Employer of Record in Chile (2026): Costs, Contracts and Compliance

An employer of record (EOR) lets a foreign company employ people in Chile before it has its own Chilean entity. The EOR is the legal employer under the Labor Code: it signs the contract, pays social security through Previred, runs payroll and withholds income tax. You direct the work and pay the employment cost plus a fee. Chile’s pension reform is raising employer costs in stages, so 2026 budgets need updating.

How an EOR works in Chile

• A written employment contract signed within 15 days of starting (5 days for contracts under 30 days) and registered with the Labor Directorate (DT).
• Monthly contribution payments through Previred and an electronic record of each contract.
• The 85% rule: employers with more than 25 workers must have at least 85% Chilean workers (Labor Code, art. 19).

What employing someone costs in Chile

• Minimum wage: CLP 553,553 a month from 1 May 2026 for workers aged 18 to 65 (Law 21,830). It is adjusted by inflation from 1 January 2027.
• Employer pension contribution: 3.5% of taxable pay for wages from August 2026, under the pension reform (Law 21,735). It rises gradually in later years.
• Unemployment insurance: 2.4% from the employer on indefinite contracts, 3% on fixed-term contracts.
• Work-accident insurance (Law 16,744): a basic 0.93% plus an additional rate by risk.
• Employee withholdings: 10% to the AFP plus its commission, 7% health (Fonasa or Isapre), 0.6% unemployment insurance on indefinite contracts, and income tax.
• Legal bonus (gratificación): usually 25% of monthly pay, capped at 4.75 minimum wages a year.
• Vacation: 15 working days a year.

Contracts and working time

Contracts are indefinite, fixed-term (up to one year, or two for professionals) or for a specific job. The working week fell to 42 hours on 26 April 2026 and will reach 40 hours in 2028 (Law 21,561).

Ending employment

Dismissal for business needs (art. 161) requires 30 days’ notice or one month’s pay in lieu. After one year, severance is 30 days’ pay per year of service for each year and fraction over six months, capped at 330 days (art. 163), and calculated on pay of up to 90 UF a month (art. 172). Accrued vacation is always paid, and a settlement (finiquito) is signed at a notary or the DT.

When to set up your own company

Once your team grows or you start invoicing in Chile, it is usually better to set up your own company (often an SpA) and employ people directly. See our employer of record and PEO services in Latin America and our payroll outsourcing in Chile guide.

Get help from Easyco

Easyco coordinates the company setup in Chile up to the issue of the RUT, and supports companies afterwards with tax, accounting, payroll and company compliance, including a registered office address. Request a quote to discuss your hiring plans.