Employment contract in Chile: Template, Key Clauses and Local Law (2026)

Employment contracts in Chile under the Codigo del Trabajo Employment in Chile is governed by the Codigo del Trabajo. An employment relationship exists, under Article 7, when a person provides personal services under subordination and dependence in return for pay; where there is no subordination, the relationship is not employment (Article 8). The contract must be in writing, and Chilean law sets strict deadlines and mandatory contents, so the formalities matter from the first day. ## Written form and deadlines The employer must put the contract in writing within 15 days of the worker joining. For a contract for a specific task or project (obra o faena) or one lasting less than 30 days, the deadline is 5 days. Failing to reduce the contract to writing in time is an infringement that can be fined, and it also shifts the burden of proof, because the law lets the worker's statement of the agreed terms be presumed true if the employer did not formalise the contract. Both parties sign, and each keeps a copy. ## Mandatory contents Article 10 lists the minimum contents of the contract, which include: the place and date it is signed; the identification of both parties, with the worker's nationality and date of joining; the nature of the services and the place or city where they will be performed; the amount, form, and period of payment of the remuneration; the length and distribution of the working day; the term of the contract; and any other agreed terms. These essential clauses can only be changed by mutual agreement, so get them right at the outset. ## The 40-hour law and working time Chile is reducing the maximum working week in stages under Law 21.561, the 40-hour law. From 26 April 2026 the weekly cap is 42 hours, down from 44, and it falls to 40 hours from 26 April 2028. The daily maximum remains 10 hours, and the law expressly prohibits cutting pay to offset the shorter week. Employers had to amend hours in writing in the contract or an annex, and the reduction must reflect a real decrease in hours worked rather than a paper adjustment. Some roles, such as senior managers and those working without direct supervision, are treated differently. Make sure the working-time clause reflects the current cap and the agreed distribution of hours. ## Contract types The main types are the indefinite contract (indefinido), the fixed-term contract (plazo fijo), and the contract for a specific task or project (por obra o faena). A fixed-term contract is generally limited to one year, extendable to two years for managers or people with a professional or technical qualification. If the worker keeps working after the term ends, or the contract is renewed beyond the limits, it becomes indefinite; and a worker engaged on more than two fixed-term contracts over a defined period is treated as having an indefinite contract. The indefinite contract is the default the law leans toward. ## Termination and severance Termination must rest on a legal ground. The grounds include mutual agreement and resignation, the fault-based grounds in Article 160, and the employer's business-needs ground (necesidades de la empresa) in Article 161. Where an employee with an indefinite contract is dismissed for business needs, the law provides a severance for years of service (indemnizacion por anos de servicio) under Article 163: broadly 30 days of the last monthly remuneration per year of service and for any fraction over six months, capped at 11 years (330 days), plus a substitute-notice payment of one month where the required notice was not given. Calculate these with current figures and the applicable remuneration. ## Sample wording > This is an indefinite employment contract under the Codigo del Trabajo. The Worker provides services as [role] at [place], joining on [date], under the subordination and dependence of the Employer. > The gross monthly remuneration is [amount], paid [monthly] by [bank transfer]. The ordinary working week is [up to 42] hours, distributed as set out in this contract, with a daily maximum of 10 hours, in accordance with Law 21.561. Adapt these to the role and confirm current figures; they are a starting point, not legal advice. ## Red flags to avoid Watch for failing to put the contract in writing within the deadline, which brings fines and shifts the burden of proof to the employer. Watch for a working-time clause that still shows the old 44-hour or 45-hour week instead of the current cap. Watch for a fixed-term contract used beyond its limits, which converts to indefinite. And watch for dismissal without a valid legal ground, which exposes the employer to increased severance. ## Social security, pensions, and the legal gratification Beyond the contract itself, a Chilean employer deducts and remits the worker's social-security contributions: pension (AFP), health (Fonasa or an Isapre), and unemployment insurance, together with work-accident insurance. These are a material part of the real cost of employing someone and are not optional. Profit-making companies also owe a statutory profit share, the gratificacion legal, which the law lets the employer satisfy either by distributing a share of profits or by paying 25 percent of annual remuneration capped at 4.75 minimum monthly wages, the route most employers choose. The contract commonly records which gratification method applies. Because these items are statutory and sit outside the negotiated pay, a contract that omits them does not remove the obligation; it only hides a cost the employer carries anyway. ## Keeping the workforce contracts straight A company in Chile quickly holds many contracts at different stages: some fixed-term approaching conversion, some needing working-time annexes under the 40-hour law, each with its own dates and obligations. The real difficulty is not drafting one contract but keeping the whole set current with the law and aware of which deadlines are coming. That is the idea behind a single contract workspace. Adira brings drafting, a per-clause view, version history, and key-date tracking into one place, tuned to how your company contracts, so obligations and dates are visible rather than buried in files. Adira is India-first today, with other jurisdictions on its roadmap, so Chile-specific depth should be treated as developing, and local formalities confirmed with Chilean counsel. This article is general information, not legal advice. For a specific employment contract in Chile, confirm the current Codigo del Trabajo requirements and your wording with a qualified Chilean lawyer.