1. Introduction
Chile offers a dynamic legal and economic environment for business development. From a labour perspective, the system has transitioned towards greater protection of workers’ rights while maintaining flexibility through diverse contracting models. Recent reforms, such as the gradual reduction of the workweek and the modernisation of migration laws, have significantly shaped the current landscape.
2. Labour and Employment Law Requirements
a) Employer Policy Requirements
Employers in Chile must implement several mandatory policies and protocols:
- Internal Regulation of Order, Hygiene, and Safety: Mandatory for companies with 10 or more employees.
- Karin Law (Law No. 21,643): Effective as of 2024, this law significantly strengthens the prevention, investigation, and sanctioning of sexual harassment, labour harassment, and violence at work. Companies must have a formal prevention protocol and an investigation procedure in place.
- Labour Inclusion (Law No. 21,015): Companies with 100 or more employees must reserve 1% of jobs for people with disabilities and have a certified Inclusion Manager.
- 40-Hour Law (Law No. 21,561): The standard workweek is being reduced to 40 hours over a 5-year period (commenced in 2024). It also limits the exclusion of work-hour limitations (Article 22, paragraph 2) to specific management and non-supervised roles.
b) Employee Training Requirements
All employment relationships must be formalized in writing within 15 days of commencement (5 days for work of less than 30 days). The contract must include essential terms such as remuneration, workday, and job description.
3. Corporate Law Requirements
a) Business Organisations
Foreign investors commonly choose between the following structures:
- Simplified Corporation (SpA): The most flexible and popular vehicle. It can be formed by a single shareholder and has simplified administration. The deadline for registration and publication of the extract has been extended to 60 days (Law No. 21,608).
- Limited Liability Company (SRL): Requires at least two partners. Any amendment to the bylaws requires the unanimous consent of all partners.
- Corporation (S.A.): Suitable for larger businesses or those intending to go public. They can be closely-held or publicly-held (supervised by the CMF).
- Branch of a Foreign Entity: Requires the appointment of a local agent with broad powers of representation.
b) Tax and Post-Incorporation
Once incorporated, the entity must obtain a Unique Tax ID (RUT) and file for Commencement of Activities before the Internal Revenue Service (SII).
- Taxation: Chile operates under a semi-integrated system (Article 14 A) for large companies (27% corporate tax) and a Pro-Pyme regime (Article 14 D) for small and medium enterprises (reduced rates and simplified accounting).
- Municipal License: Mandatory for any commercial activity. Municipalities must grant immediate definitive or provisional licenses upon compliance with basic zoning and health requirements (Law No. 20,494).
4. Payroll and Benefits Providers
Payroll management in Chile involves complex social security contributions (pension, health, unemployment, and labour accident insurance). Outsourcing to specialized providers is a common practice for international companies to ensure compliance and reduce administrative burden.
