Professional Employer Organization (PEO) in Chile

What is a PEO?

A professional employer organization (PEO) essentially acts as a middle man between employees and a company –– which is particularly useful when hiring overseas in a country with different labor and payroll regulations. 

Traditional methods of expanding your company on a global scale can be costly, time-consuming, and open you up to legal issues. Partnering with a PEO is the easiest way to hire new employees in Chile, and the rest of the world. A PEO takes all the hard work off your hands, leaving you free to focus on talent acquisition and growth. 

Your PEO tackles the tricky HR intricacies that come with hiring and managing a global team. This includes managing payroll, supplying competitive employee benefits packages specific to their local market, and making sure that your business complies with the relevant local legislation.

With the help of a PEO, you can hire the absolute best talent around the world… regardless of their location. 

If it sounds like working with a PEO could be the best thing for your business, get in touch with someone at Skuad today to find out more about the specifics.

What are the benefits of using a PEO provider in Chile?

Working with a PEO to help expand your business and hire the best possible local talent in Chile comes with numerous benefits for any growing company:

​​Hire the best talent from a new market

If you find the perfect candidate for a job at your company, geographic location should never stop you from bringing them on board. Many companies have to pass up the opportunity of hiring stellar talent just because they’re based overseas and won’t relocate. 

But with a PEO, a company’s hiring options are endless. Even if the best-possible man for the job is located in Santiago, and your business is based in Austin, a PEO makes it possible to hire them ASAP, with no headaches. 

Become a globally competitive employer

A global team is a great sign of a highly successful business –– when skilled workers from all over the world want to work with you, you’re doing something right. 

Working with a PEO to bring them on board helps you ensure that you can provide the most attractive remuneration and benefits packages, based on where each employee is located. 

Save on unnecessary costs

Hiring employees in Chile without a PEO would be expensive and chew up a lot of time and resources. Even larger companies, who can foot the bill to go it alone, almost always use a PEO because it’s so much easier – and a fraction of the cost. 

Save your business the unnecessary cost of global hiring by working with a PEO that knows exactly what it’s doing when it comes to HR and payroll. Interested in hearing a bit more about how it all works? Get in touch with us at Skuad and we’d be more than happy to answer any questions. 

Become experienced in a new market

Chile has been one of Latin America’s fastest-growing economies in the last few decades, and a PEO helps you get your foot in the door.  You can’t expand into a new market without understanding it wholly, and hiring Chilean employees gives you a great insight into the region. 

Having boots on the ground, so to speak, is a valuable asset for any form of growth. 

Avoid setting up your own legal entity in Chile

Say a company wanted to hire an employee in Chile but decided to do it on their own. The only option is to incorporate a legal entity in Chile –– which can take months and cost a lot of money. 

They’d also need to bring on Chilean lawyers and consultants who specialize in the local market to remain compliant and avoid fines. It’d also require trips back and forth from Chile to make sure the process goes smoothly.  

But using a PEO bypasses this headache, leaving the work up to the experts. Many PEOs, like Skuad, have their own legal entity already established in Chile –– which can be used to legally employ candidates on your behalf. 

Become culturally aware

One of the beauties of recruiting a global team is embracing diversity… but that also means understanding the impact of cultural differences when it comes to doing business abroad. A PEO will help you to stay on top of the major important practices to know as an employer of Chilean workers. 

For example, did you know that it’s customary to pay “aguinaldos” in Chile? These are token bonuses that come twice a year; once during Chile’s Independence Day in September and once around Christmas time. 

Ensure that your business complies with statutory requirements in Chile

Each country has its own legal requirements when it comes to hiring and payroll –– and they can get pretty intricate and confusing. The punishment for non-compliance comes with hefty fines, so it’s definitely something to avoid! A PEO will ensure that everything is above board and that your employees are getting the best possible treatment. 

This covers everything from payroll compliance and social security to providing the correct minimum number of annual leave. 

Some specifics you need to know when hiring in Chile include:

Payroll

• Chilean employees are paid in Chilean pesos.
• The Chile workweek is 45 hours, with a standard workday of 8:30 am to 6:30 pm.
• Employees are not allowed to work on Sundays, with exceptions in some sectors (eg. retail).
• Employees must pay into a private health insurance scheme known as “Isapres”, which the employer withholds from their paycheck. 
• Aguinaldos – twice-yearly bonuses – are not required but are extremely common for all employees. 
• Employees are entitled to one months’ severance pay which is usually paid out rather than requiring them to work through their notice period. 

Leave

• Employees have a right to 15 days of paid leave per year –– though often cannot take more than 10 days consecutively. 
• Sick leave can only be taken with a medical certificate –– the employer must forward the certificate to the health insurance institution, which pays the sick leave. 
• Mothers are permitted 6 weeks of maternity leave before childbirth and 12 weeks after childbirth, and their job is protected for one year after maternity leave ends.
• Fathers get five consecutive days of parental leave to be used when they nominate. 

Taxes

Employee income taxes in Chile are:

• 0.00%: 0- 11.368.06 Chilean Peses (CLP)
• 4.00%: 11,368.06- 25,262.37 CLP
• 8.00%: 25,262.37- 42,103.94 CLP
• 13.50%: 42,103.94- 58,945.52 CLP
• 23.00%: 58,945.52- 75,787.10 CLP
• 30.40%: 75,787.10- 101,049.46 CLP
• 35.00%: 101,049.46 CLP and above

Employees are required to contribute a portion of their earnings to a:

• pension fund (10% of salary)
• health insurance plan (7%)
• life insurance plan (2.84% to 3.4%)
• unemployment insurance plan (0.6%)

Learn more about how Skuad’s PEO services can help your business to grow by booking a demo today.

What does it cost to build a team in Chile?

Short answer, a lot, if you’re doing it by yourself. As mentioned above, you’ll need to incorporate a company in Chile.

Company Incorporation in Chile

The costs of incorporating a company in Chile are quite steep. Company registration costs on their own hover around $7,000 USD. Then there’s the cost of setting up an address, paying government fees, establishing a corporate bank account, registering for tax, and legal consultation costs. 

When all is said and done, you’re looking at a bill of around $20,000 USD –– and that’s just to establish the company. There’ll surely be ongoing costs and fees as well. 

Or, you could partner with a PEO provider in Chile. 

PEO in Chile

The price of a PEO service varies between providers. With Skuad, you can get started for free and then cancel at any time. 

Skuad allows you to onboard and pay employees in Chile – and everywhere else in the world – starting from just $19 USD per employee per month. A lot cheaper than company incorporation!

We also offer employer of record services, where we hire international employees on your behalf as well as manage payroll, benefits, and compliance. For this service, prices start from $199 per month.

Need something a bit more specific? Let’s work together to come up with tailor-made solutions for global enterprises, with custom pricing that’s fair for everyone involved. 

Want to book in for a demo?

If you’re ready to start growing your business in Chile, book in for a demo of Skuad’s global PEO solution right away!