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With the deepening of globalization, when enterprises expand their business in multiple countries, cross-border labor compliance has become one of the most complex and severe challenges. To help enterprises systematically address this issue, we have collaborated with top labor lawyers from over 50 major jurisdictions worldwide (all recommended by Chambers, Legal 500, or equivalent institutions) to jointly compile a Chinese-English labor & employment compliance guide exceeding 1 million words, and we will continuously update relevant key points.

This article publishes the key points of labor & employment compliance in Chile. 

01 Overview of the Labor Law System

1.Legal System

Chilean legal system is based on civil law, deeply influenced by Spanish legal traditions and later shaped by French and German civil law models.

2.Resources and Agencies

Labor regulation is primarily set forth in the Labor Code, the Constitution, health and safety and social security statutes, including Law No. 16,744. Also, international treaties regarding labor and employment matters have an impact in Chilean labor statues and regulations.

Enforcement is shared between the Labor Board (Dirección del Trabajo) and specialized Labor Courts.

02 Employment Qualifications and Classification

1.Employment Age

As a general rule, the age range during which individuals may enter and maintain an employment relationship is as follows:

? A minimum of 18 years old, regardless the gender; and

? There is no maximum age to be bound by an employment contract. Although standard retirement ages are 60 years old for women and 65 years old for men, such retirement does not imply they should retire from work but only that they can get a pension from the relevant social security institution.

2.Qualifications for Employment

Foreign businesses are allowed to hire employees in Chile without a Chilean legal entity, such as representative office, branch, subsidiary or affiliates provided they comply with Chilean labor, social security, tax laws and all applicable legislation. 

3.Classification of Employment

In Chile, personal services can take several forms, each with specific characteristics and implications. The following are the main types:

? Employee/Dependant worker

? Independent contractor

? Subcontracting/Labor dispatch

? Outsourcing

? Employer of Record (EOR)

4.Foreign Workers

As a general rule, at least 85% of a company’s workforce must be Chilean.

In order for foreign nationals to legally provide services and be employed in Chile, they must obtain a residency permit that authorizes them to engage in lawful remunerated activities and/or a work authorization linked to a temporary permanence permit.

03 Recruitment and Employment Contracts

1.Background Examination

In general terms, Chilean labor law restricts the employers background checks on applicants regarding the following matters:

? Credit history

? Criminal records

? Health check

? Prior employment

2.Contract Types

According to Chilean Labor Code employment, contracts can be classify under the following criteria:

a) Regarding its duration:

? Indefinite term/permanent employment contracts

? Fixed term employment contracts

? Project-based employment contracts

b) Regarding the working schedule:

? Full time: Working schedules go from 30 hours and up to 44 hours per week.

? Part time: Working schedule up to 30 hours per week.

c) Regarding the working system:

? In person work

? Remote or long-distance work

? Hybrid modality

3.Probationary Period

In Chile, the statute only explicitly provides for probationary periods for household employees. As such, this lack of regulation is filled in practice by hiring employees on a fixed-term basis (e.g. 3 months), after which the employment either ends or becomes an indefinite duration contract or may be renewed just once more for another fixed term.

04 Working Standards

1.Remuneration and Statutory Benefits

The Labor Code contemplates among other, the following types of remunerations:

? Base salary

? Overtime pay

? Commissions

? Profit sharing

Remuneration may be set per unit of time, day, week, fortnight, or month, or per piece, measure, or work. But, under no circumstances may the unit of time exceed 1 month.

2.Social Security and Employment Taxes

The employer has a legal obligation to withhold and pay social security and health contributions on behalf of employees, deducting these amounts from each employee's gross salary, which must be reflected in the respective pay slip.

3.Working Hours

As for working hours, the general rule and cap is a 44-weekly hour schedule. This cap will be reduced to 42 hours on April, 2026 and to 40 hours on April, 2028.

4.Rest and Leave

Employees in Chile are entitled to the rests and leaves set forth by law and the ones agreed in their employment contracts.

Following are the main rest periods and types of leave established by law, along with their key characteristics:

? Daily and weekly

? Annual paid leave

? Public holidays

? Sick leave

? Maternity leave

? Paternity leave

? Adoption leave

05 Occupational Health and Special Protection

1.Occupational Health and Security

Under Articles 184 and subsequent of the Labor Code, employers are required to adopt all necessary measures to effectively safeguard the life and health of their employees.

2.Special Protection

Chilean legislation includes specific provisions aimed at protecting and promoting the labor inclusion of certain groups, in accordance with the principles of equality and non-discrimination established both in the Political Constitution and in various international treaties ratified by Chile. Among these provisions, particular emphasis is placed on gender equality and the protection of women in the workplace. 

06 Personal Information and Privacy

1.General Rules

In Chile, legislation on data privacy and the protection of personal data provides the legal framework for the processing and safeguarding of information arising from labor relations. This framework is currently undergoing significant reform.

The current Law No. 19,628, enacted in 1999, governs the processing of personal data and requires explicit written consent from employees for data collection and processing, unless the data is publicly accessible or processing is permitted by law (e.g., labor law).

The new legal framework Law No. 21,719, published in December 2024 and set to take full effect in December 2026, significantly expands data subject rights and introduces new obligations for employers acting as data controllers.

2.Transnational Transfer

Under Chile’s current data protection framework, Law No. 19,628, the transnational transfer of personal data is not explicitly regulated as a distinct category. However, such transfers are considered a form of data processing and therefore must comply with the general principles and obligations established by the law. 

07 Anti-Discrimination and Anti-Harassment

1.General Rules

In Chile, anti-discrimination and anti-harassment regulations have been significantly strengthened with the enactment of Law No. 21,643, known as the Karin Law, which came into force on August 1, 2024. The law seeks to reinforce the regulations on the prevention of sexual harassment, workplace harassment, and violence at work, and aims to provide a more detailed framework for handling complaints and investigations.

2.Protective Characters

In Chile, labor legislation explicitly prohibits discrimination in employment and occupation. According to Article 2 of the Labor Code, acts of discrimination are defined as any distinction, exclusion, or preference based on race, color, sex, maternity, breastfeeding, age, marital status, union membership, religion, political opinion, nationality, national origin, socioeconomic status, language, beliefs, participation in professional organizations, sexual orientation, gender identity, family affiliation, personal appearance, illness or disability, or social origin, when such acts aim to nullify or impair equality of opportunity or treatment in employment.

08 Internal Policies

1.Applicability

As a general rule, the employment conditions applicable to employees within a company are governed by the individual employment contract, which must comply with the minimum standards established by the Chilean Labor Code.

In addition to individual contracts, companies hiring 10 or more employees are required to implement certain internal regulations and policies, such as the Internal Rules of Order, Hygiene and Safety (Reglamento Interno de Orden, Higiene y Seguridad，IROHS), and may also adopt complementary policies addressing workplace conduct, employee obligations, permitted and prohibited behaviors, and operational procedures.

2.Validity

IROHS are subject to the publication and deposit procedure.

3.Whistleblowing

In Chile, whistleblowing is regulated in a fragmented manner, with limited comprehensive legislation. The main legal frameworks currently in force include:

? Public Sector Whistleblowing

? Labor Code Protections – Guarantee of Indemnity

? Crime Prevention Models – Law No. 20,393

09 Transactions

1.Employment Relationship

Under Chilean labor legislation, changes in the ownership, possession, or control of a company do not affect the validity of employment contracts or collective bargaining agreements. Employees continue working under the same terms with the new employer, and their seniority and benefits remain intact.

2.Compensation

In that context, employees are not automatically entitled to compensation solely due to an M&A, equity or asset transfer, as long as their employment continues uninterrupted and under the same conditions.

10 Termination of Employment

1.Termination Grounds

Legal grounds for termination with severance indemnity: Article 161 of the Labor Code provides that the employer legally may terminate an employment contract for reasons based on business necessities. These requirements can result from streamlining or modernization activities, reduced productivity, or changes in market or economic conditions. Article 161 also provides for at will termination, this is, that an employer may dismiss, without just cause, employees who have the power to represent their employer, such as managers, executives, directors, assistant managers, agents, attorneys-at-law who have been granted general powers of management, or employees of the exclusive trust of the employer.

Pursuant to Article 159 of the Labor Code, except as otherwise provided by contract, employment contracts terminate without a severance indemnity in the following circumstances:

? Mutual agreement

? The conclusion of the particular task covered by the contract

? Force majeure (i.e., an unexpected and uncontrollable event, such as a natural disaster)

? The employee’s death

? The expiration of an agreed-on term

? Resignation

2.Termination  Procedure

Employees terminated in situations requiring a severance indemnity are entitled to 30 days’ advance written notice of termination or to an extra 30 days’ pay in lieu thereof, in addition to any indemnity. However, pay in lieu of notice is limited to an amount equal to 90 UF. If notice of termination is provided, a copy must be sent to the Labor Board.

3.Termination Protection

In Chile, certain employees benefit from special protection against dismissal, such as women during pregnancy and after one year from returning of post-natal leave, union leaders, employees engaged in collective bargaining processes, members of hygiene and safety committees.

4.Severance and Compensation

For dismissal under the grounds of Article 161 of the Labor Code which are company-related needs, severance per years of service shall be paid and it equals to one month’s salary per year of service and fractions over six months, capped at 11 years and 90 UF per month and based on the last monthly salary.

5.Wrongful Termination

If a Labor Court rules and declares a termination as unjustified, improper, or wrongful, the employer may be obliged to pay a statutory surcharge on the severance compensation for years of service, depending on the nature of the misapplication of the termination grounds.

6.Mass termination and Layoffs

Currently, Chile does not have specific legislation in force that establishes rules for mass or collective dismissals, as is the case in other jurisdictions. However, there is a bill under discussion that seeks to fill this legal gap and establish a formal procedure for such terminations.

11 Confidentiality, Non-Compete, and Non-Solicitation

1.Confidentiality

Signing a confidentiality agreement or including a confidentiality clause in employment contracts is not mandatory under the Chilean Labor Code.

2.Non-Compete and Non-Solicitation

Non-compete and non-solicitation clauses are legally permissible during and after employment, but they are not explicitly regulated by the Labor Code. Then, their enforceability depends ultimately on courts decision, based on how they are drafted, justification and whether they respect constitutional rights, particularly the freedom to work and anti-trust principles.

12 Work Representation and Trade Unions

1.Work Representation

Chilean labor law allows and regulates the establishment of employee representatives, primarily through labor unions and Health and Safety Committees. Moreover, the Chilean Constitution and the Labor Code guarantee the right to unionize.

2.Trade Unions

Chilean law recognizes seven types of unions, as follows:

? Enterprise unions (all members are employees of the same employer)

? Inter-enterprise unions (members are employees of two or more employers);

? Unions of self-employed employees

? Unions of temporary employees

? Federations

? Confederations

? Employees’ centrals.

13 Dispute Resolution

1.Procedures & Enforcement

Labor disputes in Chile are resolved through a combination of judicial and administrative mechanisms, primarily governed by the Labor Code.

Main forums for resolution:

? Labor Courts

? Labor Board

? Arbitration Panels

2.Waiver & Enforcement

Employees cannot waive minimum labor rights established by law, even by mutual agreement. These include:

? Minimum wage

? Working hours

? Paid annual leave (15 working days)

? Severance pay

? Social security contributions

? Occupational health and safety protections

On top of that, employees may waive contractual rights (e.g., bonuses or perks) only if the waiver is voluntary, informed, and not contrary to public policy.

14 Others

1.Latest Development & Trends

In Chile, the labor sector is undergoing significant regulatory changes. Among the most relevant is the entry into force of the Karin Law (Law No. 21,643), which amends the Labor Code to establish strict obligations for the prevention, investigation, and punishment of workplace harassment, sexual harassment, and violence at work.

2.Cultural and Religious Considerations

In Chile, there are no specific legal considerations from a cultural or religious perspective in labor matters. Chilean law does not establish differences or distinctions based on nationality, religion, beliefs, or culture.

* To avoid ambiguity, this article should not be regarded as legal advice.

Authors

Paulina Miranda is a partner at Philippi Prietocarrizosa Ferrero DU & Uría (PPU). Her expertise spans international employment, incentive plans, gig economy, AI, DEI, data privacy, internal investigations, health and safety, and compliance. She has extensive experience in banking, mining, construction, healthcare, consulting, and technology sectors.

Translator

Zhou Hao, Master of Laws, Associate at Anli Partners. Areas of expertise: Labor Law, Dispute Resolution, ESG Compliance.