Hiring Your First Employees in Chile

Hiring your first employees in Chile is an exciting milestone. It is also the moment foreign companies discover that Chilean labour practices work differently, sometimes very differently, from what they are used to at home.

After a decade of helping foreign companies build teams in Chile, these are the five considerations that come up in almost every first hire. Getting them right is not difficult but for Managers with no experience in the region, they can trip you up. 

Chileans Negotiate Salary on the Net Amount, Not the Gross

In most countries, salaries are negotiated in gross terms. In Chile, it is common practice for candidates to negotiate based on the net amount, what lands in their bank account after taxes and social security deductions.

We have seen companies get all the way to signing before realising each side was talking about a different number. That is an awkward and avoidable way to start a working relationship.

What to do: state explicitly, from the first conversation, whether you are discussing gross or net. Put both figures in the offer letter so there is no room for misunderstanding.

The Gratificación: A Mandatory Bonus on Top of Salary

By law, profitable Chilean companies must pay all employees a statutory bonus known as the gratificación legal. Every employment contract contains a clause dealing with it, and it is one of the first things foreign companies ask us about.

There are two ways to comply:

1. Article 47: distribute 30% of the company’s net profits among all employees, proportional to their income; or
2. Article 50: pay each employee 25% of their wages earned during the year, regardless of company results. This is capped at 4.75 monthly minimum incomes (IMM) per year — with the minimum wage at CLP $553,553 as of May 2026, that works out to a maximum of roughly CLP $219,000 per month (around US$230).

Note that these amounts move with the minimum wage, which is adjusted regularly so your employment costs are always increasing. Slightly each year.

In almost all cases, companies choose the second option (Article 50) because it is a fixed, predictable amount that can be paid monthly and does not require opening the books. Most employers also structure it within the negotiated salary: if you agreed on a gross package of US$5,000, the gratificación is calculated inside that figure rather than on top of it. Just make sure the contract says so clearly.

There Is No Probationary Period in Chile

Clients regularly ask whether they can add a probationary period to an employment agreement. In Chile, the answer is no. The Labour Code only allows termination for specific legal causes, and “unsatisfactory performance during a trial period” is not one of them.

The workaround: hire the person under a short fixed-term contract first, then move them to an indefinite contract once they have proven themselves. The catch is that if you terminate a fixed-term contract early, you must pay out the full remaining term.

Our recommendation: keep the fixed-term contract short enough that you can properly evaluate the employee without exposing yourself to a large payout if it does not work out. And remember that a fixed-term contract can only be renewed once, a second renewal converts it into an indefinite contract automatically.

Keep Commission and Bonus Plans in a Separate Annex

In Chile, you cannot change an employment contract unilaterally, every modification needs the worker’s written consent. That becomes a problem when your bonus or commission scheme is written into the main contract and you need to adjust it: an employee whose targets went up or whose commission rate went down has little incentive to sign.

What to do: keep variable compensation in a separate annex with a one-year term. Each year, a new annex sets out that year’s KPIs and bonus structure. When changes are needed, they go into the next annex, no renegotiation of the main contract, no standoff over signatures.

Register the Contract with the Labour Office — Within 15 Days

Employment contracts must be registered electronically on the Dirección del Trabajo’s website within 15 days of signing. The same applies when the relationship ends: terminations must be registered within the legal deadlines.

This obligation trips up foreign companies because it sits between providers, the lawyer assumes the accountant is doing it, and vice versa. Agree explicitly with your legal and accounting providers on who registers what. Missed registrations mean fines.

Conclusion

None of these five points is difficult on its own. What makes them costly is finding out about them after the offer has been made, the contract signed, or the labour inspector has come calling. A one-hour review of your hiring structure before your first offer letter will save you real money and awkward conversations.

Ax Legal helps industrial technology, engineering, and service companies to navigate the legal and commercial aspects of operating their business in Latin America. With deep knowledge of the industrial and natural resource sectors, we provide actionable and practical advice to help streamline our clients’ entries into Latin America, improve how they operate in the region, and to protect their interests.

Over the years, our team of legal and commercial advisors have developed a track record of working with companies of all sizes from Australia, Canada, the U.S., and Europe. The one common factor that connects our clients is that they are leaders in their field, providing innovative technologies and services to the industrial sectors.

To better understand how we can support you in the Region, please contact Cody Mcfarlane at cmm@ax.legal