An Employer of Record in Chile Offers Rapid Expansion

An employer of record in Chile can hire staff on your behalf, allowing you to avoid the need to establish a local entity and thereby offering the opportunity for your business to quickly expand into the market.

A stock image depicting someone working in an office, representing a staff member hired by an employer of record in Chile
An employer of record will find your ideal staff

For anyone planning a short-term or limited-scale market entry, or who simply needs to hire a small number of executives or team members, this service can be particularly attractive as it avoids the need for both company formation and subsequent liquidation, as well as offering guaranteed compliance with all local regulations.

An employer of record in Chile will also be able to lead the recruitment process, using its established local recruitment network to find suitable candidates.

SEE ALSO: Starting a Business in Chile: Some Considerations

An employer of record is often referred to as an EOR, and may also be called a Professional Employer Organization (PEO) or PEO firm, while it may also advertise its services as payroll outsourcing.

If outsourcing your recruitment and hiring via an employer of record in Chile is something that interests you, contact us today to discuss how we can support you. Or read on to understand more about the Chilean market as an investment destination, as well as what an EOR will do for you.

Chile is well-known for its economic and political stability and is one of the most advanced economies in Latin America.

In 2019, the country registered a gross domestic product (GDP) of $282.3 billion (all figures in USD) — placing it as the fifth-largest economy in Latin America and the Caribbean. 

It is also one of the most prosperous, with a gross national income (GNI) of $15,010 per capita in 2019, positioning it as a high-income nation by standards established by the World Bank.

Chile is famed for its business-friendliness and commitment to free trade, with the country having established an extensive network of free trade agreements (FTAs) with countries around the world. 

Chile is a founding member of the Pacific Alliance — a decade-old economic integration initiative that includes Colombia, Mexico, and Peru and has ambitions to expand beyond the region. 

It also has FTAs in place with Argentina, Brazil, and Uruguay, and is currently negotiating an agreement with Paraguay. Once that agreement is signed, Chile will have free trade agreements with all four members of the Southern Common Market (Mercosur), a 30-year-old economic association that is seen as a rival to the Pacific Alliance.

All of these conditions add up to make Chile a highly popular destination for foreign direct investment (FDI), which reached $11.93 billion in 2019, as well as an ideal base of operations for companies looking to expand into Latin America.

Below some details are offered on what an employer of record in Chile will take care of for you.

An infogrpahic providign a snapshot of the market in Chile, where you may wish to hire staff through an employer of record
A snapshot of the market in Chile

What to expect from an employer of record in Chile

An employer of record in Chile will contract staff on your behalf via its locally established entity, meaning that you can have staff in only the time it takes to find them. Depending on the profile of the person or people you need, that could be a couple of weeks or even just a matter of days.

While those workers will officially be employees of your employer of record in Chile, you will have full control over their tasks and schedules, and they will report directly to you as if you were their employer. 

You will have to cover the salaries and all statutory contributions related to those staff, as well as paying a fee to the EOR, which will usually be done on a per-employee basis.

That fee will usually be considerably less than the costs associated with company formation and liquidation, and also comes with a major convenience dividend. Because, not only will the employer of record in Chile oversee all aspects of the administration of those employees, managing their contracts and payroll, but they will also guarantee that everything is done in full compliance with local corporate and employment laws.

Your employer of record will not only lead the recruitment process for the employees you need, but will also take care of drawing up their contracts, as well as overseeing their onboarding and offboarding processes. 

During their period of employment, the EOR will enforce all statutory regulations related, including:

  • The 45-hour working week, unless an exemption exists
  • Statutory overtime payments at approximately 150% of the standard rates for additional hours worked
  • Payment of the minimum wage (approximately $469 per month in 2021) where applicable
  • Honoring of all paid leave entitlements, including vacation allowance and maternity or paternity leave

In managing your payroll, your employer of record in Chile will also guarantee that deductions from employee salaries and employer contributions are properly paid. They include:

  • Pension Fund (AFP) contributions, paid to the fund selected by the employee. Those total 11% of the employee’s salary
  • Unemployment insurance is deducted at a rate of approximately 0.6% of the employee’s salary, while the employer must contribute the equivalent of 2.4%
  • Health insurance is deducted at a rate of roughly 7% of an employee’s salary
  • Accident insurance is paid by the employer at a rate of approximately 0.93% of the employee’s salary, however this rate is based on the level of risk associated with the job being undertaken

Biz Latin Hub can be your employer of record in Chile

At Biz Latin Hub, our multilingual team of hiring and PEO specialists has the experience and expertise to seek out, hire, and manage the payroll of the employees you need to be successful in the Chilean market. 

We offer a comprehensive portfolio of back-office services, which also includes company formation, accounting and taxation, and legal services, so when you choose us as your employer of record in Chile, you also have the option of expanding your service agreement to meet your growing needs. 

We also have teams in place throughout Latin America and the Caribbean, and offer our services in 18 markets around the region.

Contact us now for a consultation or free quote.

Or learn more about our team and expert authors.

A Biz Latin Hub infogrpahic highlighting when it is best to use an employer of record and when it is best to establish a local entity
When to use an employer of record or establish a local entity

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