Fixed-Term Employment Contract Chile (Contrato de Trabajo a Plazo Fijo)

A Fixed-Term Employment Contract Chile (Contrato de Trabajo a Plazo Fijo) is a formal written employment agreement governed by Article 159 No. 4 of the Código del Trabajo (DFL No. 1 of 2003) that establishes a time-limited employment relationship between an employer (empleador) and a worker (trabajador), with a predetermined expiration date agreed upon by both parties at the time of contracting. Unlike the indefinite employment contract regulated under Article 159 general provisions, the plazo fijo contract gives both parties certainty about the duration of the employment relationship — subject to the strict legal limits and automatic conversion rules imposed by Chilean law.

The constitutional foundation for employment law in Chile is Article 19 No. 16 of the Constitución Política de la República de 1980, which guarantees freedom of work (libertad de trabajo) and prohibits unjust or arbitrary termination of employment. Article 19 No. 18 guarantees the right to social security, underpinning the mandatory AFP pension system (DL 3.500 of 1980), FONASA/ISAPRE health coverage (Ley 18.469 and Ley 18.933), and the AFC unemployment insurance system (Ley 19.728 of 2001).

Article 159 No. 4 of the Código del Trabajo establishes the governing rules for fixed-term employment in Chile. The maximum duration of a fixed-term contract is one year for most workers. For managers (gerentes), professionals holding a university degree (titulados de una universidad o instituto profesional), and technical specialists whose skills are not easily replaced, the maximum duration is extended to two years. Any fixed-term contract that is renewed for a second time — meaning the parties have already used one renewal — is automatically converted by operation of law into an indefinite employment contract (contrato de trabajo indefinido), regardless of the parties' intentions. This conversion rule protects workers from perpetual precarious employment and reflects Chile's strong policy preference for permanent employment relationships.

Additionally, Article 159 No. 4 establishes a second automatic conversion trigger: if a worker continues providing services after the expiration of the fixed-term contract with the employer's knowledge and acquiescence — even for a single additional day — the contract transforms into an indefinite contract by operation of law. The Juzgados de Letras del Trabajo have consistently applied this rule in disputed cases, ordering retroactive recognition of indefinite employment status and entitlement to all corresponding benefits, including the indemnización por años de servicio under Article 163 and enhanced AFC unemployment insurance benefits for indefinite contracts under Ley 19.728.

Under Article 9 of the Código del Trabajo, all employment contracts must be in writing (escriturado). For fixed-term contracts, the written contract must be executed within fifteen calendar days of the worker commencing services — unless the contract duration is less than thirty days, in which case the escrituración deadline is five days. The Dirección del Trabajo (DT), Chile's labour inspection authority headquartered in Santiago and operating regional offices (Inspecciones del Trabajo) throughout the country's 16 regions, enforces writing requirements through workplace inspections and may impose fines under Article 506 of the Código del Trabajo ranging from one to five Unidades Tributarias Mensuales (UTM).

A fixed-term contract worker is entitled to the same mandatory benefits as an indefinite contract worker during the term of the contract: AFP pension contributions under DL 3.500, health coverage through FONASA or ISAPRE, AFC unemployment insurance under Ley 19.728, occupational accident coverage under Ley 16.744 through a mutual society (ACHS, Mutual de Seguridad, or IST), feriado anual proporcional (proportional annual leave under Article 67), gratificación legal proporcional (proportional profit-sharing under Articles 47–52), and the minimum wage protection of the Ingreso Mínimo Mensual (IMM, currently CLP 500,000 for workers aged 18–65 in 2025).

The Corte Suprema de Justicia, through its Labour Chamber (Sala Laboral), resolves interpretation disputes through the recurso de unificación de jurisprudencia under Article 483 of the Código del Trabajo. The Corte has consistently emphasized that Chilean courts must apply the principle of continuidad de la empresa — interpreting ambiguous facts about contract renewal and continuation of services in favour of indefinite employment status.

A Fixed-Term Employment Contract Chile is required whenever a Chilean employer engages a worker for a role that is genuinely temporary or tied to a specific time period — for example, to cover a permanent employee's leave of absence (licencia médica, post-natal parental leave under Ley 20.545, or feriado anual), to handle a seasonal surge in business activity, to complete a defined project phase with a clear end date, or to staff a position that is not part of the company's regular permanent operations.

The contract is needed when a company — whether a Sociedad por Acciones (SpA) under Articles 424–446 of the Código de Comercio, a Sociedad de Responsabilidad Limitada (SRL) under Ley 3.918, a Sociedad Anónima (SA) under Ley 18.046, or an Empresa Individual de Responsabilidad Limitada (EIRL) under Ley 19.857 — hires workers for a fixed period. Employers must carefully evaluate whether the position genuinely meets the fixed-term criteria before using this contract type, because Chilean labour courts apply the principle of primacía de la realidad — if the actual circumstances show the work is permanent and continuing, the Juzgados de Letras del Trabajo will reclassify the relationship as indefinite regardless of the written contract label.

A plazo fijo contract is appropriate for: replacement workers substituting an absent permanent employee, where the contract should specify the absent worker's name and the reason for absence; project-phase employees engaged for the implementation of a defined deliverable; seasonal workers in tourism, retail, or agriculture where the seasonal nature is documented; and entry-level workers on probationary fixed terms where the employer intends to evaluate fitness before converting to indefinite employment (noting that Chilean law has no formal probation period — the fixed-term contract serves this commercial purpose).

The Dirección del Trabajo issues administrative guidance (Dictámenes) clarifying the boundary between legitimate fixed-term employment and artificial fragmentation of permanent work relationships. Employers in industries regulated by the Inspección del Trabajo — including construction, retail, healthcare, and education — face heightened scrutiny of their fixed-term contract practices. Large employers in retail (supermercados, tiendas por departamento) and hospitality have faced collective complaints before the Dirección del Trabajo and class-action labour proceedings before the Juzgados de Letras del Trabajo for systematic misuse of fixed-term contracts.

A fixed-term contract is also needed when engaging foreign workers — the contract must be signed and, where required by the Departamento de Extranjería y Migración under Ley 21.325 of 2021, legalized through the Ministerio de Relaciones Exteriores to support visa processing. The employment contract and its duration must align with the visa term being requested.

A valid Fixed-Term Employment Contract Chile under the Código del Trabajo must contain the essential elements specified in Article 10, the duration provisions of Article 159 No. 4, and the social security registration requirements of DL 3.500, Ley 18.469, and Ley 19.728.

Party Identification: Full legal name, RUT (Rol Único Tributario assigned by the Servicio de Impuestos Internos — SII), cédula de identidad number (issued by the Servicio de Registro Civil e Identificación), date of birth, nationality, and domicile of both employer and worker. For legal entity employers, the company RUT, Registro de Comercio or Registro de Empresas y Sociedades (RES) inscription details, and the legal representative's identity and powers (mandato) must appear. Article 10 No. 1 of the Código del Trabajo mandates this identification.

Contract Duration and End Date: The specific start date (fecha de inicio) and end date (fecha de término) must be stated precisely, as required by Article 159 No. 4. The end date may be expressed as a calendar date or as a definite future event (for example, return of the replaced worker). The contract must not exceed one year for ordinary workers or two years for managers and professionals. The parties should note the prohibition on second renewals converting to indefinite contracts.

Nature of Services and Location: A precise description of the work to be performed (naturaleza de los servicios) and the place where services will be rendered, as required by Article 10 No. 3. The Corte Suprema has issued unification rulings (recurso de unificación de jurisprudencia under Article 483) emphasizing that vague descriptions can be interpreted to expand the employer's obligations.

Remuneration: The agreed monthly or periodic remuneration, which must meet or exceed the Ingreso Mínimo Mensual (IMM — CLP 500,000 for 2025). Article 41 defines remuneration to include base salary (sueldo base), overtime (sobresueldo), commissions (comisiones), and gratificación legal under Articles 47–52. Article 10 No. 4 requires specification of the payment period, which may not exceed one month.

Working Hours: The duration and daily/weekly distribution of working hours under Article 10 No. 5. The standard maximum is 44 hours per week from April 2024, reducing progressively to 40 hours under Ley 21.561 of 2024. Daily hours may not exceed 10 hours including overtime under Article 28.

Gratificación Legal: The method for calculating profit-sharing, either under Article 47 (30% of net profits distributed proportionally) or Article 50 (25% of monthly remuneration, capped at 4.75 IMM per year). Fixed-term workers earn gratificación proporcional based on months worked during the applicable calendar year.

AFC Unemployment Insurance: Fixed-term contract workers receive reduced AFC benefits under Ley 19.728 compared to indefinite contract workers. The employer contribution rate for fixed-term contracts is 3% of taxable remuneration (versus 2.4% employer + 0.6% worker for indefinite contracts) — the full 3% is an employer-only contribution, deposited entirely into the worker's individual unemployment account. Workers on fixed-term contracts do not contribute to the AFC solidarity fund, which provides enhanced benefits for indefinite contract workers.

Termination and Finiquito: At the natural expiration of the fixed-term contract, the employer must pay all proportional entitlements — feriado proporcional under Article 73, gratificación proporcional under Articles 47–52, and any outstanding remuneration. The settlement must be documented in a finiquito ratified before a ministro de fe (Notario Público, inspector del trabajo, or secretary of the Juzgado de Letras del Trabajo) under Article 177 of the Código del Trabajo. Early termination by the employer before the contract's expiration date (without just cause) entitles the worker to all remuneration that would have been earned until the agreed end date, as the Corte Suprema has established through unification jurisprudence.

Automatic Conversion Warning: Both parties should be aware that a second renewal of the fixed-term contract converts it to an indefinite contract by operation of Article 159 No. 4, and that continuation of services after the end date — even one additional day — triggers the same conversion. Employers should implement calendar management systems to avoid inadvertent conversion through oversight.

Forms-legal.com provides this Fixed-Term Employment Contract Chile template as a practical tool for documenting time-limited employment relationships. All employment contracts should be reviewed by a licensed Abogado to confirm compliance with the Código del Trabajo, applicable Dictámenes of the Dirección del Trabajo, and the specific facts of the employment relationship. Los usuarios de forms-legal.com pueden descargar este documento de forma gratuita en formato PDF o DOCX, completar los campos del formulario guiado y obtener un documento listo para firma.