Types of Employment Contract
Open ended contracts
Are the most common type of contract used in Chile. They can be terminated by mutual agreement between the parties, or unilaterally for instance when an employee resigns.
Fixed term contracts
Can be for any period between a day and a year. Exceptionally they could run for up to two years. Undetermined contracts – are used for specific tasks or projects. They need to be carefully drafted to avoid any misunderstanding when the project or task is finished.
Terms and Conditions of Employment
Paid holidays After 12 months working with the same employer, an employee is entitled to 15 days of paid holiday leave. That leave can be accrued for a period of up to two years, which most employers try to avoid as it can mean an additional payment under severance conditions.
There are 16 public holidays per year in Chile
Paid sick leave
Employees get sick pay for absences due to illness or injury on the provision of a medical certificate within two days from the incident. If the leave is for less than 11 days, they do not get paid for the first three days. However, if the leave is for 11 days or more, they get paid for all of the days off sick. In all cases the sick leave is paid for by the employees’ health insurance. Maternity / Paternity leave the mother is entitled to 6 weeks of paid leave before the birth and 24 weeks after, which is paid for by her health insurance. Fathers are entitled to 5 days paternity leave. However once 7 weeks have passed after the birth, the mother can choose to transfer all or some of her remaining leave to the father.
If a member of the employee’s immediate family passes away, the employee is entitled to 3 days of paid leave.
The following amounts are deducted from the employees wage at source by the employer on a monthly basis:
● Pension 10%
● Health plan 7%
● Unemployment insurance 0.6% The employer pays additional amounts for other insurances:
● Unemployment 2.4%
● Disability and survival insurance 1.99%
Trade Unions and other representative bodies
The current Chilean constitution gives all workers the right in Chile to form or belong to a collective representative body, with the purpose of being able to collectively defend or negotiate their conditions of employment with their employee. Chilean workers also have a legal right not to belong to the trade unions. Please note that at the time of writing this article, in March 2022, Chile is going through a process to update its constitution.
The trade unions (sindicatos in Spanish), have significant strength and influence, which they frequently use during collective pay negotiations. Strikes are not uncommon in the industries previously mentioned, which at times have caused significant operational problems and costs to their employers.
A Health and Safety committee is mandatory in companies with more than 25 employees and should have three representatives from employers and three from employees. The main role of the H&S committees is to evaluate the risks to employees and agree mitigating actions.
A Biparty Training committee is mandatory in companies with more than 15 employees. The main role is to agree on an occupational training program for the employees.