Hiring an independent contractor in Chile can provide access to professionals with diverse skill sets ready to support a company's project requirements. However, when looking for independent contractors to handle projects for...
Read MoreHiring an independent contractor in Chile can provide access to professionals with diverse skill sets ready to support a company's project requirements. However, when looking for independent contractors to handle projects for the company, it is important to apply the right strategy to successfully contract these skilled professionals.
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Hiring an independent contractor in Chile can provide access to professionals with diverse skill sets ready to support a company’s project requirements. However, when looking for independent contractors to handle projects for the company, it is important to apply the right strategy to successfully contract these skilled professionals.
If hiring an independent contractor is the best fit for business requirements, it is important to understand how to classify different workers and service providers.
The primary distinction between independent contractors and employees is based on the characteristics of the services provided and whether the individual is subordinate or dependent on the company. An individual will be considered an employee when they are subordinate or dependent to the company. Independent contractors are self-employed as their own business entity providing a service for a company rather than becoming a subordinate member of the company. This designation precludes them from receiving benefits like health insurance and paid time off.
It is essential for a company to review labor laws in Chile to ensure it correctly classifies the independent contractors. Compliance is ultimately the responsibility of the contracting company, and it will need a government-issued certification to transfer that obligation to contractors. If an employee is misclassified as contractor, the company could be liable for labor court fines and other penalties such as back payments for benefits owed. Another potential penalty is that the dismissal of a contractor could be determined void on the grounds of outstanding social security debts. This would result in the company needing to continue paying wages after the date of the dismissal until the outstanding social security debts are fully paid.
When hiring independent contractors, it is essential to follow these three guidelines to ensure the process is successful.
Interviews with full-time employees often involve questions about character traits because these individuals will contribute to company culture. Independent contractor interviews are more similar to business transactions. The questions should be related to the skills and experience that can contribute to the project, as interest in personality traits may indicate a more permanent relationship.
Once a contractor is selected, a company should ensure both parties know what to expect from the business relationship. Create a written agreement that covers the relationship requirements, including:
Under labor regulations in Chile, the contracting company is also responsible for meeting health and safety requirements and managing workplace risk.
Extensive training can signify employer control over project completion, but the contracting company may offer a brief introduction of the company for the contractors to ensure they have everything they need to meet performance standards. Introduce them to key players in the project and essential workflows.
Because contractors are not on employees on payroll, their remuneration should be paid through a separate process. If needed, use a trustworthy money transfer service to securely send funds internationally.
A company’s obligations for withholding tax contributions may depend on the situation. While responsibility for compliance falls on the company by default, it is possible to opt to make the contractor responsible for their own labor and social security requirements with the proper certifications. Discuss these requirements with contractors before signing the service agreement.
Terminating independent contractors
While the type of project can affect the agreement terms, a company should generally have straightforward termination at the end of a set duration or project. However, to avoid any disputes, the contracting company should outline the termination protocols in the contract. This practice can help protect the business from potential legal issues in the future.
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THIS INFORMATION IS FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE LEGAL OR TAX ADVICE. You should always consult with and rely on your own legal and/or tax advisor(s). Globalization Partners does not provide legal or tax advice and the information is not tailored to the specific situations of your company or your workforce. Globalization Partners makes no representations or warranties concerning the accuracy, completeness or timeliness of this information. Globalization Partners shall have no liability arising out of, or in connection with, the information, including any loss caused by use of, or reliance on, the information.
THIS CONTENT IS FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE LEGAL OR TAX ADVICE. You should always consult with and rely on your own legal and/or tax advisor(s). G-P does not provide legal or tax advice. The information is general and not tailored to a specific company or workforce and does not reflect G-P’s product delivery in any given jurisdiction. G-P makes no representations or warranties concerning the accuracy, completeness, or timeliness of this information and shall have no liability arising out of or in connection with it, including any loss caused by use of, or reliance on, the information.
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