To fire an employee, the reason for termination must first be determined. According to the legislation, the following reasons for termination are valid: mutual consent, resignation, or contract expiration, breach of contract (employer must be able to demonstrate), or the company's necessity for restructuring (the most common reason for the dismissal of an employee).
The employer must write a letter to the employee explaining the reason for termination and the effective date, which must be signed in person or delivered certified mail to the employee's home address. Additionally, the identical letter must be filed with Chile's Ministry of Labor. It is customary for employees to be told on their final day of employment.
Following the termination letter, the employer must draft a severance agreement that details the reason for the termination and the amount to be paid to the employee. Within ten days of termination, the severance agreement must be executed.
In the event of a mutual agreement, both parties must sign a document stating that they have decided to end the employment contract. Additionally, during the first 1-2 weeks following the termination date, a severance agreement must be signed.
One month's notice is required by law. It is not unusual for employers to waive the notice period and make payment in lieu of notice.
If the employee has worked for the company for at least one year, they are eligible to severance pay. Each year of service up to 11 years entitles the employee to one month's compensation. Additionally, after one year of employment, the employee is entitled to an additional month of severance pay if they work for at least half of the subsequent year.
The probation period is fixed at 12 months.