Social Security
Old-age pensions are financed exclusively by employees through contributions that are accumulated in individual accounts at entities known as Administradoras de Fondos de Pensiones (AFP).
For these purposes, employees must contribute 10% of their monthly remuneration up to a maximum of 90 Unidades de Fomento (currently approximately US$3,500). In addition, employees must contribute 7% of their monthly remuneration for medical care, also up to a 90 UF cap. Finally, the employers must contribute 2,01% of the employee’s remuneration for disability and survival insurance (SIS). For purposes of labour and social security legislation, work may begin, as a rule, at the age of 18 and retirement may occur at the age of 65 for men and at age 60 for women. Nevertheless, the Social Security System contains provisions which allow for early retirement in certain cases. In Chile, retirement is not a legal cause for termination.
A pension reform enacted through Ley N° 21.735 (published on March 26, 2025) transforms the country’s pension architecture by introducing a new mixed system that preserves the individual capitalisation pillar while layering on a mandatory Social Insurance (Seguro Social Previsional) funded exclusively by employer contributions. Employers are now required to contribute 8.5% of the worker’s taxable remuneration, phased in gradually starting at 1% from August 2025 until Augist 2033 and will increase annually: 6% is allocated to the worker’s individual capitalization account (reached progressively, beginning at 4.5%), 1.5% goes to a Protected-Return Contribution (Cotización con Rentabilidad Protegida) which generates State-guaranteed bonos de seguridad previsional in the worker’s favor, and the remaining 2.5% funds the Autonomous Pension Protection Fund (Fondo Autónomo de Protección Previsional, FAPP). The FAPP finances three key benefits: a years-of-contribution bonus (beneficio por años cotizados) payable to pensioners aged 65 or older who meet minimum contribution thresholds; a gender life-expectancy compensation (compensación por diferencias de expectativa de vida) for women; and eventually the disability and survivor insurance previously financed by workers. Benefits began phasing in from December 2025 (years-of-contribution bonus and gender compensation), and the Protected-Return Contribution is set to commence in September 2026.
Healthcare and Insurances
The Social Security system covers all employees, including independent employees. The latter are legally obliged to contribute to a mandatory insurance that covers old age, disability and survivorship insurance.
In the case of foreign employees, as a general rule, they must also pay social security contributions as indicated above. However, Law Nº 18,156 grants exemption from social security contributions to foreign technician employees and the company that contracts them, provided that certain conditions are met: i) the expatriate subscribes to a social security system outside Chile covering at least illness, pension, disability and death; and ii) the employee expressly declares in his employment agreement that he will remain affiliated and paying the foreign social security system.
- Accidents or Professional Illness
Insurance for accidents or professional illnesses provides for medical and dental attention, hospitalisation and medicine, as well as indemnities (depending on the type of disabilities suffered) and related expenses.
Unemployment insurance is financed on a tripartite basis, as the contributions are paid by the employer, the employee (2.4% and 0.6% of the employees’ taxable remuneration up to a maximum of 126,6 UF, respectively) and the government. This insurance is mandatory for every employee hired after 1 October 2002, whereas it is discretional for those employees hired before said date. In the case of fixed-term contracts, the entire contribution (3%) is exclusively financed by the employer.
Required Leave
- Holidays and Annual Leave
Employees who have worked for more than one year have the right to an annual paid vacation of 15 working days. The holiday must be continuous, but the excess over the 10 working days may be divided by mutual agreement. After working ten years, continuously or not, for the same or different employers, vacations are extended by one working day for every three years of service for his current employer. In case of employees who work in the 11th and 12th Regions of the country and the province of Palena, the basic vacation period is 20 days.
Sundays and days legally established as holidays shall be non-working days, except for activities authorised by law to be performed on those days. Companies exempt from this prohibition must compensate their employees with a paid day off in exchange for worked Sundays or holidays. However, in certain activities, at least two rest days in the month must be granted on Sundays. When more than one paid day off is accumulated in one week, the parties may agree on a special distribution or on a special remuneration mechanism. In the latter case, remuneration for the compensated rest day has a surcharge that cannot be less than 50%.
- Maternity and Paternity Leave
Female employees are entitled to six weeks’ leave before (prenatal leave) and twelve weeks after (postnatal leave) the birth of a child, on full pay. This payment is made by the Social Security system and not by the employer. In addition, women cannot be dismissed during pregnancy and for a period of one year as from the end of the postnatal leave, other than with prior authorisation of a labour court. Additionally, to the referred postnatal leave, there exists a supplementary permit that as a general rule, provides a 12 weeks’ permit after the end of the postnatal dispensation of the mother, on full pay. Nevertheless, the mother entitled to this benefit may choose to return to her job in a part-time schedule, in which case the parental permit and subsidy is extended to 18 weeks. In this case, the subsidy granted by the Social Security System is reduced to 50% of her salary, and the employer must pay, at least, 50% of the remuneration set forth in the labour agreement and all variable remuneration to which she is entitled. Likewise, the mother may benefit the father of the child by granting him part of the parental leave. In this case, the subsidy will be paid according to the salary of the father.
When the health of a child under one year of age requires attention at home as a result of a serious illness, which circumstances will be demonstrated through a medical certificate issued by the services in charge of the infant’s health, the employee mother will be allowed to take an employment leave and subsidy allowance in cases of prenatal, postnatal and paternal postnatal leaves, during the period prescribed by the health service. If both parents are under a labour agreement, either one of them, at the mother’s choice, will be able to use this permit and will be entitled to the corresponding subsidy allowance. However, the father will be entitled to these rights in case the mother of the child is deceased or if legal custody has been granted by a judicial ruling. Furthermore, the employee who has been entrusted by a court of law with the personal care of a child less than one year old, as a protection measure, shall also be entitled to such leave and subsidy allowance. This right shall be extended to the spouse or civil partner mentioned above.
Establishments with 20 or more female employees, regardless of their age or marital status, must provide a nursery service for children under 2 years old. Employers may contribute to an external nursery school to provide such service. While the women are feeding their babies, they must be granted one hour a day for this purpose.
- Sickness and Disability Leave
Chile provides a public and private medical system for employees, including preventive and curative health care. The preventive medical service provides for periodic medical checks. When employees are found to suffer a specific illness, they are granted sick leave. During periods of sick leave, the employer cannot terminate the labour contract without cause, but the medical system pays the salary starting on the fourth day of illness or the first day in case of leaves exceeding 10 days. A monthly cap applies. This system is funded through employees’ contributions.
- Any Other Required or Typically Provided Leave(s)
In the event of the death of a child, every employee shall be entitled to 10 days of paid leave. In the event of the death of a spouse or civil partner, the employee shall be entitled to 7 calendar days of paid leave, in addition to the legal vacations to which the employee is entitled. In this case, the employee shall also be entitled to labour protection or immunity for one month, as from the date of death, thus entailing that said employee cannot be fired unless a labour court has previously authorised such dismissal. However, regarding employees hired for a fixed-term or for a specific task or service, the labour privileges shall be afforded to them only during the effective term of the corresponding employment contract, if said term is less than one month, without requiring the court’s authorisation. This allowance shall amount to seven business days in the event of the death of a child during pregnancy. Finally, in the event of the employee’s father, mother or sibling, the employee is entitled to four calendar days of paid leave, albeit without granting the benefit of said labour privileges or immunity.
In case of marriage or civil union, every employee shall be entitled to 5 continuous working days of paid leave, in addition to the annual holiday. This leave may be used, at the employee’s option, on the day of the marriage and on the days immediately before or after the marriage.
- Personal and family life conciliation
Leave shall be granted to employees who have the personal care of a child under fourteen years of age or a young person under eighteen years of age with a disability or in a situation of severe or moderate dependency, during the leave period determined by the Ministry of Education in accordance with the calendar of the respective school year, in preference to other employees without such obligations.
Whenever the nature of the duties so permits, the employer shall offer the worker who, during the term of the employment relationship, has the personal care of a child under fourteen years of age or is responsible for the care of a person with disabilities or in a situation of severe or moderate dependency, regardless of the age of the person being cared for, without receiving remuneration for this activity, the possibility of performing all or part of his or her daily or weekly work in the form of telecommuting or teleworking.
The foregoing provision does not apply to employees who are authorised to represent the employer, such as managers, assistant managers, agents or attorneys.
- Other Required or Typically Provided Benefits
Employers have no legal obligation to provide fringe benefits, other than benefits which may be voluntarily agreed in individual or collective contracts or agreements. Pension and sickness benefits are covered by the Social Security system. There is no legal obligation to provide catering facilities and meals.
Pensions: Mandatory and Typically Provided
Indemnities are granted in the form of a pension to the injured employee or to his/her spouse and dependent children in case of death of the employee. The Employees’ Compensation Fund is funded through a base contribution (made by the employer) of 0.95% of the employee’s salary (with a cap of 90 UF per base salary), plus an additional payment, which must be borne exclusively by the employer, depending on the activity and level of risk of the company (additional rate from 0% to 3.4%).
