that extends far beyond just hiring that one perfect candidate.
Hiring through an Employer of Record (EOR)
An EOR becomes the legal employer of your Chilean team members while you maintain day-to-day management and direction of their work. Think of it as outsourcing the legal and administrative complexity while keeping the actual employment relationship.
The speed difference is dramatic. While entity setup takes months, most EOR services can have your new hire onboarded and working within a couple of weeks. The EOR handles employment contracts, payroll processing, benefits administration, and compliance with Chilean labor law. They become your buffer against regulatory changes and administrative complexity.
The trade-off is cost and control. The pricing of EOR services can range between $500 and $2,000 per employee per month, or a percentage of payroll. You’re also working within their established processes and benefit structures, which might not perfectly match your company culture. But for many growing companies, that predictable cost and reduced risk make the ROI count.
Payroll and tax withholdings in Chile
Chilean payroll runs monthly, always in Chilean pesos, and the tax system uses something called the UTM (Unidad Tributaria Mensual) that adjusts for inflation every month. Think of it as a moving target that keeps your tax calculations current with economic reality.
Employee income tax follows a progressive structure that starts at 0% for monthly earnings up to about 695,250 Chilean pesos and climbs to 35.5% for high earners. Your payroll provider withholds this automatically, so employees don’t face surprise tax bills at year-end. Social security contributions add another layer, with employees contributing 20% of their gross salary for pensions, health insurance, and unemployment coverage.
Employers contribute separately to the system. You’ll pay into workplace accident insurance and unemployment funds, plus a new 8.5% pension contribution that took effect in March 2025. The reporting deadlines are monthly, typically by the 12th of the following month, and the Chilean income tax system takes compliance seriously. Missing deadlines or miscalculating contributions triggers penalties that scale with the size of the error.
Working hours, holidays, and leave
In 2024, “The Chilean government passed amendments to the Labour Code reducing the weekly working hours limit from 45 to 40 hours and introducing more flexibility in the distribution of working hours,” according to Lockton.
Overtime pay kicks in after that threshold and pays at a 50% premium rate. Employees can work a maximum of two overtime hours per day, which gives you some scheduling flexibility without running into labor law violations.
Chile celebrates 15 paid public holidays annually, including religious holidays, national celebrations, and regional observances. Employees earn a minimum of 15 paid vacation days per year, which increases to 20 days after 10 years with the same employer. Unlike some countries, employees must take these vacation days within the calendar year or the following March.
Sick leave operates on a different system entirely. Employees receive full pay for the first three days of illness, then transition to social security benefits that cover about 75% of their salary. Parental leave provides 18 weeks for mothers and five days for fathers, with additional flexibility for adoption or complications. These benefits come from Chile’s social security system, not directly from employer costs.
Mandatory benefits and social contributions
Chile’s social security system splits into three main buckets: health insurance, pensions, and unemployment protection. Every Chilean employee chooses between FONASA (the country’s public health insurance) or an ISAPRE (the country’s private health plan), with premiums deducted from their salary. The pension system works through “AFPs” (essentially, private pension fund administrators) that manage individual retirement accounts.
Employers contribute to workplace accident insurance and unemployment funds, plus a pension contribution. The total employer burden typically runs 8% to 10% of payroll, depending on the specific AFP and insurance providers chosen. These contributions are mandatory, not negotiable, and form the backbone of Chile’s social safety net.
While not legally required, most Chilean employers provide meal allowances and transportation stipends as standard practice. Many companies also pay a 13th-month bonus in December, though this varies by industry and company policy. These perks help attract talent in competitive markets like Santiago, where cost-of-living considerations matter for employee satisfaction and retention.
Handling employment contracts in Chile
Every employee in Chile must have a written contract. Not a handshake deal, not a verbal agreement, not an email thread from six months ago. A proper, signed document in Spanish that covers all the legal requirements.
The contract needs to specify salary amounts, working hours, job responsibilities, and termination procedures. You’ll choose between indefinite contracts (permanent employment), fixed-term contracts (maximum two years), or probationary periods (up to six months for most roles). Most international companies default to indefinite contracts because they offer the most flexibility for long-term team building.
What catches many companies off guard is that contractual employment agreements must be drafted in Spanish. Even if your new hire speaks perfect English and prefers working in English, their employment contract must be in Spanish and follow Chilean legal formats. Translation errors can create compliance issues later, so most companies work with local legal counsel or EOR providers who handle contract preparation as part of their service.
Chilean work visas and immigration
Hiring someone who doesn’t already have the right to work in Chile means navigating the country’s visa system. The good news is that Chile modernized its immigration law in 2021, creating clearer pathways for international talent.
The most common route is the Temporary Residence Visa for remunerated activities, which allows foreign nationals to work for up to two years and can be renewed indefinitely. Unlike the old system, this work visa doesn’t tie workers to a single employer, so your new hire can change jobs without starting the visa process over. The application requires a signed employment contract, a passport with a validity of at least six months, a criminal background check, and a medical certificate.
Processing typically takes two to four months, though incomplete paperwork can extend that timeline. As the employer, you’ll need to provide corporate registration documents, proof of tax compliance, and detailed job descriptions. There’s also a practical consideration: companies with more than 25 employees can only have 15% foreign workers, though exceptions exist for specialized technical roles and permanent residents.
Chile also offers interesting alternatives like the Job Seeker Visa (SUJE), which gives qualified professionals six months to find work while allowing part-time employment. For companies looking to test international hiring, this creates opportunities to meet candidates who are already in-country and motivated to stay.
Navigating employee vs. contractor classification
The distinction between employees versus contractors in Chile follows specific legal criteria that focus on the reality of the working relationship, not just what you call it in a contract. Chilean courts look at factors like work schedule control, equipment provision, exclusivity of services, and integration into company operations.
True contractors work independently, use their own tools, serve multiple clients, and operate with minimal supervision. Employees receive detailed instructions, work set schedules, use company equipment, and integrate into organizational structures. The gray area emerges with remote workers, specialized consultants, and project-based roles that might look like contracting but function like employment.
Misclassification creates serious financial exposure. Chilean authorities can reclassify contractors as employees retroactively, requiring you to pay back taxes, social security contributions, vacation pay, and severance benefits. The new immigration law introduced harsh sanctions for employers who hire foreign workers without proper authorization, with fines that scale based on company size.
Termination and severance in Chile
Ending employment relationships in Chile requires following specific procedures that vary based on the reason for termination. The system distinguishes between dismissals with cause (serious misconduct or poor performance) and those without cause (economic reasons or restructuring).
For terminations without cause, employees receive one month’s salary for each year of service, with partial years calculated proportionally. Notice periods depend on tenure: 30 days for employees with over one year of service, or payment in lieu of notice. Employees also receive accrued vacation pay and any outstanding bonuses.
What makes Chilean termination law particularly employee-friendly is the reinstatement provision. If a court determines that dismissal was unjustified, employees can choose between reinstatement with back pay or enhanced severance compensation.
Hire in Chile by partnering with Pebl
When you’re ready to hire that perfect candidate in Santiago, Pebl’s Chilean EOR services handle the complexity so you can focus on what matters: building your team. Our local expertise in Chile, combined with our presence across 185+ countries, means you get compliant hiring, seamless onboarding, and ongoing HR support through a single platform.
Instead of navigating Chilean labor law, visa requirements, and payroll systems yourself, you get legal peace of mind and expert guidance that turns international hiring from a six-month project into a two-week process. Contact us today to learn more.
FAQs: Hiring in Chile
The practical questions always surface after the big picture becomes clear. Here are the specific answers hiring managers need when they’re ready to move from strategy to execution.
Can I hire a Chilean employee without a company in Chile?
Yes, even without an established legal entity, organizations can hire Chilean employees through an EOR that becomes the legal employer while you maintain operational control. This lets you hire within weeks instead of spending months setting up a Chilean subsidiary. It’s the quickest route to employing Chilean talent without the administrative overhead of entity formation.
What is the minimum wage in Chile?
As of May 2025, Chile’s minimum wage is CLP 529,000 per month (approximately US$560) for workers aged 18 to 65, and CLP 394,622 for those under 18 or over 65. The government plans another increase to CLP 539,000 in January 2026. This represents one of the higher minimum wages in Latin America, reflecting Chile’s economic stability.
Are employment contracts required in Spanish?
Yes, all employment contracts in Chile must be written in Spanish and follow local legal formats, regardless of your employee’s English proficiency. Translation errors can create compliance issues, so most international companies work with local legal counsel or EOR providers for contract preparation. The Spanish requirement is non-negotiable under Chilean labor law.
Do Chilean employees receive severance by default?
Employees terminated without cause receive one month’s salary for each year of service, calculated proportionally for partial years. They also get accrued vacation pay and any outstanding bonuses. Chilean law includes reinstatement provisions, meaning improperly terminated employees can choose between enhanced severance or returning to their job with back pay.
What jobs are in high demand in Chile?
Tech roles lead demand, with 30,000 computer science graduates entering the workforce annually and 35% job growth in Santiago’s tech sector, according to Nucamp. Mining and renewable energy offer opportunities in specialized industrial roles. Finance and fintech show strong growth, particularly in payment platforms, risk analytics, and regional banking operations.
This information does not, and is not intended to, constitute legal or tax advice and is for general informational purposes only. The intent of this document is solely to provide general and preliminary information for private use. Do not rely on it as an alternative to legal, financial, taxation, or accountancy advice from an appropriately qualified professional. The content in this guide is provided “as is,” and no representations are made that the content is error-free.
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