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Employment & Labor

Dismissals & Severance in Chile

The legal ground you choose determines the cost — and once the termination letter is sent, that choice is very hard to change.

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Overview

What this involves

A Chilean dismissal is not an at-will act. The employer must invoke a specific legal ground, state it in a formal termination letter with the facts supporting it, and pay the entitlements that flow from that ground. If the ground is later rejected by a court, the employer pays severance plus a statutory surcharge — which is why the letter costs more mistakes than any other document in the process.

The other half of the exercise is the finiquito, the final settlement. Executed correctly, with the required formalities, it closes the relationship. Executed casually, it may not prevent a claim at all.

What we handle

Ground selection

Analysis of which legal ground genuinely applies to the facts, and what each one costs — before anything is communicated to the employee.

Termination letter

Drafting the letter with the factual detail the law requires, and handling the notifications that must accompany it.

Severance calculation

Years of service, notice in lieu, accrued holiday and any additional entitlements, calculated to the applicable caps.

Finiquito

Preparing and executing the final settlement with the formalities that make it effective as a release.

Collective and restructuring situations

Business-necessity terminations affecting several employees, with the sequencing and documentation those require.

From anywhere

How we run this for a client abroad

Assessment first

You send the documents you have. We tell you what applies, what it costs and how long it takes — before you commit to anything.

Power of attorney

Granted at a Chilean consulate or apostilled where you live. It lets us act for you in Chile without you travelling.

We file, you get updates

Our attorneys handle the filings and appearances in Chile. You get plain-English updates at every stage.

FAQ

Dismissals & Severance — common questions

What English-speaking clients ask us most about this specific service.

How much severance does an employer pay in Chile?

For dismissal on business-necessity grounds, severance is calculated on years of service and subject to statutory caps, plus notice or payment in lieu of notice. For dismissal based on the employee's serious misconduct, no severance is due — but the employer must be able to prove the misconduct if it is challenged, and failing to do so converts the dismissal into an expensive one.

Can I dismiss someone for poor performance?

Not as a standalone ground in the way US employers expect. Chilean law lists specific grounds, and underperformance has to be framed within one of them and supported by a documented record. Dismissing a weak performer without that record is how employers end up paying severance with a surcharge.

What happens if the employee challenges the dismissal?

The matter goes before the labor courts, where the employer bears the burden of proving the ground stated in the letter. If the court rejects it, severance becomes payable with a statutory increase; in cases involving protected categories or fundamental rights, the exposure is higher still. The letter you sent becomes the case you have to defend.

Is the finiquito enough to prevent a lawsuit?

A properly executed finiquito, signed with the required formalities and without reservation, is a strong defense. One signed informally, or with the employee expressly reserving rights, is much weaker. The formalities exist for a reason and skipping them is a false economy.

Talk to a Chilean lawyer about a dismissal in Chile

Get an initial assessment in English — confidential, with no obligation.

Book your consultation now →

WhatsApp+56 9 5217 5304

Emailhola@oklegal.cl

HoursMon–Sat 09:00–20:00