Chilean Employment Benefits: The Basics
Generally speaking, statutory requirements in Chile are not as generous as you may see in jurisdictions such as Australia. The Harris Gomez Group (HGG) has put together a brief summary to help management teams understand Chilean statutory employment benefits. It must be noted that these are only basic guidelines and you are encouraged to contact HGG for specific advice tailored to your business.
In Chile, employees are entitled to 15 days’ annual leave per annum. It is important to note that there are also approximately 15 public holidays (or “feridados“) in Chile each year as you will see in the attached link: http://www.feriados.cl.
In comparison, Australia employees are entitled to 20 working days and approximately 10 public holiday per annum, depending on the state.
Sick days are governed by Decreto con Fuerza de Ley (or “Decree with Force of Law”) DFL 44 of 1978. Unlike Australia where employees are entitled to a minimum of 10 days’ paid personal leave, the system in Chile does not put a limit on the amount of sick days an employee may take provided they have a medical licence or “licencia médica”.
Maternity & paternity leave
In terms of maternity leave, Australian mothers, if eligible, may access 18 weeks’ of government-funded Parental Leave pay at the National Minimum Wage in addition to any existing employer-provided paid or unpaid leave. As of 1 January 2013, fathers are now eligible for up to 2 weeks of paid leave at the National Minimum Wage.
In comparison, Chilean mothers are entitled to 6 weeks of paid prenatal leave and 12 weeks of paid postnatal leave. After the 12-week postnatal period, mothers now have the right to take a further 12 weeks of full-time leave. In addition, fathers are allowed to take 5 days’ leave upon the birth of a child, which the father may use from the moment of birth excluding weekends or distribute them during the first month after birth.
This is an area that is quite different to Australia. In terms of bonuses, employers in Chile are obliged to provide all employees with a statutory bonus in addition to an employee’s base salary. Known as a “legal gratification”, there are two statutory methods available to the employer.
- 30% of the total net income of the company is divided out among all the employees, proportionate to their income; or
- Pay the employee 25% of wages earned during the year, regardless of the total net income obtained by the company. This bonus is capped at 4.75 Minimum Monthly Income (IMM) which currently corresponds to a maximum bonus of CLP$83,125 per month (approximately US$160).
Most businesses elect the second option above and this payment is made monthly.
All employees must contribute 7% of their salary towards health insurance. Such contributions are withheld from the employee’s monthly salary and paid directly to each private healthcare institution. If the employee does not nominate an institution, there is a default institution available called Fonasa.
Similar to superannuation in Australia, all Chilean employees must contribute 13% of their monthly earnings, up to a maximum of 70.3 UF, to a personal retirement account maintained with a Pension Administration Fund (AFP). This amount is withheld by the employer and paid to the AFP.
Harris Gómez Group is an Australian-Chilean legal and business advisory firm located in Santiago, Chile and Bogota, Colombia . In 2001, HGG was the first Australian law firm to have a local office in Latin America. The firm specialises in Common Law and Latin American cross-border issues in areas such as Mining and Energy, Corporate, Mergers and Acquisitions, Tax, Intellectual Property and Business Enterprises. With over 19 years of experience immersed in the respective legal and business cultures of Australia and Latin America, we create a seamless bridge between the two regions and have become an essential partner to many multinational enterprises.
Av,Vitacura 5250 Oficina 802
Codigo Postal: 7630225
Vitacura, Santiago, Chile
T: +56 2 2242 1157