Business climate

Labor laws in Chile

Labor legislation in Chile protects the rights of employees, while providing employers with the necessary flexibility to do business.

Wednesday, July 29, 2009  
Temas Laborales

Starting a company in Chile gives you the opportunity to hire some of the leading scientists, engineers, and creative minds in Latin America. The spirit of labor legislation in Chile aims to assure optimal relations between employers and their employees.

 

Legislation considers aspects such as the freedom to hire, the duration of the working day, vacation and holidays, certain benefits applicable to all employees who have an employment contract, and the ability to terminate a work contract, among other topics. Below are eight important factors to consider when signing a work contract with an employer or employee.

 

1. Freedom to hire
There is full freedom to hire, to the extent that the minimum benefits protected by law in benefit of employees are observed (workday, minimum wage, and vacation and holidays).

 

2. Workday
The law specifies a maximum of 45 working hours during the week and no more than two hours of overtime per working day.  The law also covers part-time work.

 

3. Holidays and days of rest
Employers are obligated to provide a minimum of one day of rest per week, in addition to any national holidays.

 

4. Vacations and extended absences
Each employed person has a right to 15 working days of vacation per year, which corresponds to 21 consecutive days, or three weeks, during which the employer must continue paying the employee’s regular salary.

 

Women in Chile have the right to take time off from work before and after giving birth. The legislation is currently under review, as of May 2011.

 

5. Minimum wage

 

Legislation is currently in progress to revise the minimum wage law, but as of May 2011, the minimum wage is adjusted every year in the month of July. Currently, minimum wage is CP$172,000 per month, or US$320, for a full time employee, and a proportional amount in the case of part-time work.

 

Up-to-date information regarding the minimum wage in Chile can be found online at the Ministry of Finance’s English website.

 

6. Contractual modifications

 

In general, contract modification requires consent of the employee.

 

7. Legal bonus

 

Employers are legally required to offer a bonus in the event that the firm earns profits. In certain cases, a percentage of profits earned must be distributed to all workers.

 

8. Termination of employee contracts

 

In Chile there is freedom to terminate working relationships with employees. However, employers must justify the dismissal. It is also the obligation of a company to provide severance pay as stipulated by law.

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