Payroll in Chile

In Chile the employment contract sets the payday and the pay period. The pay period cannot be longer than one month. There is no general rule that every employee must be paid by the tenth of the following month, so read the contract rather than assuming a date.

Payday and payslips

Pay in legal currency. Electronic transfer to the employee's bank account is allowed at the employee's request, and it must cost the employee nothing. Every payment needs an itemised payslip that shows the amount paid, how it was calculated and the deductions.

Where pay includes commissions or incentives, the required annex should explain the underlying operations and the calculation. Keep the contract, hours, leave, tax and contribution records. If you use an employer of record, agree how your team can verify that it has paid both the employee and the relevant institutions.

Extra payments

The dossier marks a thirteenth salary as mandatory, but Chilean law is better described through the gratification rules. Qualifying profit-making employers that keep accounting records must pay statutory gratification. The Labour Code method is at least 30% of qualifying net profits, allocated under its rules. Alternatively, an employer can use the article 50 method: 25% of the employee's relevant annual remuneration, capped at 4.75 monthly minimum wages. Confirm which method applies and record any advances paid. Holiday bonuses may also be due under the contract or collective terms, so check the offer and any collective instrument.

Deductions and remittance

An ordinary employee contributes 10% of covered pay to pension savings, plus the AFP's administration commission, and 7% to statutory health coverage. A covered indefinite-contract employee also pays 0.6% unemployment insurance. Apply each scheme's ceiling. The 2026 ceilings are 90.0 UF for pension, health and occupational accident contributions, and 135.2 UF for unemployment insurance. UF is an indexed unit, so use the applicable peso conversion.

The employer's own charges are separate. From August 2026, the employer pension contribution is 3.5% of covered pay. For an ordinary indefinite contract, add 2.4% unemployment insurance, 0.9% basic occupational accident cover and 0.03% SANNA, plus any additional risk rate.

Social contributions generally fall due by the tenth of the following month, with a next-working-day rule when that date is a weekend or holiday. Electronic payment generally extends to the thirteenth. These are contribution deadlines, not salary deadlines. Check your provider's bank cut-offs and confirm payment receipt.

Employment income tax is progressive. For September 2026 monthly payroll, taxable income up to CLP 968,233.50 is exempt. Higher bands use marginal rates from 4% to 40%, together with the table's deduction amounts. The base is generally remuneration less qualifying employee pension and health deductions. Thresholds change with the monthly UTM, so use the table for the month you are paying. The dossier does not give a tax filing form or deadline, so confirm these with the tax authority before your first pay run.

Working time that affects pay

The ordinary maximum fell to 42 hours a week on 26 April 2026. The next reduction, to 40 hours, is scheduled for 26 April 2028. The ordinary daily maximum is generally ten hours. The working day must generally include at least a 30-minute meal break that does not count as working time.

Overtime normally needs a written agreement for temporary business needs, lasting no more than three months and renewable by agreement. The usual limit is two extra hours a day. Overtime carries at least a 50% premium and is paid with the relevant ordinary pay. Work beyond agreed hours with the employer's knowledge can count even without the written agreement.

Employees in specified customer-facing commerce and service work receive at least a 30% premium for ordinary Sunday hours. Do not apply a universal holiday premium to every hire.

You must control attendance and ordinary and overtime hours using an attendance book, time clock or compliant electronic system. Agree who records hours, approves overtime and sends payroll changes to payroll.

Chile taxes employment income through a progressive monthly withholding system. Payroll applies a table of bands to each employee's taxable pay and withholds the result. The table changes every month, so there is no single rate you can apply to every salary.

Income tax bands and how withholding works

For September 2026 monthly payroll, taxable income up to CLP 968,233.50 is exempt. Higher bands use marginal rates from 4% to 40%, together with a deduction amount for each band. The tax authority's table for October 2026 has 8 bands in total, running from 0% to 40%. The top rate is 40%.

The thresholds move with the monthly UTM, an indexed unit. Do not apply January figures to September payroll, and do not use an already-published October table for September pay. This guide does not reproduce the full band table because the thresholds and deduction amounts change each month. Take the bands and deduction amounts from the table that applies to the pay month, and check the figures in your payroll system against it each month.

The taxable base is generally remuneration less the employee's qualifying pension and health deductions. In practice, social deductions come off first, and the tax table is then applied to what remains.

Allowances and credits

The dossier for this guide does not set out personal allowances or tax credits for employment income. The only reductions it confirms are the qualifying employee pension and health deductions taken before the tax table is applied. Before assuming any other allowance, check the tax authority's current rules for the specific employee.

Employee deductions

An ordinary employee contributes 10% of covered pay to pension savings, plus the pension fund administrator's commission. The employee also pays 7% to statutory health coverage. A covered employee on an indefinite contract pays a further 0.6% for unemployment insurance. Private health plans can cost more than the statutory 7%, so check the employee's actual plan.

Each scheme has its own monthly ceiling. The final 2026 ceilings are 90.0 UF for pension, health and occupational accident contributions, and 135.2 UF for unemployment insurance. They apply from February 2026 remuneration. UF is an indexed unit, so the peso equivalent changes and payroll must use the applicable conversion.

Employer contributions are separate from the employee's deductions and are not taken from pay. The dossier also gives 17.6% as a national government rate for employee social contributions. It does not break that figure down, so reconcile it against the scheme rates above before relying on it.

Business taxes are a separate matter

The corporate income tax rate is 27% and the VAT rate is 19%. These are business and transaction taxes, not deductions from an employee's salary.

• Confirm the monthly tax table before each payroll run.
• Confirm each employee's pension, health and unemployment status.
• Apply the scheme ceilings using the current UF conversion.

For an ordinary indefinite-contract employee in Chile, the employer pays 6.83% of covered pay in statutory contributions from August 2026, when pay is below the relevant ceilings. An additional occupational-risk rate depends on the activity and the employer's accident record, and benefits, gratification and exit costs are separate.

Employer and employee rates

Earlier 2026 summaries show a lower employer total of 5.8%, set before the August pension increase. Use the August figures and ask your provider which rate table its payroll applies.

Fixed-term and long-service cases

For fixed-term or project work, the employer pays the full 3% unemployment insurance instead of 2.4%. After 11 years in the same employment relationship, the individual-account contributions stop under the scheme rules. The employer continues the 0.8% solidarity-fund contribution. Check exclusions and the actual contract history.

Ceilings

The pension regulator's final 2026 monthly ceilings are 90.0 UF for pension, health and occupational accident contributions, and 135.2 UF for unemployment insurance. They apply from February 2026 remuneration and replace the provisional amounts announced in January. UF is an indexed unit, so the peso equivalent changes. Payroll must use the applicable conversion and scheme rules.

What is and is not included

The rates above cover the standard statutory employer charges. They do not include:

• the additional accident rate, which depends on the activity and the employer's assessed accident record, so ask for the current assessment even for an office role;
• statutory gratification and its charges;
• benefits such as meal or transport allowances, supplementary health insurance or holiday bonuses promised in the offer or collective terms;
• EOR fees and potential exit costs.

Employee deductions are separate from employer charges. Private health-plan costs can differ from the 7% statutory rate. Contributions generally fall due by the tenth of the following month, or the thirteenth for electronic payment. Check your provider's bank cut-offs.

Worked cost example

Assume an ordinary indefinite-contract employee on CLP 1,000,000, fully covered and below each ceiling.

This is a partial figure. It leaves out additional accident contributions, gratification and its charges, benefits, EOR fees and exit costs. Request a quote based on the full compensation package.

Annual leave

After more than one year of service, the general entitlement is 15 working days of paid annual leave. It is 20 working days for work in Magallanes, Aysén and Palena province. Saturdays do not count as working days for this entitlement. Additional progressive leave can arise after ten years of work and each further three years.

Keep at least ten working days together. Splitting the remainder and carrying leave forward both require agreement within the legal limits. Accrued or proportional leave is part of the final settlement when employment ends, so keep leave balances accurate.

Public holidays

The government lists 16 national holidays in 2026, with additional local holidays in Arica and Parinacota, and in Chillán and Chillán Viejo. The September national holidays are Friday 18 and Saturday 19 September. Sundays and statutory holidays are ordinarily rest days.

New Year's Day, Labour Day, both September holidays and Christmas have special non-waivable rules for covered commerce employees, with statutory exceptions. Where the law allows work on a Sunday or holiday, hours above the ordinary weekly schedule attract overtime pay and compensatory rest applies. Employees in the specified customer-facing commerce and service category receive at least a 30% premium for ordinary Sunday hours. Do not apply a universal holiday premium to every hire. Use the calendar and rest rules for the employee's workplace and activity.

Sick leave

An ordinary sickness subsidy requires authorised medical leave and the relevant insurance conditions. For general dependent employees, these include six months' affiliation and normally 90 contribution days in the preceding six months.

Consecutive certificates for the same diagnosis can be combined. The subsidy uses a statutory net-pay calculation. It is not an automatic employer-paid gross salary for every absence, so check how any days before the subsidy starts are treated under the contract or collective terms.

Maternity, paternity and parental leave

The ordinary maternity entitlement is six weeks before birth and twelve weeks afterward, with statutory subsidy rules. Pregnancy-related illness, a late birth and medical complications can extend leave. Birth before the 33rd week of pregnancy or birth weight below 1,500 grams can give 18 postnatal weeks. Multiple births have a separate extension.

After ordinary postnatal leave, the employee generally has twelve weeks of postnatal parental leave with the statutory subsidy. A qualifying return for half the working day extends this to eighteen weeks, with half the subsidy and the relevant pay. The working mother can transfer part of the leave to the working father from the seventh week, subject to notice requirements.

The father or non-gestational parent has five paid days for a birth. The leave can run from the birth, excluding weekly rest days, or be distributed within the first month. Qualifying adoption cases also receive this leave. It cannot be waived and is separate from any transferred parental leave.

Confirm medical certificates and the benefit calculation before promising any employee uncapped gross salary. Agree dates and payroll treatment before leave begins. Pregnancy protection ordinarily runs until one year after maternity leave ends, so get case-specific advice before any dismissal.

Other paid leave

Marriage or a civil union gives five continuous working days of paid leave. Bereavement leave is ten calendar days for a child, seven calendar days for a spouse or civil partner, seven working days for a child who dies during gestation, and four working days for a sibling or parent. These rights are additional to annual leave.

Chilean compliance risk concentrates in a few places: the written contract and its registration, monthly contribution payments, time and payroll records, notice and termination, and the final settlement. Most of these have fixed day counts, so build them into your calendar before the first hire starts.

Contracts and written terms

The written contract should name the parties, the role, the workplace, the start date, pay and payment period, hours and duration, plus any other agreed terms. The general deadline for putting it in writing is 15 days after the employee joins. That drops to five days for specified work or for contracts shorter than 30 days. Separately, the contract must be registered with the labour authority within 15 days of its conclusion. For an EOR hire, agree and sign the terms before the start date.

Remote or hybrid work needs its own terms in the contract or an addendum: location, duration, supervision, working-time treatment and the disconnection period. Register that arrangement electronically with the labour authority within 15 days.

If a collective instrument covers the employee, an individual contract cannot reduce the pay, benefits or rights it provides. Ask the employing entity to identify any applicable collective terms before you set the offer. Do not assume one national agreement applies to every hire.

Social contribution payments

Social contributions generally fall due by the tenth of the following month. When that date is a weekend or holiday, the next-working-day rule applies. Electronic payment generally extends the deadline to the thirteenth, including weekends and holidays. Check the provider's bank cut-offs and confirm that payment was received. These dates apply to contributions only. They are not a deadline for paying salary, which follows the pay period set in the contract, up to one month.

Contribution ceilings are set in UF, an indexed unit, so the peso equivalent changes. For 2026 the ceilings are 90.0 UF for pension, health and occupational accident contributions and 135.2 UF for unemployment insurance.

Records

Give the employee an itemised payslip showing the amount paid, the calculation and the deductions. Where pay includes commissions or incentives, the required annex should explain the underlying operations. Keep the contract, hours, leave, tax and contribution records. The employer must control attendance and ordinary and overtime hours with an attendance book, time clock or compliant electronic system. This also covers remote employees who are subject to working-time limits. The dossier does not give a retention period, so confirm the required period with local counsel. If you use an EOR, agree how your team can verify that it has paid both the employee and the institutions.

Notice and termination

Employment can end only through a legal route: resignation, mutual agreement, valid fixed-term expiry, specified serious misconduct or substantiated business needs. Document the ground and the facts, and check protected status before issuing notice. Pregnancy protection, for example, ordinarily runs until one year after maternity leave ends. Where protection applies, prior court authorisation can be required.

An employee resigning must give at least 30 days' written notice, with the required signature or ratification formalities. For dismissal on business needs under article 161, the employer gives at least 30 days' written notice, with a copy to the labour authority, or pays the statutory amount in place of notice. Do not treat the first months of a hire as a period in which employment can be ended freely. The general termination grounds apply from the start.

Under article 161, after at least one year of service, the starting point for compensation is 30 days of the last monthly remuneration per year of service, with a fraction above six months counted, capped at 330 days. The monthly calculation base is generally capped at 90 UF. This is separate from notice pay and accrued leave.

Final settlement

The employer must generally provide the written final settlement and make payment available within ten working days after separation. Check contribution payments before issuing it, because unpaid contributions can affect whether a dismissal takes legal effect.