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.
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. This is why it is beneficial to hire via an employer of record in Chile
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.
Tabla de contenidos
What exactly is an Employer of Record in Chile?
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.
An employer of record in Chile is a service provider that assists foreign companies in employing staff and managing the legal and administrative aspects of human resources. The EOR takes on the responsibility of being the formal employer for the foreign company’s workforce in Chile, handling payroll, taxes, benefits, and compliance with local labor laws and regulations.
By engaging an employer of record in Chile, foreign companies can establish a presence in the country without the need to establish their own legal entity. This simplifies the process of expanding into the Chilean market and allows the company to focus on its core business operations. The EOR model provides flexibility and agility for companies seeking to quickly enter the Chilean market or test business opportunities without the burden of setting up a separate entity or navigating complex labor and legal requirements independently.
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.
Chilean economy popular among foreign investors
Chile is well-known for its economic and political stability and is one of the most advanced economies in Latin America.
According to the World Bank, in 2022, the country registered a gross domestic product (GDP) of $301.03 billion (all figures in USD) — placing it as the fifth-largest economy in Latin America and the Caribbean. A strong economy offers new opportunities to hire via an employer of record in Chile
It is also one of the most prosperous, with a gross national income (GNI) of $284.45 per capita in 2022, positioning it as a high-income nation by standards established by the World Bank. This is yet another reason to hire via an employer of record in Chile
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. This ensures a strong economy, adding to the benefits of hiring via an employer of record in Chile.
It also has FTAs in place with Argentina, Brazil, and Uruguay. Chile has 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.
Below some details are offered on what an employer of record in Chile will take care of for you.
What to expect from an employer of record in Chile
An EOR 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.
Legal aspects your employer of record in Chile will oversee
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 employer of record in Chile 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.
La información que aquí se ofrece no debe interpretarse como orientación o asesoramiento formal. Por favor, consulte a un profesional para su situación específica. La información proporcionada tiene únicamente fines informativos y es posible que no recoja todas las leyes, normas y mejores prácticas pertinentes. El panorama normativo está en continua evolución; la información mencionada puede estar obsoleta y/o sufrir cambios. Las interpretaciones presentadas no son oficiales. Algunas secciones se basan en las interpretaciones o puntos de vista de las autoridades pertinentes, pero no podemos garantizar que estas perspectivas se respalden en todos los entornos profesionales.