From the point of view of migration law, there are facilities that allow for more efficient economic exchange between the various countries of the region.
One of these facilities is the possibility of requesting a visa for temporary residence in Chile, for a period of 2 years, and being able to carry out any type of legal economic activity, for nationals of MERCOSUR countries, which includes Argentinean, Bolivian, Brazilian, Paraguayan and Uruguayan citizens.
In this way, executives from the different countries mentioned above will be able to enter Chile with their visas already authorised, with the only remaining step being to obtain an identity card, so that their stay in Chile will be assured for 2 years, which will allow them to be certain of being able to carry out economic activities in full migratory regularity.
Only the following shall be required for the delivery of this endorsement:
- Passport or identification document.
- Criminal record certificate or equivalent document issued by the competent authority of their country of origin or the country in which they have resided for the last 5 years (adults).
- Recent photograph,
In this way, this visa is an expeditious way to efficiently manage migratory exchange between MERCOSUR countries.
2.- CONTRACTUAL MODALITIES
In Chile there is the following type of employment contract:
Fixed Term ContractThe contract may be concluded for a fixed term, i.e. a termination date expressed in the contract itself; it may be of an indefinite nature, i.e. without a time limit; or it may be associated with a specific work or task, in which case the contract will end when the work or milestone that gave rise to the contract has been completed.
The fixed term cannot exceed 1 year if the worker does not have a professional qualification, and 2 years if the worker has such accreditation; on the other hand, a fixed-term contract is understood to have become an indefinite one when it is renewed for a second time.
Permanent contractThis is the general modality in Chile, in which contracts will have an indefinite duration, and may be terminated for the legal reason that corresponds to the Company's needs (Art. 161 Labour Code), so that the Company must pay special compensation in case of application of such regulations.
Contract for work or task: It is the contract generally used in business models such as construction or project development, since it allows the term of the contract to be fixed to the fulfilment of a specific milestone within a work, or to a specific project. In view of the above, it is essential to specify the specific milestone until which the contract will be in force.
3.- HOLIDAYS
The holiday regime in Chile consists of 15 working days for holiday entitlement. Notwithstanding this, it is common for companies to agree on a higher amount for their executives, particularly for expatriates so that they can travel to their countries of origin together with their families.
4.- LICENCES
With regard to medical leave, the Company shall not have any cost whatsoever while the worker is on medical leave, since the remuneration during this period of sick leave shall be assumed in full by the medical service to which the worker is affiliated, i.e. it shall be assumed by FONSASA if the worker has state coverage, or by ISAPRE in cases where the worker has private health coverage.
The important thing for the Company is to manage within the legal deadlines (3 days), the medical leaves of its workers once they are duly notified.
5.- OCCUPATIONAL DISEASES / OCCUPATIONAL ACCIDENTS REGIME
The occupational diseases regime is laid down in Law No. 16.744, which expressly regulates the treatment of occupational diseases and accidents at work.
In addition, companies in Chile are responsible, by virtue of Art. 184 of the Labour Code, for effectively protecting the life and health of all their workers, so that in the event of any illness that could be classified as occupational in origin, the worker is required to be referred to the respective mutual insurance company, in order to certify the existence of the illness and its potential origin.
This legislation provides workers with coverage both for medical treatment and financial compensation in the form of a pension in the event of disability, when an occupational disease causes the worker to lose all or part of his or her ability to work.
However, the Company will always be responsible for verifying that its workers are not exposed to occupational hazards that may cause illness or accidents in the performance of their duties, and if they do occur, it will be liable to pay compensation for the damages that are generated in a specific case, and there is almost a strict liability in this respect.
6.- WORKING DAY
Currently, according to the latest law that came into force in April 2024, the ordinary working week in Chile is 44 hours per week, with a target of 40 hours per week by 2026.
Any excess of the above-mentioned working hours shall be remunerated as ordinary overtime with a surcharge of 50% on the basic hourly rate, and this must always be agreed in writing, and the agreement must be sporadic and exceptional.
Likewise, for specific or strategic tasks that require continuity of service, an exceptional working day may be agreed, however, this requires the approval of the "Labour Directorate", and if it is approved by this body, it is imperative to apply it in the terms authorised, otherwise the authorisation may be revoked by the aforementioned authority.
Finally, according to the second paragraph of Article 22 of the Labour Code, employees who hold powers of representation of the employer, such as managers or proxies, and all those who provide services without direct or immediate subordination to a manager, are excluded from the working day.
7.- PROTOCOLS / PREVENTION OF HARASSMENT / BULLYING AT WORK
In Chile, the so-called "Karin Law" was enacted in 2024, which reinforces the procedures on labour and sexual harassment, obliging employers to carry out training and inductions for workers in the framework of respect for fundamental rights.
To this effect, every employer must maintain an information protocol in the company, which must be known by all employees, and which establishes the guidelines for the event that situations of harassment occur, being mandatory for the company to carry out an investigation procedure within the framework of due process when an employee makes a complaint, whether verbal or written.
8.- TERMINATION OF THE EMPLOYMENT RELATIONSHIP
Chilean legislation is very strict in terms of dismissal, as it establishes specific grounds for termination, which are regulated in articles 159 and 161 of the Labour Code.
In most of the grounds, the issuance of a letter of termination is required, which complies with certain formalities, namely a statement of the ground, and above all, in the grounds of Articles 160 and 161, a statement of the facts constituting the ground.
The grounds of Article 159 of the Labour Code are "mutual agreement of the parties", "voluntary resignation of the worker", "death of the worker", "expiry of the term agreed in the contract", "conclusion of the work or service that gave rise to the contract" and "fortuitous event or force majeure". All these causes do not entitle the worker to legal indemnities, except for the "termination of the work or service that gave rise to the contract" which, in the case of a worker whose contract was in force for more than one month, generates a special indemnity of 2.5 days for each month worked.
The grounds of article 160 of the Labour Code are multiple, and as a common denominator, they do not entail the payment of any compensation, as they are of expiry as they involve a breach of contract that generates an immediate termination of services. By way of reference, we can point out that of "serious breach of the obligations imposed by the contract", "lack of probity of the worker in the exercise of his duties" and "unjustified absences of the worker".
Finally, the grounds of Article 161 of the Labour Code, namely "needs of the company, establishment or service" and "written dismissal by the employer" entail payment of the statutory severance pay, namely severance pay for years of service, with the legal ceilings referred to below, and in case of dismissal with immediate effect, an additional severance pay called "substitutive of prior notice".
9.- COMPENSATION REGIME. LEGAL CEILINGS.
As noted in the previous point, only the grounds of Article 161 of the Labour Code entitle the employee to payment of statutory severance pay, basically severance pay for years of service and severance pay in lieu of notice.
Both indemnities are paid with the following legal ceilings in accordance with Article 172 of the Labour Code.
- Limit of 11 remunerations.
- Remuneration calculation basis: UF 90 -USD 3500 approx.
In other words, a worker with more than 11 years of service and a monthly salary of more than USD 3,500 would be paid a total compensation of approximately USD 38,500.
As an exception to the aforementioned legal ceilings, it is relevant to establish that if the parties contractually agree to exempt the worker from these ceilings, this is absolutely valid and becomes a contractual obligation to be fulfilled by the employer.
10.- LIABILITIES / LABOUR COST
For the Company, the labour cost in Chile is given by the worker's gross remuneration plus the respective employer's contributions.
In our country, remuneration is distributed as follows:
- Minimum monthly remuneration. This is paid to any worker who works an ordinary 45-hour working week and is equivalent to USD $500. This is known as the "basic salary".
- Statutory bonus. The company must reward its workers for the profits it receives in a business year. Thus, labour legislation provides two mechanisms to comply with this obligation:
- Annual bonus: The company will reward its workers with 30% of the total profits it has received during a business year.
- Monthly bonus. The company will pay its workers a total of 25% of the annual remunerations monthly, with a ceiling of 4.75 minimum monthly incomes, which is equivalent to paying the worker the approximate amount of USD $200 monthly for this concept, a system that gives certainty of the cost that will be paid month by month, without having the uncertainty of having to distribute 30% of the profits that the company receives in a year. This is the most recommended and generally applied system.
- Variable remuneration or commissions. In addition to the basic monthly salary, the worker may receive a variable remuneration for sales commissions, among other types of variable stipends, or have an entirely variable remuneration that is subject to commissions. This gives rise to the institution of the "running week", i.e. the payment of rest days to which the worker is entitled, if he/she is subject to a system of payment by daily commissions.
- Special bonuses. In addition to the above, the worker may have an agreed bonus in his or her employment contract for the fulfilment of certain goals. It is essential that each of the bonuses that the worker may eventually accrue is expressed in the employment contract or in an annex to the contract, containing the necessary specification so that each of the accrual requirements is clearly understood.
- The employee's remuneration is protected by the principle of the protection of remuneration. Therefore, the employer is obliged to respect the following limitations when deducting from the employee's remuneration.
- Compulsory remuneration deductions. Pension and social security contributions discussed in section 5 of this report, together with statutory taxes, and union dues, if any.
- Prohibited remunerative deductions. Fines not authorised in the Internal Regulations, rental fees, sums associated with the loss of the employer's assets at the employee's expense, among others indicated in Article 58 of the Labour Code.
- Remunerative deductions allowed. It is permitted to deduct, always with the agreement of the worker, the contributions destined to the payment of housing, sums destined to the education of the worker or his family.
In addition, it is permitted to deduct the employer's share of mutual funds granted to the worker, up to a limit that may not exceed 30% of the worker's monthly remuneration.
Finally, the worker is authorised to make deductions of any kind, provided that these are authorised by the worker, and do not exceed 15% of the worker's monthly remuneration.
In addition, the employer shall have the following benefits associated with the worker's remuneration at his own cost:
- Pension Fund Administrator Insurance. Equivalent to approximately 1.35% of the worker's remuneration.
- Insurance for accidents at work. Equivalent to 0.93% of the worker's remuneration.
- Unemployment insurance. The employer will be responsible for a total of 2.4% of contributions, depending on the worker's remuneration.
11.- TRADE UNION REGULATION.
In Chile, for the constitution of a trade union in a Company that does not have a trade union organisation, at least 8 workers are required to complete the minimum quorum of representing at least 50% of the total number of workers in the Company, if the Company has a total of 50 workers or less.
Union directors in Chile have labour privileges from the date of their election until 6 months after they leave office. In trade unions that affiliate 25 or more workers, the board of directors must be composed of the number of directors established in the bylaws. Notwithstanding the above, only the highest relative majorities enjoy labour privileges, permits and leaves, with three directors if the union has between 25 and 249 workers; five directors if the union has between 250 and 999 workers; seven directors if the union has between 1,000 and 2,999 workers; and nine directors if the union has 3,000 or more workers.
Once a trade union organisation is legally constituted, it may submit a draft collective agreement and initiate a regulated collective bargaining procedure, which includes the right to strike for the workers involved in the bargaining.