OUTLINE
Notice periods in Chile
Termination of employment in Chile
Post-termination restraints in Chile
Waivers in Chile
Transfer of undertakings in Chile
Avoid risk and missed opportunities with our end-to-end employment solutions
End of employment in Chile
At some point, every employment relationship comes to an end — and Chilean labour law sets out clear rules for handling that process. Whether the employment ends through resignation, dismissal, mutual agreement, or business transfer, there are specific procedures and entitlements that apply.
In this section, we’ll take you through the key rules governing the end of employment in Chile, including statutory notice periods, severance pay, and the formal requirements for termination. We’ll also cover probationary periods, post-termination restraints, waivers of rights, and what happens to employees in the case of a transfer of undertakings.
Notice periods in Chile
In most countries, employers must give notice if they want to terminate their employment contract — but this works differently in every country. Read on to learn about notice periods in Chile.
Notice periods in Chile for employers
When an employer in Chile terminates an employee without cause (for the ‘needs of the company’), they must provide notice of at least 30 calendar days. This must be provided to the employee in writing and must state the reason for termination. Alternatively, the employer can pay the employee a month’s salary instead of requiring them to work during the notice period. If the reason for termination is misconduct, no notice is required.
Severance pay in Chile
Employees who have their contracts terminated for the needs of the company are entitled to severance pay if they have worked for the company for at least one year. Unless a higher amount is negotiated with the employee, this must be equivalent to at least one month’s salary for each year worked, plus a pro rata amount for any period worked over six months.
Severance is not payable if termination was for serious misconduct or just cause. However, if a dismissal is found to be unfair by a court, they may reclassify it as an ordinary termination and order the employer to pay severance pay plus a penalty of 30–100%.
Probationary periods in Chile
Probationary periods are not recognised in Chile, apart from for domestic workers, who may be subject to a two-week trial period.
Termination of employment in Chile
There are various circumstances under which an employment contract can come to an end in Chile. For example, an employee may resign, be fired for misconduct, or simply come to the end of their fixed-term contract. Read on to learn about some of the different forms of termination of employment in Chile.
Termination by mutual agreement in Chile
Employees and employers in Chile can agree between themselves to terminate their employment agreement. This is known as termination by mutual agreement. It must be documented in writing and signed by the employee and either a union representative or an inspector of the Labour Directorate. The agreement should also include the terms of termination, including any severance pay.
Dismissal for business needs in Chile
Employers in Chile can terminate employees for the needs of the business by giving them 30 calendar days’ written notice. Severance pay is usually required for employees with at least one year of service. Acceptable reasons for this type of termination include:
- Drops in productivity.
- Changes in market or economic conditions.
- Changes or modernisation of the company.
Dismissal for just cause in Chile
Employers may also end an employment contract because of the employee’s actions. This is known as termination for just cause. Specific reasons that may justify termination of employment are laid out in the Labour Code and include:
- Serious improper conduct by the worker (e.g. harassment, physical abuse).
- Negotiations by the worker in the employer’s line of business.
- Repeated failure to attend work.
- Abandonment of work without a good reason.
- Reckless acts, omissions, or imprudence.
- Intentional damage to facilities, tools, machinery, or merchandise.
- Serious breach of the employment contract.
Other grounds for termination of employment in Chile
Apart from the circumstances outlined above, termination of employment in Chile may also be due to:
- Employee resignation.
- Death of the employee.
- Expiration of the term of the contract.
- Completion of the work agreed.
- Acts of God (force majeure).
Post-termination restraints in Chile
Post-termination restraints are restrictions that employers can impose on employees extending beyond the end of the employment relationship. Read on to learn what you need to know about post-termination restraints in Chile.
Different types of post-termination restraints in Chile
The following types of post-termination restraints are permissible in Chile, subject to certain conditions:
- Confidentiality agreements: These prevent employees from sharing confidential information obtained during the employment period.
- Non-compete clauses: These prevent employees from launching or working for competing organisations. They can be upheld after the end of the employment contract, subject to certain conditions.
- Non-solicitation clauses: These prohibit employees from poaching or soliciting clients or staff members from their former employer.
Restrictions on post-termination restraints in Chile
In general, post-termination restraints in Chile must be designed to protect the legitimate interests of the business and must not unduly limit the former employee’s freedom to work, which is guaranteed by the Constitution. For this reason, certain limitations apply to the post-termination restraints that employers can impose — and it is important to be aware of these when putting your contracts together.
In general, post-termination restraints in Chile must be reasonable in terms of scope, duration, and geographic limits, as courts are unlikely to enforce restrictions that are overly broad. Restrictions must be provided in writing, and employers are usually required to pay some form of compensation to the employee during the restricted period.
Waivers in Chile
In some countries, employees can choose to waive employment rights in the context of a termination agreement, usually in exchange for compensation. In Chile, waivers may apply to conventionally agreed benefits, such as perks negotiated in the employment contract. However, employees generally can’t waive statutory rights guaranteed by the Labour Code and other employment legislation.
Transfer of undertakings in Chile
When a business or part of a business is transferred to another entity, this is known as a transfer of undertakings. And many countries — including Chile — have specific rules governing what happens to employees in this situation.
Employee rights after a transfer of undertakings in Chile
When an entity is transferred in Chile, existing employees are transferred with it and become employees of the new business. These employees have the right to maintain accrued seniority, holiday entitlements, and service-based indemnities. They maintain all former rights and obligations under employment agreements and practices of the former employer. This principle is referred to as ‘legal continuity’.
Avoid risk and missed opportunities with our end-to-end employment solutions
There are many different ways an employment contract can come to an end. But whatever the situation, you need to understand the rules that cover the end of employment in Chile — or you could end up facing legal issues.
Our solutions ensure your business is protected from risk when a relationship with a worker comes to an end — whatever the reason. We can also help you to avoid missed opportunities by re-deploying talent where possible.
Compliantly hire workers anywhere with CXC
With our EoR solution, you can engage workers anywhere in the world, without putting your business at risk. No more worrying about local labour laws, tax legislation or payroll customs — we’ve got you covered.
DISCLAIMER: The information contained on this website is provided for general informational purposes only and should not be construed as legal, tax, or other professional advice on any subject matter. While we endeavor to ensure that the content is accurate and up to date, we make no warranties or representations of any kind regarding the completeness, accuracy, reliability, suitability, or availability of the information contained herein. The content on this site is not intended to be a substitute for professional advice. Users should not act or refrain from acting based on any information on this website without seeking the appropriate legal, tax, or other professional advice tailored to their specific circumstances from qualified professionals. We expressly disclaim all liability in respect to actions taken or not taken based on any or all of the contents of this website. Use of the information on this site does not create an attorney-client, tax advisor-client, or any other professional-client relationship between the user and the website or its authors.
Australia/New Zealand Head Office
Asia Head Office
EMEA Head Office
North America Head Office
Latin America Head Office
Level 3, 99 Walker Street
North Sydney, NSW 2060 Australia
