Labour Law in Chile

Overview of main characteristics of labor law in Chile

The employment relationship between employers and workers in Chile is regulated by the Labor Code and its complementary laws, which establish the form, terms, rights, obligations, the form of termination, and the consequences that stem from employment contracts.

Compliance with labor legislation is the responsibility of the Labor Directorate (DT), a public service that also aims to ensure its proper interpretation.

Labor causes are known by independent courts with exclusive competence in labor matters, composed of specialized judges, and whose hearings are oral and public.

What are the types of employment contracts in Chile?

The individual employment contract is defined in article 7 of the Labor Code.

In Chile, employment contracts can be:

• Indefinite contract: It is a type of contract in which no term is established, which offers the employee better job stability. The indefinite-term employment agreement only ends when the worker resigns, is fired or if he dies.

• Fixed-term contract: This labor agreement sets a start date and a contract end date. It can be renewed, but cannot be extended for more than 24 months.

• Work or Project contract: a contract used to establish the employment relationship between an employer and employee for the completion of specific, time-limited tasks. It is commonly used in construction contracts where temporary labor is required to complete a project within a predetermined time frame. For example, for remodeling an apartment, building a house, or implementing a new software for making payments or processing purchase orders.

How many foreign workers can a company have in Chile?

The Labor Code states that at least 85% of the workers serving the same employer must be of Chilean nationality unless the company has less than 25 workers.

To determine this proportion, the total number of workers employed by an employer within Chile must be considered, excluding specialist technical personnel that cannot be replaced by Chilean personnel.

Moreover, a foreigner will be considered Chilean if their spouse or civil partner or their children are Chilean, or if they are widowed from a Chilean spouse, as well as foreigners who have resided in the country for more than five years.

What is the minimum wage in Chile?

In Chile, the monthly minimum wage is set annually by legislative resolution. For the period 2023 the minimum gross income for workers over 18 and up to 65 years of age was $410,000, around $500 USD.