Procedures, requirements, and all information related to domestic help and paying social security deductions as an employer (imposiciones) in Chile.
Hiring domestic help in Chile is a common practice. Domestic workers include housekeepers, gardeners, child care workers, cooks, and any other persons hired to work within a private home. Housekeepers are known as asesoras or nanas in Chile, and will be referred to as nanas here after. Nanas are the most common domestic workers who can play a multifaceted role as housekeepers, babysitters, and cooks. In Santiago, many nanas are from neighboring countries, and it is legal to hire them if they have the appropriate work permits.
There are two types of nanas:
– Puertas adentro – full-time nanas living in your home
– Puertas afuera – full or part-time nanas commuting to your home
Since you will be inviting someone into your home, people often rely on credible recommendations from friends, family, and acquaintances when hiring nanas. You can also go through an agency that will pair you with a nana for a fee. Here are some popular agencies:
– La Nana
Contracts with Domestic Workers
This is a legal agreement between you and the nana promising service for payment.
Things you need to know before signing a contract with a nana:
For part time and puertas afuera nanas, their shift cannot exceed 12 hours per day, and they must have a one hour break.
Full-time workers must have off one full day a week, or two half days if requested, and national holidays. If a nana works on specific holidays, such as New Years or Christmas, they must receive an alternate day off within the following 90 days, but may not receive extra payment instead. You can be fined for up to $700.000 for violating this norm.
Salaries are discussed with each domestic worker with a minimum of $225.000 brutos/gross amount for full-time positions.
For part-time or occasional workers, salaries are based on the type of work on a per day basis.
Salaries will also include daily transportation.
When to get a contract
It is recommended to draft and sign a contract with nanas once both parties agree upon a regular work schedule, and must be signed before a notary public within the first 15 days of work.
If you hire a nana on an occasional basis, boletas may be used. Boletas are formal receipts issued when particular services are provided on a freelance or irregular basis allowing taxes to be paid and collected by the state.
– Work Permit or Visa
– Chilean IDs – Carnet or Cedula de Identidad – yours and the employee
– One personal reference
– Proof of address
Where to get a contract
Work contracts must be signed by you and the nana at a public notary bringing along the required documents. Although notaries have contract templates where you fill in the blanks, you can download and draft the contract yourself with these templates.
Tip: Make copies of the contract and keep the contract in the case any issues arise.
Terms and Conditions
This is your time to set all the cards on the table. Discuss the terms with the nana making sure you are both on the same page. Below are some things you must consider:
- Types and distribution of services rendered – exactly what is expected and what they are willing (or not) to do
- Contract duration
- Amount, manner, and schedule of payment. Remember, your nana must sign receipt of payment for every peso that you pay. This covers both of you in case disagreement arises.
- Whenever you contract anyone for services, it is best to make it clear whether the amount discussed is in gross (sueldo bruto) or net (sueldo liquido). Once you get into deductions, this detail will play a major role. (See the section on Previred below)
- Amount for transportation should be considered separately. This is worked out on a daily basis and is not included in the calculation of imposiciones. It is added at the very end.
- Terms of Social Security Deductions or imposiciones (See next section below)
- Hours/Days. Start and finish times, total hours and lunch break.
- Food and shelter. This applies to puertas adentro nanas where food and shelter are included, but not considered part of the salary.
- Vacations. Upon completing one year of work, they receive 15 paid weekdays.
- Other agreements: sickness/tardiness, holiday and bonus entitlements.
Imposiciones and PreviRed
Imposiciones are social security deductions that the employer is obligated to declare and pay. These deductions should total approximately 13% of taxable income paid to the social programs that the employee has choosen.
PreviRed is the platform where one can make electronic payments, and it calculates all of the deductions for you. Deductions must be paid before the 13th of each month. PreviRed acts as a third party agency who allocates all the deductions to the corresponding agencies with whom your nana is registered. It allows you to make one single payment every month without having to fill in forms for every dedction payable or go to the corresponding payment office to stand in line to pay every month. It really is fast and easy. Here is where you sign up for PreviRed, it’s very straight forward – create an account, add your employee, and pay! Where the payments are allocated depends on your employee´s registration with the various social security establishments affiliated with Previred.
Tip: Although you cannot pay for previous months, there is a way to make a payment if you miss the deadline. It can be a hassle, so it is highly recommended to pay on time. You must go to the individual social policy offices that the employee is registered under to verify the social benefit plans and deductions. You will be charged a late fee, and must make a payment at a designated pay point like ServiPag or Caja los Andes.
When making a payment through PreviRed, the total amount of wages excludes the amount for transportation. Since you pay for the deductions, it is subtracted from the salary that the nana receives. This is why it is easier to include imposiciones as part of the salary to avoid any issues with your employee and the state.
Types of Deductions/Imposiciones
Health Care: at least 7% of the gross monthly income.
Retirement: amount varies with each plan through AFP or IPS.
Severance: 4.11% of gross monthly income.
Work Accidents: 0.95% of gross monthly income.
Dependents: amount varies.
NOTE: If your nana has any dependents she will have a certificate of registration for each dependent. All this means is that when you make the imposiciones payment on Previred you must tick the box that says “Carga Familiar”. It automatically makes an adjustment to some of the contributions as the government subsidises certain benefits for dependents.
Here’s an example of payments:
Gross Salary (sueldo bruto): $210,000
Less Deductions/Imposiciones: -$45,000 —> this is what you pay to Previred
Subtotal (sueldo liquido): $165,000
Plus transportation: $25,000
Total Payable to your employee: $190,000
Here’s a document that will help you figure it all out.
What to Do when Things go Wrong
Injury at Work/Your Home
If there is an injury at work, it is covered under Mutual de Seguridad or ACHS which is included in the monthly deductions.
Domestic workers do not have rights to severance pay for their years of service. Instead, there is a fund they can access (the 4.11% monthly deduction).
Dismissing a Nana
Although you can immediately terminate a nana without cause since your relationship is heavily based on trust as you are inviting someone to work in your home. You must pay the last monthly wage. Otherwise, there must be a written notice and a copy sent to la Inspección del Trabajo with at least 30 days of anticipation. A termination of work contract must be completed which is called a “finiquito” – this must also be notarised. It is a legal declaration that all outstanding payments have been made which includes pro rata holiday pay, bonuses and imposiciones. With regard to Previred, you simply make your final payment according to the total last days of work and after that you can remove the employee from your account in Previred.
If theft is involved, a police report must be filed followed by a lawsuit as in any regular context.
REMEMBER: The person that you hire is not the person that you fire – notarised contracts protect both your employee and YOU!
How much is a fair rate of payment?
The daily rate depends on how many hours are worked. The minimum wage in Chile as of July 2014 is $225.000 a month. Generally accepted most nanas start work at 9am and end at 5pm. 8 hours in total. Daily rates vary from $10,000 to $14,000 for half day and $15,000 to $22,000 for full day, plus transport. How much you pay really depends on how big your house is, how many responsibilities your nana will have and how many hours she will work. Don’t get caught in the neighbourhood rate trap – just because you live in Vitacura doesn’t mean you need to pay more – its all relative to the amount of work and time your nana spends in your employment.
Quoting and negotiating the daily rate is where it become tricky, because you have to consider the imposiciones that will be deducted, and nanas want to know how much they will go home with at the end of the day. They will want to know the sueldo liquido plus transport amount so you´ll have to work in the imposiciones to know how much it will cost you all together.
If your nana will use public transportation, which is generally accepted as the norm, the will use a BIP card to board buses and the Metro. Peak time costs $690 for the Bus + Metro use. It allows your nana to use the bus and the Metro with up to two changes within a 120 minute time span. If more changes are needed it will charge the same amount again. So to be fair, lets assume the journey is long and requires more than two stops, including her return journey home calculate $690 x 4 which will add up to $2.760 a day. If your nana needs more than that to arrive to your home it is safe to assume she simply lives too far and over a long period of time such long and timely journeys will not be sustainable.
The amount and frequency that you pay bonuses really depends on your personal discretion. Don’t feel obligated to pay if it is not deserving. anything from $20,000 to $100,000 is acceptable. There is no law nor rule that states a minimum amount. Generally though, bonuses are paid at Christmas time and Dieciocho (Las Fiestas Patrias, Chile´s Independence day celebrations on 18 and 19 September every year – which normally last about a week!) Christmas bonuses of around $50,000 often accompany a food hamper as well. For Dieciocho simply an extra $20,000 will be welcomed. Again, these are guidelines only and it really is up to you how much you are willing and able to give.
Helpful Info and Links
Certifica Vigencia de Contrato – A template of a certificate proving employment by you for your Nana. You need to have this notarised upon completion. (MS Word Document Download)
Written by: Crystal Manafi
Edited by: Angela Finch