When you decide to expand your business into Chile, you have to handle many business aspects, from HR to legal to accounting. One area of utmost importance is Chile compensation and benefits....
Read MoreWhen you decide to expand your business into Chile, you have to handle many business aspects, from HR to legal to accounting. One area of utmost importance is Chile compensation and benefits. You'll need to make sure your employees get the right wages as well as all the statutory benefits required by the government.
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When you decide to expand your business into Chile, you have to handle many business aspects, from HR to legal to accounting. One area of utmost importance is Chile compensation and benefits. You’ll need to make sure your employees get the right wages as well as all the statutory benefits required by the government.
Chile has a monthly minimum wage of 337,000 Chilean pesos (as of May 2021). That currently equals around $450. Employers are encouraged to evaluate an employee’s performance each year and raise their salary accordingly. While Chile does not mandate a 13th-month bonus, any agreed-upon bonuses must be given in the local currency.
Keep these bonuses in mind when looking at Chile compensation laws:
Workers are entitled to additional benefits as well as these monthly bonuses. Employees must pay into Chile’s private health insurance — known as “Isapres” — and employers must hold up to USD 214 pre-tax each month. As an employer, you can decide whether you want to give employees a taxable bonus for health insurance. Typically, employees will look for a more extensive plan through Isapres or another private company where the employer compensates the employee for the difference above the ceiling of USD 214.
Other guaranteed benefits include time off on Chile’s 14 national holidays, six weeks of maternity leave before childbirth, and 15 paid working days of vacation a year once employees have more than a year of service.
As a Chile employer, you’ll need to disperse benefits yourself or choose Chile benefit outsourcing with a local company or a global PEO. Chile benefit management is complicated, and you’ll need to know all the ins and outs of the country’s employment laws to stay compliant. While you can work with a local Chilean company for Chile benefit management, you’ll remain liable for any mistakes.
Globalization Partners offers a better solution. We take care of all aspects of your employee benefits, from making sure you stay compliant to sourcing the best benefits to attract top talent. The risk falls on our shoulders instead of yours since we act as the Employer of Record.
Chile compensation laws mandate a typical 45-hour work week. Anything over these hours is classified as overtime, in which employees receive time and a half.
One significant benefit restriction is car allowances. Employers cannot give employees company cars without a notable tax penalty. Employers can provide monthly commuting allowances, but limits depend on the employee’s gross salary.
Expanding to a new country comes with many considerations — including benefit plan development. When you’re unfamiliar with the laws and employment customs in a country, this stage can be a challenge. At Globalization Partners, our experts can give you the guidance you need for competitive employee benefits planning in Chile.
Your benefits plan will be one of many factors in your company’s success in Chile. While benefits play a role in compliance, they also support your workers. The benefits you provide to your employees will show how much you value their work and keep overall morale high. A strategic benefits plan can aid in recruiting and retaining the talent your company needs to succeed.
Supplemental provisions and perks outside of the legal requirements can make your company competitive in the labor market and encourage people to apply to your vacancies. Possible fringe benefits include:
Employers are responsible for complying with labor regulations in Chile. That included providing the required benefits, which include:
Employees are entitled to 15 days of annual leave each year, and the country has 14 public holidays. Maternity leave must be 18 weeks total with six before delivery and 12 after. Workers must receive full pay during this time off.
Designing your benefits plan requires research and an understanding of your company’s resources. The goal of your plan is to find a balance between what your company can afford and the support your employees need. You can follow these basic steps to get started.
This initial phase is about understanding your financial capabilities and how you can allocate funds most effectively. Take a look at your yearly earnings and expenses and create a budget for your employee benefits.
It’s also essential to evaluate your goals during this stage. For example, if you want to improve employee retention, you can cut back on recruitment and add extra fringe benefits to your plan. If your goal is to build a large team, you might stick to the required benefits so you can support more employees.
When you research industry standards, you’ll gain a clear understanding of what employees expect from companies like yours and how you can make your business more competitive in the market. Explore other companies in the area and in your industry. Consider the benefits they offer as you plan your own.
Your provisions will be more appealing to applicants if you understand their needs. You can conduct surveys or interviews to understand workers in the area and the support they want from their employers.
With the information you’ve gathered, you can develop a plan that balances employee needs with company capabilities. It’s best practice to allocate funds to required benefits first and use your remaining money for supplemental provisions based on your findings.
Every company allocates a different amount of funds to their benefits. Several factors can affect your expenses, including location, industry, and company size. Your budget for benefits will be unique to your business and its goals.
Managing your benefits costs can feel challenging, especially early in your expansion. As your Employer of Record (EOR), Globalization Partners will advise you through this process with lawyers and HR experts. We’ll help you find the right balance and keep your costs in check.
Much like costs, calculations for benefits will vary based on the provisions you offer. Among the required benefits, social security contributions provide calculation guidance. Employers must contribute 1 to 1.5 percent of survivor and disability insurance. Employees contribute 10 percent for old-age pension and 7 percent for medical care.
The country describes both taxable and nontaxable benefits for employees. Most benefit types are considered taxable income, including housing and living allowances, education coverage, home leave, and medical allowances. Nontaxable benefits include:
Chile’s social security system includes coverage for public healthcare, though private care and insurance schemes are available for people who want them. While employers are required to make social security contributions, private insurance schemes can be a part of supplemental provisions as well.
At Globalization Partners, we use a tiered benefits system to make planning simple. Our lawyers ensure every level includes the legal requirements, and our HR experts add supplemental benefits to each level. With our system, you can scale your benefits as you grow and keep your employees happy. Learn more about our services by contacting us today.
If you’re ready to grow your business, or you have questions about a specific country, complete the form. One of our experts will be in touch shortly.
