Countries › Chile › Guide › 15. Exiting › Closing down or selling with staff in Chile: dismissal for business needs, notice, severance caps, paid up contributions and insolvency terminations

Closing down or selling with staff in Chile: dismissal for business needs, notice, severance caps, paid up contributions and insolvency terminations

Last verified: 2026-10-26 · Status: Stable

When a business is sold, employees move to the buyer with their seniority and no severance is triggered. When it is closed without insolvency, staff are dismissed for business needs with 30 days' notice or a month's pay in lieu, plus 30 days' pay per year of service up to 11 years, with the monthly base capped at 90 UF, and the dismissal has no effect while social security contributions are unpaid. If the company is put into insolvency liquidation, contracts end on the date of the order and the liquidator pays notice and severance with priority over other creditors.

USD figures use the Central Bank exchange rate of CLP 986.58 per US dollar published in the Diario Oficial for 23 October 2026 (CNCI Chapter I, Title VII). UF and UTA values are the SII figures for October 2026 (UF 41,221.08 on 26 October; UTA CLP 865,812). Conversions are for orientation only.

Key facts

Severance per year of service (business needs dismissal)	30 days of payCódigo del Trabajo, art. 163, as of 2026-10-26 · in force
Maximum years of service counted for severance (330 days of pay)	11 yearsCódigo del Trabajo, art. 163, as of 2026-10-26 · in force
Monthly wage cap for severance	90 UFCódigo del Trabajo, art. 172, as of 2026-10-26 · in force
Notice for dismissal for business needs (or one month's pay in lieu)	30 daysCódigo del Trabajo, art. 161 and 162, as of 2026-10-26 · in force
Surcharge on severance if business needs ground is improper	30 %Código del Trabajo, art. 168 a), as of 2026-10-26 · in force
Deadline for an unjustified dismissal claim	60 working daysCódigo del Trabajo, art. 168, as of 2026-10-26 · in force
Deadline to issue the settlement and make payment available	10 working daysCódigo del Trabajo, art. 177, as of 2026-10-26 · in force
Liquidator's deadline to notify workers of termination	6 business daysCódigo del Trabajo, art. 163 bis Nº 1, as of 2026-10-26 · in force

The rule

1. Changes in the ownership, possession or holding of the business do not alter workers' rights and obligations under their individual contracts or collective instruments, which continue with the new employer.
Cost to do it: No severance on a sale; the buyer takes on accrued seniority.Código del Trabajo, DFL Nº 1 of 2002, Art. 4, second paragraph, 2003-01-16 official text · verified 2026-10-26

2. The employer may end a contract citing the needs of the company, establishment or service, such as rationalization or modernization, falls in productivity or changes in market or economic conditions that make dismissals necessary. This ground cannot be used against workers on sick leave or leave for work accidents or occupational illness. Workers with special protection (fuero) can only be dismissed with prior court authorization.
Cost to do it: Notice and severance under art. 162 and 163.Código del Trabajo, DFL Nº 1 of 2002, Art. 161, first and third paragraphs, and art. 174, 2003-01-16 official text · verified 2026-10-26

3. Dismissal for business needs requires written notice to the worker, with a copy to the Labor Inspectorate, at least 30 days in advance, or payment in cash of an amount equal to the last monthly wage in lieu of notice. The letter must state the total amount to be paid. Before dismissing, the employer must inform the worker in writing of the status of social security contributions up to the last day of the prior month, with receipts; if contributions are not fully paid, the dismissal does not end the contract until the arrears are paid and the worker is notified, and wages accrue in the meantime.
Cost to do it: One month's wage in lieu of notice if notice is not given; all contribution arrears.
Example: A worker earning CLP 2,959,740 a month dismissed without 30 days' notice receives CLP 2,959,740 in lieu. / Notice in lieu is one month's pay, US$3,000 for a US$3,000 earner.Código del Trabajo, DFL Nº 1 of 2002, Art. 162, fourth to seventh paragraphs, 2003-01-16 official text · verified 2026-10-26

4. A worker with one year or more of service dismissed for business needs receives the severance agreed individually or collectively if higher, and otherwise 30 days of the last monthly wage per year of service and fraction over six months, with a maximum of 330 days. For severance purposes the monthly wage taken into account is capped at 90 UF as of the last day of the month before payment.
Cost to do it: Up to 11 months' wage, with each month capped at 90 UF; maximum CLP 40,808,869 at the 26 October 2026 UF.
Example: Eight years at CLP 2,959,740 a month: severance CLP 23,677,920. / Eight years at US$3,000 a month: US$24,000; the statutory maximum is 990 UF, about US$41,364.Código del Trabajo, DFL Nº 1 of 2002, Art. 163, first and second paragraphs, and art. 172, final paragraph, 2003-01-16 official text · verified 2026-10-26

5. A worker who considers the dismissal unjustified may sue within 60 business days of separation; if the court finds the business needs ground improperly applied, the severance is increased by 30 percent.
Cost to do it: 30 percent surcharge on severance if the ground fails, plus legal costs.
Example: On CLP 23,677,920 of severance, the surcharge is CLP 7,103,376. / On US$24,000 of severance, the surcharge is US$7,200.Código del Trabajo, DFL Nº 1 of 2002, Art. 168, first paragraph and letter a), 2003-01-16 official text · verified 2026-10-26

6. The final settlement (finiquito) must be in writing and signed or ratified before a labor inspector or another authorized official such as a notary, or signed electronically on the Labor Directorate website; the employer must issue it and make the payment available within 10 business days of separation.
Cost to do it: Notary fee where a notary acts; free on the Labor Directorate website.Código del Trabajo, DFL Nº 1 of 2002, Art. 177, 2003-01-16 official text · verified 2026-10-26

7. If the employer is put into insolvency liquidation, contracts end on the date of the liquidation order. The liquidator must notify each worker within six business days of being notified of the order, attaching a certificate from the Superintendency of Insolvency, with a copy to the Labor Inspectorate. The liquidator pays, on the debtor's behalf, a notice indemnity equal to the average of the last three monthly wages and, for workers with a year or more of service, the art. 163 severance. The rule that unpaid contributions keep the contract alive does not apply.
Cost to do it: Notice indemnity and severance paid from the estate, with first class priority within the Civil Code limits.
Example: A worker whose last three wages averaged CLP 2,959,740 receives CLP 2,959,740 as notice indemnity. / Notice indemnity of US$3,000 for a US$3,000 earner, plus severance.Código del Trabajo, DFL Nº 1 of 2002, Art. 163 bis Nº 1 to 3, 2003-01-16 official text · verified 2026-10-26

Worker	Notice in lieu	Severance	Total
8 years, CLP 2,959,740 a month (US$3,000)	CLP 2,959,740	CLP 23,677,920 (8 months)	CLP 26,637,660 (US$27,000)
12 years, CLP 3,500,000 a month (below the 90 UF cap)	CLP 3,500,000	CLP 38,500,000 (11 months, the 330 day maximum)	CLP 42,000,000 (US$42,571)

Cost of dismissing a worker for business needs (Código del Trabajo art. 162, 163 and 172). UF 41,221.08; CLP at 986.58.

Worked example

A foreign owner closes a Chilean SpA with 20 staff, without insolvency. A typical worker has eight years of service and earns US$3,000 a month (CLP 2,959,740).
The SpA pays all social security contributions up to the prior month and attaches the receipts to the dismissal letter, or the dismissal has no effect (Labor Code art. 162). It pays one month in lieu of notice, CLP 2,959,740, and eight months of severance, CLP 23,677,920 (US$24,000) (art. 163).
The settlement is signed on the Labor Directorate website or before a notary within 10 business days (art. 177). Workers on medical leave or with fuero need separate handling (art. 161 and 174).
If instead the business is sold as a going concern, the staff move to the buyer with their seniority and no severance is paid at that point (art. 4).

Step by step

1. Decide between sale of the business (contracts transfer, Labor Code art. 4) and closure (dismissals).
2. Identify workers on medical leave and workers with fuero; the latter need court authorization (art. 161 and 174).
3. Pay all social security contributions up to the month before the dismissals and keep the receipts (art. 162).
4. Send written notices 30 days ahead with a copy to the Labor Inspectorate, stating the total amount, or pay a month in lieu.
5. Compute severance at 30 days per year, up to 330 days, with the 90 UF monthly cap (art. 163 and 172).
6. Issue and pay the settlement within 10 business days, electronically or before a ministro de fe (art. 177).

Common traps

A dismissal with unpaid contributions does not end the contract, and wages keep accruing until the arrears are paid and notified (Labor Code art. 162).
Improper use of the business needs ground raises severance by 30 percent (art. 168).
Workers on sick leave cannot be dismissed for business needs (art. 161).
Contractual severance above the statutory amount must be paid if agreed (art. 163).
In insolvency, the liquidator must notify workers within six business days; the contract ends on the date of the order (art. 163 bis).

Sources

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