How much does it really cost to hire in Chile in 2026?
Chile loads almost no flat percentage onto the employer. Pension and the 7% health contribution both come out of the employee's pay. The one fixed employer payroll line is work accident insurance, starting at 0.9% of salary. The real Chile cost sits in severance, which runs 30 days of pay per year of service up to 330 days.
· Chile guide
Illustration · Santiago, Chile
Chile is unusual. Most employer social costs are paid by the employee, not by you. Pension and the 7% health contribution are deducted from the worker's gross pay. The one flat employer payroll line is work accident insurance. It starts at 0.9% of salary and rises by risk class.
The big Chile cost is not a monthly percentage. It is severance. If you end a contract on business grounds, you owe 30 days of the last monthly salary for each year of service. The total is capped at 330 days of pay, which is 11 years. You also give 30 days notice or pay one month's salary instead.
Statutory leave is 15 days of paid holiday a year. The minimum wage is CLP 539,000/month. There is no statutory 13th-month salary in Chile. Instead the law sets a profit-share called gratificación, worth at least 30% of net annual profit.
The headline on what a Chile hire actually costs
Start with the gross monthly salary. Add work accident insurance at 0.9% as a base, more for higher-risk-class roles. That is close to the whole flat employer add-on in Chile.
Pension and the 7% health contribution are not your cost. The employee pays them out of gross pay. Your real exposure is the severance you build up over time.
Chile flips the usual cost picture. In most countries the employer carries a large flat social charge on top of salary. In Chile the employee funds pension and health. The employer's standing payroll cost is mainly work accident insurance, which starts at 0.9% of salary and rises with the role's risk class, set by SUSESO. There is no single consolidated employer social security rate published in the law. The employer share is made up of separate small lines, and government sources do not state them as one combined figure.
| Line | Who pays | Rate or basis |
|---|---|---|
| Gross salary | Employer | Per contract |
| Work accident insurance (base) | Employer | 0.9% plus a variable risk add-on set by SUSESO |
| Pension (AFP) | Employee | Deducted from gross pay, not an employer cost |
| Health (FONASA or ISAPRE) | Employee | 7% of taxable salary, deducted from pay |
| Income tax (Impuesto Único de Segunda Categoría) | Employee | Withheld from pay, 0% to 40% bands |
| Severance reserve (years of service) | Employer | 30 days of pay per year, capped at 330 days |
| Gratificación (profit share) | Employer | At least 30% of net annual profit, or the capped Art. 50 option |
The flat monthly add-on you pay as the employer is small next to markets like France or Brazil. The cost that grows quietly is severance. Every year an employee stays, you build up another 30 days of severance liability, up to the 330 days ceiling at 11 years. Budget that reserve from day one, not at the point you need to end the contract.
Add Teamed from $599 per employee per month and the picture is complete. Use the Employer Cost Calculator to run your own salary figures for Chile.
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Start with gross salary
Confirm the agreed gross monthly salary in Chilean pesos. This is the base for every other line, including the work accident rate and the severance reserve.
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Add work accident insurance
Apply the work accident base rate, then the risk add-on set by SUSESO for the role. For an office hire this is close to the base. This is the main flat employer line.
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Deduct, do not add, pension and health
Pension and health come out of the employee's gross pay, not on top of it. Your job is to deduct the right amounts and remit them on time.
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Build a severance reserve
Set aside the severance that accrues for each year of service from the start. The liability grows quietly until the cap, so reserve for it rather than meet it in cash at the end.
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Budget gratificación each year
Chile has no 13th-month salary, but the profit-share gratificación is a real annual cost. Plan it into the headcount budget for every Chile hire.
What the employer actually pays into the system
Work accident insurance is the main flat employer line. The base is 0.9% of salary. A risk add-on is set per company by SUSESO.
Pension and health are employee-funded. You deduct and remit them, but they are not a cost on top of salary for you.
Work accident insurance (Ley 16.744)
This is the clearest flat employer cost in Chile. The base rate is 0.9% of the employee's taxable salary under the SUSESO framework. On top of the base, a variable additional rate is set by risk class. An office role sits near the base. A role in a higher risk class attracts more. The combined rate is your real cost for this line.
Pension (AFP) and health, paid by the employee
Pension goes to a private fund manager (AFP). It is roughly a tenth of taxable salary plus the fund's own commission, and it comes out of the employee's gross pay. Health is 7% of taxable salary, paid to FONASA or a private ISAPRE, again deducted from the employee. Neither is an employer charge on top of salary. The employer's job is to deduct the right amounts and remit them on time. Government sources set these out as separate employee deductions, not as a single combined employee rate.
Why there is no single employer rate
Chile does not publish one consolidated employer social security percentage. The employer pieces are the work accident base of 0.9% plus its risk add-on, a small employer share of unemployment insurance, and disability and survivorship cover. The exact current figures for those last lines are not stated as a single rate in the government sources, so model the work accident line as your reliable flat cost and treat the rest as small.
Income tax is withheld, not an employer cost
The Impuesto Único de Segunda Categoría runs in eight bands. The first band up to about 13.5 monthly tax units is 0%. The top band is 40% on the highest earners. It is the employee's tax. Your obligation is to withhold and remit it correctly. It is not a cash cost to the employer.
Severance is the cost that grows with every year
End a contract on business grounds and you owe 30 days of the last monthly salary for each year of service. The cap is 330 days, which equals 11 years.
You also give 30 days written notice. Skip the notice and you pay one month's salary instead.
Severance is the line that makes Chile costs back-loaded. When you end an indefinite contract for business needs under Art. 161, the law sets the severance for years of service (indemnización por años de servicio). It is 30 days of the last monthly salary for each full year worked, plus a fraction over six months. The total cannot exceed 330 days of pay, which is 11 years of service (Código del Trabajo, Art. 163).
On top of severance, you owe notice. Art. 162 requires 30 days written notice for a business-needs termination, with a copy to the Inspección del Trabajo. If you do not give that notice, you pay the worker one month's salary instead. This is the pay in place of notice (indemnización sustitutiva del aviso previo), equal to the last monthly salary.
Severance for years of service: 30 days of the last monthly salary for each year worked. Total capped at 330 days of pay, equal to 11 years.
Notice for a business-needs end: 30 days in writing, or pay one month's salary in place of it.
Source: Código del Trabajo, Art. 163
Getting the ground wrong costs more
If a court rules your termination ground improper, the severance rises by a set percentage. An improper business-needs ground under Art. 161 adds 30%. An unjustified Art. 159 ground, or no legal cause at all, adds 50%. An improper misconduct ground under Art. 160 adds 80%, and as much as 100% where the dismissal lacks a plausible motive (Código del Trabajo, Art. 168). Good process is the cheapest insurance you can buy.
No statutory trial period
Chile has no general probation period. The only legal trial period is the first two weeks for domestic workers. For everyone else, full protection applies from the first day. You cannot rely on an early easy-exit window, so hire deliberately and document from the start.
Leave, hours and pay rules that shape the budget
Every employee gets 15 days of paid holiday a year after one year of service. The working week is now 42 hours, stepping down to 40 by 2028.
Maternity rest is 6 weeks before birth and 12 weeks after, then a further 12 weeks of parental leave.
Annual leave
The statutory minimum is 15 days of paid annual leave per year, available after one full year of service (Dirección del Trabajo). Workers in the far-north and far-south extreme zones get extra days. Unused leave is paid out when the contract ends, so treat accrued holiday as a real liability.
Working hours and overtime
Under Ley 21.561 the maximum ordinary week is 42 hours from 26 April 2026. It was 44 before that date and drops to 40 from 26 April 2028. Overtime is paid at a premium of at least 50% over the ordinary hourly wage. Model overtime as a variable add-on, not a fixed cost.
Maternity and parental leave
Maternity rest is 6 weeks before the birth and 12 weeks after it, under Código del Trabajo, Art. 195. After that comes parental postnatal leave of 12 weeks, which can stretch to longer at half time. These payments are funded through the state maternity subsidy, not directly by the employer, but you plan cover and continuity around them.
Holidays and pay timing
Chile has 5 days non-waivable holidays for retail and commerce workers, including New Year, 1 May, the two September independence days, and Christmas. Pay must be made at intervals no longer than one month. Sick pay sits in the state subsidy system. For a medical leave of 10 days or fewer, the first 3 days carry no subsidy. For longer leave, the subsidy runs from day one.
How Teamed handles Chile employment costs for you
Teamed becomes your legal employer of record in Chile for from $599 per employee per month, with zero FX mark-up in any currency.
Payroll, work accident insurance, AFP and health remittance, severance tracking, and the full Chile compliance stack run on one platform.
Real HR and legal experts handle your Chile hires from the first contract through every monthly remittance and the severance reserve that builds over time. An actual person, not a chatbot or a pooled queue. There is no setup fee and no exit fee. Every employer cost passes through at cost, itemised on every invoice. You see the work accident line, the gratificación accrual, and any leave liability. Nothing hides inside the management fee.
EOR payroll, contractor onboarding, and entity setup all live on one platform. A Chile contractor who converts to employment keeps their record. That same employee can graduate from EOR to your own Chilean entity without switching systems. EOR is the right structure for a first Chile hire, until it isn't. Start from the Chile hiring overview or run the Employer Cost Calculator to see the full picture.
Frequently asked questions
What does it cost an employer to hire someone in Chile in 2026?
Less on top of salary than most markets, because the employee funds pension and health. The main flat employer line is work accident insurance at 0.9% of salary, plus a risk add-on set by SUSESO. The employee pays the 7% health contribution and pension out of gross pay. Your larger cost is the severance reserve, which builds at 30 days of pay per year of service. Add Teamed from $599 per employee per month for the full employer-of-record service.
Why is there no single employer social security rate in Chile?
Chile does not publish one combined employer percentage. Pension and health are employee-funded, deducted from the worker's pay. The employer pieces are the work accident base of 0.9% plus its risk add-on, a small employer share of unemployment insurance, and disability and survivorship cover. Government sources state these as separate lines, not as a single figure, so model the work accident line as your reliable flat employer cost.
How much is severance in Chile and is it capped?
On a business-needs termination you owe 30 days of the last monthly salary for each year of service, plus a fraction over six months. The total is capped at 330 days of pay, which equals 11 years. You also give 30 days written notice, or pay one month's salary in place of it. If a court rules the ground improper, an uplift of 30% to 100% is added.
Does Chile have a 13th-month salary?
No. Chile has no statutory 13th-month salary. Instead the law requires a profit share called gratificación. The base entitlement under Art. 47 is at least 30% of the company's net annual profit. Most employers use the Art. 50 option, paying 25% of each worker's pay capped at 4.75 minimum monthly incomes a year. Budget gratificación as a real annual employer cost.
What leave does a Chile employee get and who pays for it?
Every employee gets 15 days of paid annual leave a year after one year of service, and unused leave is paid out on exit. Maternity rest is 6 weeks before birth and 12 weeks after, then a further 12 weeks of parental leave, funded through the state maternity subsidy rather than directly by the employer. The working week is 42 hours, dropping to 40 by 2028, with overtime paid at least 50% above the ordinary rate.
Chile is the country buyers get wrong on cost, in both directions. The flat monthly employer add-on is tiny because the employee funds pension and health, so the headline number looks cheap. Then severance accrues quietly at thirty days of pay a year, and a mishandled termination adds an uplift on top. The real Chile cost is not on the payslip. It is the reserve you should have built from the first hire.
Chile puts almost nothing flat on the employer. Pension and health come out of the worker's pay, not on top of it.
The cost that grows is severance, 30 days of pay per year up to 330 days.
Know the work accident rate. Build the severance reserve. Plan the gratificación before you sign the offer.
