How to use an Employer of Record in Chile

Found your ideal candidate in Chile, but wondering how to hire them to expand operations in Latin America? Well, to recruit workers in Chile (and beyond) you’ll have to establish a local entity in the country you want to hire from. 

And that’s just the first step in a series of processes that can become expensive and take months. International hiring can be tricky. Apart from setting up a local entity, you’ll need to have a good grasp of local employment laws and remain compliant with Chilean regulations. You'll also have to handle the legal paperwork and set up HR processes to pay and manage your employees.

But there’s a much easier and cost-effective way to hire workers in Chile. Use an employer of record (EOR) service and international hiring becomes quick and easy. An EOR takes on the legal responsibility of hiring workers abroad. The right EOR can help you fast-track your international hiring to build a global team and manage payroll, benefits, and compliance seamlessly. 

In this article, we explain how an EOR can help you hire international workers, the costs and benefits of using an EOR, and how to navigate Chilean labor laws via an EOR.

Six steps to hiring employees in Chile using an employer of record

An EOR can significantly reduce your workload when it comes to hiring workers abroad. But how do you choose an employer of record that’s right for your business?

Follow the six steps to help you choose the right EOR to expand your business in Chile.

Step 1: Weigh up the pros and cons of each potential partner

Create a shortlist of all the features you need to simplify your international hiring, including:

• A local entity that’s authorized to hire employees in Chile

• Access to legal guidance from a team of experts to help you classify employees, stay compliant, etc.

• Compliant benefits and compensation packages

• Assistance with managing onboarding and terminations

• Global payroll services 

• Intellectual property and data protection

These features will serve as a checklist you can use to vet potential EOR providers and find a reliable service for the best price.

Step 2: Take the time to select the most appropriate EOR service provider 

An important consideration is to make sure that your EOR partner owns its own entity in Chile because it can guarantee consistent pricing and the safety of your data. Otherwise, if the EOR depends on third parties to offer their services, you can’t be sure about consistent pricing, compliance, or whether strong data protection measures are in place. Learn more about the difference between owned-entity vs. partner-dependent global employment providers before you choose your EOR.

Step 3: Check the reviews, testimonials, and coverage of your shortlist of providers

Reviews and testimonials will give you unbiased insights into the quality of service an EOR provider offers, judging by the experience of their previous and existing customers. Check out the company website, read reviews on third-party websites and client testimonials, and review online press coverage. This will provide you with more information about the EORs operation and how well (or not) they treat their employees.

Step 4: Ensure that the EOR solution for Chile will provide a best-in-class employee experience

Since your EOR hires employees on your behalf and serves as the face of your brand, make sure they have the capabilities to offer a positive and engaging employee experience. That includes paying salaries and benefits claims on time, onboarding employees without hitches, and providing explanations for any levies and taxes withheld.

Step 5: Work with your partner to make sure you always provide a fair and equitable compensation package 

Salaries for remote roles can be dynamic. Partnering with an employer of record will help you figure out how to factor in market rates, and an applicant’s skill and experience to offer competitive salaries. To attract the best candidates, work with an EOR to offer a modern and competitive benefits package factoring in local labor laws, as well as the individual’s experience, role, and level.

Step 6: Make sure your partner will guard your intellectual property and maintain data security for your business

What protections does the prospective EOR have to protect your IP and any financial data they process? Make sure they have the certifications required to guarantee the security of your data

Hire and pay your global team with speed and security

Start using Remote’s employer of record services and local entities to avoid the time, cost, and risk of building your own.

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What are the benefits of using an employer of record in Chile?

An employer of record does all the legal and regulatory legwork required for you to hire employees, onboard them, and get them working for you immediately. 

You can use an EOR to do the heavy lifting involved in opening a legal entity in Chile, saving you a significant amount of time and resources. An EOR can help you start hiring in days, by filing permits with local authorities, setting up a working payroll and benefits infrastructure, and handling compliance with employment laws and tax regulations.

Some benefits of using an employer of record in Chile include:

• Onboarding employees faster since you no longer need to spend months filing for hiring permits

• Rolling out benefits like health insurance and pension plans easily

• Paying employees and contractors on time, every time

• Avoiding legal trouble by making sure your employees and independent contractors are classified accordingly

• Offering competitive salaries to pay your employees, depending on market rates, their skill, experience, and cost of living

• Protecting your intellectual property and sensitive data.

The right employer of record will help you hire, pay, and manage workers in Chile quickly, safely, and easily, while staying compliant with local labor regulations.

How much does it cost to use an EOR in Chile?

Employer of record firms either charge a flat rate or a fraction of your payroll costs. On one hand, older EOR providers charge hefty rates of up to $2,000 per employee per month or a fraction (up to 18%) of your payroll expenses.

On the other hand, smaller EOR companies charge significantly less, but they may not offer services in many countries or own their own legal entities. You also have to verify if they have strong protections in place for your data and intellectual property.

In contrast, Remote offers everything you need to hire international employees: payroll, benefits, compliance, enhanced IP and data protection, and access to legal experts that’ll help you keep up with changes to Chile’s labor landscape — for an affordable, flat fee.

Compare Remote with other EOR service providers to find the global employment solution that offers the best value for your money.

Hiring in Chile

The Chilean Labor Code is the primary source of employment law in the country. You’ll need an employer of record partner that’s familiar with Chilean labor laws, and has the capabilities to deal with countless other unique situations that may come up when you’re hiring talent in Chile.

Employment contracts and agreements in Chile

A written employment contract must be provided to the employee within 15 days of employment. Failing to do so can attract fines in a labor dispute, and authorities will generally accept any claims made by an employee as binding without a written contract.

Any collective bargaining agreements an employee is covered by will apply to individual contracts they agree to.

Labor compliance in Chile

The Chilean Labor Code has several provisions designed to protect employees from violations and inhumane treatment, such as:

• Protecting employees from any form of discrimination or harassment due to race, religion, nationality, ideology, political affiliation, sex, financial, social, or physical condition

• A normal working week shouldn’t exceed 45 hours over five to six working days; a normal workday is capped at 10 hours daily

• Safe and dignified working conditions

• Overtime work is paid for at a 50% premium

• A daily rest period of at least 30 minutes

Payroll and payroll taxes in Chile

Employers are required to withhold income and payroll taxes capped at 35% and 17.6% respectively from their employees’ paychecks. Corporate payroll taxes are capped at 3.40%, covering unemployment insurance (2.4%) and occupational accident insurance (0.93%).

Remote’s guide to hiring in Chile explains Chilean tax arrangements in detail.

Employment benefits and compensation in Chile

Chilean law demands that employers provide several mandatory benefits. In addition to statutory benefits, Remote can help you offer global benefits that’ll help you attract and retain top talent without breaking the bank.

Maternity and parental leave

Expectant mothers are entitled to 30 weeks of paid maternity leave, starting six weeks before delivery, with benefits paid by the health insurance agency. Mothers with children below the age of 18 are entitled to 10 days of paid parental leave.

Nursing mothers can take an hour-long leave every day to breastfeed a child up to two years old.

Paternity leave

Fathers are entitled to five days off following their partner’s delivery and can share her maternity leave for up to six weeks, or 12 half-weeks. Paternity benefits equal to an employee’s full wages are paid by the health insurance agency.

Vacation and holidays

There are 17 public holidays that employees can take as paid days off in Chile. Workers who’ve been employed for an entire year are entitled to 15 working days of paid vacation annually.

Severance pay and employee terminations in Chile

Generally, employees can be terminated for a just cause, including reasons such as fraud, negligence, and dishonesty, while managers can be terminated at will with a severance package. Employees must be notified at least 30 days before they’re let go. Employees who have been employed for at least a year are entitled to a month’s pay for every year of service, capped at 11 months' pay.

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What are the risks of employee misclassification in Chile?

Chilean labor laws make the distinction between employees and contractors. Employees work under the direct supervision of the employer, who decides on their schedule, and working location, and gives them the equipment to do the job. Contractors, on the other hand, are self-employed and have more control over their working hours, conditions, and location. They also use their own tools to perform their work. Full-time Chilean employees are entitled to benefits and protected by labor laws, unlike contractors.

Companies that misclassify their workers in Chile may have to face serious consequences such as fines, penalties, or legal issues. This is why it’s crucial that your employer of record has the expertise to classify your workers correctly and mitigate any risks of misclassification.

Remote’s team of employment experts can ensure compliance with labor laws and help you avoid misclassification risks. Read our guide to misclassifying employees to make sure you’re doing everything within your power to stay compliant.

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Get started with an employer of record in Chile

Expanding your team in Chile will help build a diverse workforce and scale your company without breaking the bank. But international hiring can be a complex process that has many moving parts.

Remote makes it easy and simple to hire, onboard, pay, and manage your employees in Chile. Our team of remote working and global hiring experts can help you get started hiring talent from Chile and around the world in minutes. Remote can:

• Help you to view and manage all your employees from a single platform

• Keep you updated with changing labor rules in Chile and ensure compliance

• Protect your data and intellectual property

• Help you offer compliant benefits packages.

• Offer you a global payroll solution that can help you pay your workers on time.

• Provide seamless onboarding to get your employees up to speed

• Give you all the infrastructure you need to hire employees compliantly, so you can focus on finding the best talent.

In short, Remote provides a global hiring solution that makes it easy to hire anyone anywhere in the world. Learn more about our employer of record services to see how you can take your business to the next level. If you’re ready to start building your global team, get started with Remote, and start hiring employees in Chile right away!

Your guide to switching EOR providers

Use this guide to learn how easy it is to switch from a different EOR provider and start employing your global team with Remote. We walk you through the key steps so you understand what’s involved.

Get the guide