Countries › Chile › Guide › 7. Labor and employment › Employing people in Chile: contracts, working hours, minimum wage, social security, dismissal and severance, unions and outsourcing
Employing people in Chile: contracts, working hours, minimum wage, social security, dismissal and severance, unions and outsourcing
Last verified: 2026-10-26 · Status: Changing
Every employee in Chile needs a written contract within 15 days of starting, the maximum ordinary week is 42 hours since 26 April 2026 and falls to 40 hours on 26 April 2028, and the minimum monthly wage is CLP 553,553 from 1 May 2026 (Ley Nº 21.830). On top of salary the employer pays a legal profit share, unemployment and work accident insurance and a new employer pension contribution of 3.5 percent since August 2026 that rises in steps to 8.5 percent under the 2025 pension reform. Employees can be dismissed for business needs with 30 days notice or pay in lieu plus one month of pay per year of service, capped at 11 years and a 90 UF monthly base, and courts add 30 to 100 percent when a dismissal is found unjustified.
USD figures use the Central Bank exchange rate of CLP 986.58 per US dollar published in the Diario Oficial of 23 October 2026 (Ley Nº 18.840 art. 44). UF amounts use the SII value of CLP 41,057.20 for 30 September 2026 and UTM amounts the SII value of CLP 72,151 for October 2026. Conversions are for orientation only.
Key facts
| Minimum monthly income, workers over 18 and up to 65, from 1 May 2026 | 553553 CLPLey Nº 21.830 art. 1, as of 2026-10-26 · in force |
|---|---|
| Minimum monthly income in US dollars at CLP 986.58 per US dollar (23 October 2026) | 561.08 USDLey Nº 21.830 art. 1, as of 2026-10-26 · in force |
| Minimum monthly income, workers under 18 or over 65, from 1 May 2026 | 412938 CLPLey Nº 21.830 art. 2, as of 2026-10-26 · in force |
| Maximum ordinary working week since 26 April 2026 | 42 hoursCódigo del Trabajo art. 22; Ley Nº 21.561, as of 2026-10-26 · in force |
| Maximum ordinary working week from 26 April 2028 | 40 hoursCódigo del Trabajo art. 22; Ley Nº 21.561, as of 2026-10-26 · pending |
| Overtime surcharge over ordinary pay | 50 %Código del Trabajo art. 32, as of 2026-10-26 · in force |
| Paid annual leave after one year of service (20 in Magallanes, Aysén and Palena) | 15 working daysCódigo del Trabajo art. 67, as of 2026-10-26 · in force |
| Deadline to put the employment contract in writing | 15 daysCódigo del Trabajo art. 9, as of 2026-10-26 · in force |
| Maximum fixed term contract (24 months for managers and degree holders) | 12 monthsCódigo del Trabajo art. 159 Nº 4, as of 2026-10-26 · in force |
| Notice for dismissal for company needs, or one month of pay in lieu | 30 daysCódigo del Trabajo art. 161 and art. 162, as of 2026-10-26 · in force |
| Statutory severance per year of service | 30 days of payCódigo del Trabajo art. 163, as of 2026-10-26 · in force |
| Cap on years counted for statutory severance (330 days) | 11 yearsCódigo del Trabajo art. 163, as of 2026-10-26 · in force |
| Cap on the monthly pay base for severance and notice pay | 90 UFCódigo del Trabajo art. 172, as of 2026-10-26 · in force |
| Deadline to sue for unjustified dismissal | 60 working daysCódigo del Trabajo art. 168, as of 2026-10-26 · in force |
| Annual cap on the legal gratificación per worker under art. 50 | 4.75 minimum monthly incomesCódigo del Trabajo art. 50, as of 2026-10-26 · in force |
| Employee pension contribution to individual account, plus AFP commission | 10 %DL 3.500 art. 17, as of 2026-10-26 · in force |
| Employer pension contribution since 1 August 2026 | 3.5 %Ley Nº 21.735 fourth transitory article letter b), as of 2026-10-26 · in force |
| Employer pension contribution at end of phase in (from August 2033 on the base schedule) | 8.5 %Ley Nº 21.735 art. 1 and fourth transitory article letter i), as of 2026-10-26 · pending |
| Employer unemployment insurance contribution, indefinite contracts (3 percent for fixed term) | 2.4 %Ley Nº 19.728 art. 5, as of 2026-10-26 · in force |
| Employee unemployment insurance contribution, indefinite contracts | 0.6 %Ley Nº 19.728 art. 5, as of 2026-10-26 · in force |
| Basic employer work accident insurance contribution (plus additional risk rate up to 3.4 percent) | 0.9 %Ley Nº 16.744 art. 15, as of 2026-10-26 · in force |
| Monthly taxable pay cap for pension, health and work accident contributions, 2026 | 90.0 UFDL 3.500; Superintendencia de Pensiones 2026 caps, as of 2026-10-26 · in force |
| Monthly taxable pay cap for unemployment insurance, 2026 | 135.2 UFLey Nº 19.728 art. 6; Superintendencia de Pensiones 2026 caps, as of 2026-10-26 · in force |
| Minimum share of Chilean national workers for employers with more than 25 workers | 85 %Código del Trabajo art. 19 and art. 20, as of 2026-10-26 · in force |
The rule
Cost to do it: No filing fee. Failing to put the contract in writing on time is fined 1 to 5 UTM, CLP 72,151 to CLP 360,755 at the October 2026 UTM.
Example: A late written contract can cost a fine of CLP 72,151 to CLP 360,755 per worker. / About US$73 to US$366 per worker.DFL Nº 1 of 2002, Ministerio del Trabajo, Código del Trabajo, Art. 7, art. 9 and art. 10, 2003-01-16 official text · verified 2026-10-26
Cost to do it: Fixed term and specific job contracts carry a higher employer unemployment insurance rate of 3 percent instead of 2.4 percent (Ley Nº 19.728 art. 5).DFL Nº 1 of 2002, Código del Trabajo, Art. 159 Nº 4 and Nº 5, 2003-01-16 official text · verified 2026-10-26
Cost to do it: Same pay for fewer hours: the step from 44 to 42 hours raises the cost per hour worked by about 4.8 percent, and the step to 40 hours by a further 5 percent.
Example: An employee on CLP 1,500,000 a month whose hourly overtime base works out at CLP 8,000 earns CLP 12,000 for each overtime hour. / On a US$1,520 monthly salary with an hourly base of about US$8.11, each overtime hour costs about US$12.16.DFL Nº 1 of 2002, Código del Trabajo, as amended by Ley Nº 21.561, Art. 22 and its note on gradual implementation; art. 32, 2023-04-26 official text · verified 2026-10-26 · changed: The 42 hour limit took effect on 26 April 2026 under Ley Nº 21.561 (Diario Oficial 26 April 2023), replacing the 44 hour limit in force since 26 April 2024; the Dirección del Trabajo set the default implementation rule in Dictamen ORD. Nº 253/21 of 16 April 2026. The next and final step to 40 hours takes effect on 26 April 2028.
Cost to do it: Wage floor for each full time employee aged over 18 and up to 65.
Example: CLP 553,553 a month, or CLP 6,642,636 a year before the legal profit share. / About US$561 a month, or about US$6,733 a year.Ley Nº 21.830; DFL Nº 1 of 2002, Código del Trabajo, Ley Nº 21.830 art. 1, art. 2 and art. 7; Código del Trabajo art. 44, 2026-06-22 official text · verified 2026-10-26 · changed: Ley Nº 21.830 (Diario Oficial 22 June 2026) raised the general minimum to CLP 553,553 from 1 May 2026, up from CLP 539,000 set from 1 January 2026 by Ley Nº 21.751 (Diario Oficial 28 June 2025), and provides an inflation adjustment from 1 January 2027.
Cost to do it: Under art. 50, at most 4.75 minimum monthly incomes per worker a year: CLP 2,629,376.75 at the minimum in force from 1 May 2026, or about CLP 219,115 a month.
Example: A worker on CLP 1,500,000 a month would get 25 percent, CLP 375,000, but the cap limits the gratificación to about CLP 219,115 a month. / Cap of about US$2,665 a year, or about US$222 a month, per worker.DFL Nº 1 of 2002, Código del Trabajo, Art. 42 letter e), art. 47 and art. 50, 2003-01-16 official text · verified 2026-10-26
Cost to do it: Three working weeks of paid leave a year per worker, plus proportional leave paid out on termination.DFL Nº 1 of 2002, Código del Trabajo, as amended by Ley Nº 21.645, Art. 67, 2023-12-29 official text · verified 2026-10-26
Cost to do it: Employer pension contribution of 3.5 percent of taxable pay since August 2026, on pay up to the 90 UF cap (about CLP 3,695,148 a month at the 30 September 2026 UF).
Example: On taxable pay of CLP 1,719,115 a month the employer pays CLP 60,169 of pension contribution and withholds CLP 171,912 (10 percent) from the employee, plus the AFP commission. / On about US$1,742 of monthly taxable pay: about US$61 employer contribution and US$174 withheld from the employee.Ley Nº 21.735; Decreto Ley Nº 3.500 of 1980, Ley Nº 21.735 art. 1 and fourth transitory article; DL 3.500 art. 17, 2025-03-26 official text · verified 2026-10-26 · changed: Under the fourth transitory article of Ley Nº 21.735 (Diario Oficial 26 March 2025) the employer pension contribution rose from 1 percent to 3.5 percent of taxable pay on 1 August 2026; the next step, to 4.25 percent, is due on 1 August 2027.
Cost to do it: Employer: 2.4 or 3 percent unemployment insurance plus 0.90 percent basic accident insurance and the additional risk rate of up to 3.4 percent.
Example: On taxable pay of CLP 1,719,115 a month on an indefinite contract: CLP 41,259 of employer unemployment insurance, CLP 15,472 of basic accident insurance and CLP 10,315 withheld from the employee. / About US$42 and US$16 for the employer and US$10 for the employee.Ley Nº 19.728; Ley Nº 16.744, Ley Nº 19.728 art. 5 and art. 6; Ley Nº 16.744 art. 15, 2001-05-14 official text · verified 2026-10-26
Cost to do it: One month of pay in lieu of notice, on a base capped at 90 UF (about CLP 3,695,148 or US$3,745 at the 30 September 2026 UF). Unpaid contributions keep pay running until they are settled.DFL Nº 1 of 2002, Código del Trabajo, Art. 159, art. 160, art. 161 and art. 162, 2003-01-16 official text · verified 2026-10-26
Cost to do it: Up to 11 months of pay capped at 90 UF a month, about CLP 40,646,628 or US$41,200 at the 30 September 2026 UF, plus notice pay and accrued leave, less the employer funded unemployment account balance.
Example: Dismissal for company needs after 7 years and 8 months on CLP 3,000,000 a month: 8 years of severance, CLP 24,000,000, plus CLP 3,000,000 in lieu of notice, CLP 27,000,000 before the unemployment account offset. If a court finds art. 161 was improperly applied, the severance rises by 30 percent, CLP 7,200,000 more. / About US$24,326 of severance plus US$3,041 in lieu of notice, US$27,367 in total, and about US$7,298 more if the dismissal is found improper.DFL Nº 1 of 2002, Código del Trabajo; Ley Nº 19.728, Código del Trabajo art. 163, art. 168 and art. 172; Ley Nº 19.728 art. 13, 2003-01-16 official text · verified 2026-10-26
Cost to do it: Free when signed on the Dirección del Trabajo website; notary fees apply otherwise.DFL Nº 1 of 2002, Código del Trabajo, as amended by Ley Nº 21.361, Art. 177, 2021-07-27 official text · verified 2026-10-26
Cost to do it: No fee; it limits how many foreign staff a company with more than 25 workers can hire outside the exceptions.DFL Nº 1 of 2002, Código del Trabajo, Art. 19 and art. 20, 2003-01-16 official text · verified 2026-10-26
Cost to do it: Cost of collecting compliance certificates from each contractor every month; without them the principal bears joint liability for the contractor's unpaid wages, contributions and severance.DFL Nº 1 of 2002, Código del Trabajo, as amended by Ley Nº 20.123 and Ley Nº 20.760, Art. 183-A, art. 183-B, art. 183-C, art. 183-D and art. 3, 2006-10-16 official text · verified 2026-10-26
Cost to do it: No fee; contingency planning for strikes cannot rely on hiring replacements.DFL Nº 1 of 2002, Código del Trabajo, as amended by Ley Nº 20.940, Art. 227 and art. 345, 2016-09-08 official text · verified 2026-10-26
Cost to do it: Internal and advisory time to prepare the protocol; the accident insurance administrators provide support to their affiliated employers.DFL Nº 1 of 2002, Código del Trabajo, as amended by Ley Nº 21.643, Art. 211-A, 2024-01-15 official text · verified 2026-10-26
| Item | Rate | CLP | USD | Rule |
|---|---|---|---|---|
| Base salary | 1,500,000 | 1,520.40 | Contract; Código del Trabajo art. 44 | |
| Legal gratificación, art. 50 option, capped | 25 percent of pay up to 4.75 minimum incomes a year | 219,115 | 222.10 | Código del Trabajo art. 50 |
| Taxable pay | 1,719,115 | 1,742.50 | Código del Trabajo art. 41 and 42 | |
| Employer pension contribution | 3.5 percent | 60,169 | 60.99 | Ley Nº 21.735 fourth transitory article |
| Employer unemployment insurance | 2.4 percent | 41,259 | 41.82 | Ley Nº 19.728 art. 5 |
| Basic work accident insurance | 0.90 percent | 15,472 | 15.68 | Ley Nº 16.744 art. 15 |
| Total employer cost before the excluded items | 1,836,015 | 1,860.99 | ||
| Withheld from the employee: pension | 10 percent plus AFP commission | 171,912 | 174.25 | DL 3.500 art. 17 |
| Withheld from the employee: unemployment insurance | 0.6 percent | 10,315 | 10.46 | Ley Nº 19.728 art. 5 |
Monthly employer cost of one worker on an indefinite contract with a base salary of CLP 1,500,000, from August 2026 (excludes the additional accident risk rate, the disability and survivor insurance premium, health insurance withheld from the employee and income tax withholding).
| Date | Change | Rule |
|---|---|---|
| 1 January 2027 | Minimum wage indexed to inflation from May to December 2026 | Ley Nº 21.830 art. 1 |
| 1 August 2027 | Employer pension contribution to 4.25 percent | Ley Nº 21.735 fourth transitory article letter c) |
| 1 August 2028 | Employer pension contribution to 5 percent | Ley Nº 21.735 fourth transitory article letter d) |
| 26 April 2028 | Maximum week to 40 hours | Código del Trabajo art. 22; Ley Nº 21.561 |
| August 2029 to August 2033 | Employer pension contribution rises 0.7 points a year to 8.5 percent, unless the slower alternative schedule, reaching 8.5 percent in August 2035, is triggered | Ley Nº 21.735 fourth transitory article letters e) to i) |
Scheduled changes that raise labour cost (base schedules set by law).
Worked example
- A foreign owned SpA hires an engineer in Santiago on an indefinite contract at a base salary of CLP 1,500,000 (about US$1,520) a month in November 2026. The written contract must be signed within 15 days of the start date (Código del Trabajo art. 9).
- The company pays the gratificación monthly under art. 50, capped at about CLP 219,115, so taxable pay is CLP 1,719,115. On that it pays 3.5 percent pension, 2.4 percent unemployment insurance and 0.90 percent basic accident insurance, CLP 116,900 in total, for a monthly cost of about CLP 1,836,015 (about US$1,861) before the additional accident risk rate and the disability and survivor insurance premium.
- Seven years and eight months later the company restructures and dismisses the engineer for company needs, now earning CLP 3,000,000 a month. It gives notice in writing with a copy to the Labour Inspectorate and pays CLP 3,000,000 in lieu of notice and eight years of severance, CLP 24,000,000 (about US$27,367 in total), less the employer funded balance of the engineer's unemployment account, after proving that pension contributions are paid up to date. The settlement is signed electronically on the Dirección del Trabajo website and paid within 10 working days (art. 161, 162, 163, 177; Ley Nº 19.728 art. 13).
- Had the engineer earned CLP 6,000,000, the base would be capped at 90 UF, about CLP 3,695,148, so severance would be about CLP 29,561,184 (about US$29,963) instead of CLP 48,000,000 (art. 172).
Step by step
- Before the first hire, the company needs its RUT and start of activities with the SII (see Start here) and must affiliate with a work accident insurance administrator under Ley Nº 16.744.
- Day 1 to day 15: sign the written contract with the minimum contents of art. 10 and register the worker for pension, health and unemployment insurance contributions.
- Prepare internal rules and the harassment prevention protocol required by art. 211-A before staff start.
- Every month: pay salaries at or above the minimum wage, pay the gratificación if using the monthly art. 50 option, and declare and pay social security contributions on taxable pay up to the 2026 caps of 90.0 UF and 135.2 UF.
- Every month, if you use contractors on site: request compliance certificates from each contractor and withhold payment if they do not prove compliance, to limit liability to subsidiary (art. 183-C and 183-D).
- Track scheduled changes: the employer pension contribution steps each August, the minimum wage indexation on 1 January 2027 and the 40 hour week on 26 April 2028.
- On dismissal: check that all contributions are paid, give written notice with the cause and amounts (30 days for company needs, or pay in lieu), send a copy to the Labour Inspectorate, and issue and pay the settlement within 10 working days.
Common traps
- Calling a worker a contractor does not change the law: if services are personal and under subordination, art. 7 treats it as employment, with contributions, leave and severance owed.
- Unpaid pension contributions make a dismissal ineffective under art. 162, so pay keeps accruing until the employer settles the contributions and notifies the worker.
- A second renewal of a fixed term contract, or continuing to work after it expires, turns it into an indefinite contract with full severance rights.
- The art. 50 gratificación is often forgotten in budgets; it adds up to about CLP 219,115 a month per worker and bears social security contributions.
- Employer pension cost is rising every August under Ley Nº 21.735; multi year budgets should use the scheduled rate for each year, not today's 3.5 percent.
- The 42 hour week applies to existing contracts without a pay cut; schedules agreed for the 44 hour stage cannot be changed unilaterally, and the default rule shortens the end of the working day.
- Unjustified dismissal surcharges of 30 to 100 percent apply on top of severance, and the 60 working day claim period is suspended while a complaint is pending before the Labour Inspectorate.
- Using contractors without collecting compliance certificates leaves the principal jointly liable for their workers' unpaid wages, contributions and severance; pure labour supply makes the principal the employer.
- Group companies with common labour management can be treated as a single employer under art. 3, which matters for union and collective bargaining rights.
- Expatriate staff, including those transferred from Argentina or other neighbouring countries, count against the 85 percent Chilean worker rule once the employer has more than 25 workers, unless they are specialised technical staff or meet the family or five year residence exceptions of art. 20. Argentine side employment and social security rules are covered by The Argentine Thread.
- Strikes cannot be broken by hiring replacements: art. 345 makes it a serious unfair practice.
Sources
- DFL Nº 1 of 2002, Código del Trabajo, consolidated text (Ley Chile, Biblioteca del Congreso Nacional)
- Ley Nº 21.830, minimum monthly income from 1 May 2026, Diario Oficial 22 June 2026 (Ley Chile)
- Ley Nº 21.751, minimum monthly income 2025 and January 2026, Diario Oficial 28 June 2025 (Ley Chile)
- Ley Nº 21.735, pension reform, Diario Oficial 26 March 2025 (Ley Chile)
- Decreto Ley Nº 3.500 of 1980, pension system (Ley Chile)
- Ley Nº 19.728, unemployment insurance (Ley Chile)
- Ley Nº 16.744, work accident and occupational disease insurance (Ley Chile)
- Superintendencia de Pensiones, 2026 taxable pay caps
- Dirección del Trabajo, Dictamen ORD. Nº 253/21 of 16 April 2026 on the 42 hour week
- SII, UF values 2026
- SII, UTM values 2026
- Central Bank exchange rates published in the Diario Oficial of 23 October 2026
Related pages
- start/start-here
- entities/choosing-an-entity
- taxes/tax-system-overview
- investing/foreign-investment-regime
- macro/economy-at-a-glance
- /country/chile/
- /calendar/
- /dashboard/
- https://theargentinethread.com/guide/
Related: Chile country profile · live dashboard · central bank and release calendar · our posts on X
