Chile is known for its strong and transparent, stable economy that promises growth. The country’s legal framework, along with its labor laws, encourage foreign investors to enter the domestic and affluent Chile markets. Chile also has a mature financial market, which has prospered over the years. The preliminary articles of the Chilean Labor Codex regulate the labor and work relationships between employers and employees. There are five books in the Chilean Labor Codex. Each of them controls a specific topic:
1. The individual labor or employment contract and training
2. Ultimate protection of employees
3. Labor unions
4. Collective negotiations
5. Labor jurisdiction
For a company that has twenty-five or more employees, a minimum of 85% of them are required, by the law, to be Chilean citizens. However, if a Chilean national cannot replace a technician, the law is relaxed. For a company that has twenty-four employees or less, there is no rule regarding the ratio of Chilean nationals to foreigners that the company must employ.
Duration of Labor Contracts
The labor law in Chile states that the labor contract can be either:
- Indefinite or permanent
- For a specific period of time
- Project basis; until the completion of a task or event
Most employees have a 45-hour cap per week. The Chile labor law divides the 45-hours into a minimum of five and a maximum of six consecutive days. Employees, on average, work for 9-hours per day in Chile. Employees are allowed no more than 2-hours of overtime per working day. This includes part-time work as well. However, if the employees hold the label “trusted” on their contract, they can be exempted from the cap. Initially, this policy was made for managers and executives, but it was adopted for all employees over time.
The minimum wage in Chile is adjusted every year in the month of July. Currently, the standard monthly minimum wage is 320,500 Chilean pesos (US $375.69) for employees between the ages of 18-65. A proportional amount is paid to part-time workers.
Every employed individual in Chile has the right to fifteen working days of vacation every year. This adds up to twenty-one consecutive days or a total of three weeks. During this time, the employer must pay the worker’s full salary. However, this only applies if the employee has worked with his employer for a minimum of one year. If an employee has two consecutive periods of vacations lined up, article 70 states that the employer must tell the employee to take a minimum of fifteen days off from work before the end of the year.
Women in Chile can take time off from work before and after childbirth, in addition to the three weeks of holidays that they receive.
Termination of Contracts
In Chile, employers are permitted by the law to terminate working relations with their workers. However, this cannot be done on a random basis. All employers must justify the dismissal, and the employee is entitled to receive compensation from the company.
To learn more about labor and compliance in Chile, click here