- Overview: Guatemala
- Global PEO and payroll
- Global HR Compliance
- Work permit for hiring expats via PEO
- Expand without a company set up
- Contractor vs. employee: which is better?
Global HR Compliance in Guatemala
If you hire international workforce, or plan to hire, then Hiring and Firing Workforce in Guatemala Guide below will help you understand the nuances of labor legislation in the country.
Companies hire international workforce for various reasons but in most cases they are:
- entering the foreign markets to sell company products. To do so, the company hires sales representatives who would represent their product and sell it to their local client base.
- hiring a global talent with unique skills that is unavailable in the local market or costs the company less than the talent with similar skills hired in the home country.
Before entering a certain foreign market or engaging a global talent, it is crucial for the company to understand how it can make local hires and reward its workers on a monthly basis. Growing companies often face a challenge of paying benefits and bonuses to the commission-based independent sales representatives they are working with.
If you intend to hire and pay your foreign workforce in full compliance with labor laws and regulations of Guatemala, then the Global Employer of Record service from Acumen International may be the best way for you to go. We are an International PEO company and we specialize in global employment, meaning we can employ your employees in Guatemala and act as their legal employer on your behalf. We will payroll your foreign workforce monthly and provide benefits to them through our global network so you don’t have to set up your own legal entities there.
We are experts in global workforce employment in , and our goal is to become your single provider. Instead of working with numerous local staffing agencies and legal advisors, Acumen International can solve your global business challenges and save you time, costs, and resources.
Our team of English-speaking professionals frees you from working through language nuances. Acumen International works 24/7 and can assist you whenever you need, regardless of time zones. Our goal is to create tailored labor solutions for you that are managed legally and in full compliance with the local employment laws.
With our knowledge and deep understanding of local nuances, you easily satisfy your need for skilled professionals in your global industry. With our qualified local partners, you can trust that your global workforce satisfies all local tax, social security, and immigration requirements in Guatemala.
See the guide below for a general overview of labor rules and regulations in Guatemala or contact us if you need to employ workers in Guatemala or would like to get more details.
Hiring and Firing Workforce in Guatemala Guide
# Employment contracts
An individual labor contract can come into existence simply by the employee starting work for the employer. However, the parties must enter into a written agreement, except for agriculture and cattle raising labor, domestic services, accidental or temporary labor not exceeding sixty (60) days, providing labor for a determined work, when its value does not exceed one hundred Quetzales (Q.100.00) and the term to deliver the hired work does not exceed sixty (60) days. There are different types of agreements such as undefined term, fixed term and for specific labor.
# Minimum (Statutory) Employment Rules and Regulations in Guatemala
# Hours of work:
The ordinary working day shift cannot exceed eight (8) hours per day, and forty-four (44) hours per week. The ordinary working night shift cannot exceed six (6) hours a day and thirty-six (36) per week. The ordinary working mixed shift cannot exceed seven (7) hours a day and forty-two (42) hours a week. Work performed between 6 am and 6 pm is considered day shift. Work performed between 6 pm and 6 am of the following day is considered as night shift. Work spread between both day and night shifts, is called a mixed shift; however, if, on a mixed shift, the employee works four or more hours during the night, it will be considered as a night shift for payment purposes.
# Probation period:
In every contract for an indefinite term, the first two months are considered a trial period. The parties can agree to a shorter trial period. During the trial period, either party can terminate the contract for any reason, without incurring any liability.
# Annual leave:
Employees are entitled to be paid for the following public holidays: 1 January; Thursday, Friday and Saturday Saints; 1 May; 30 June, 15 September, 20 October, 1 November, 24 December (half day), 25 December, 31 December (half day), and the day of the employee’s local festival.
All employees are entitled to a minimum of fifteen (15) days of paid holiday provided they have worked for the same employer for a year. This entitlement increases with every completed year of service. There are also various compulsory daily and weekly rest periods and breaks which have to be observed.
# Parental leave:
All pregnant workers are entitled to paid maternity leave of thirty (30) days prior to childbirth and fifty-four (54) days after childbirth. As mentioned above, employees breast feeding their babies are entitled to an hour’s paid break per day for 10 months after returning to work. This period can be extended on recommendation by a medical practitioner. If the benefits for maternity leave are past due and the disability persists, the right of the benefit continues as subsidy for illness, in which case the term will initiate at the end of the subsidy for maternity. Subsidy for illness is granted from the fourth day of disability, until this one lasts, but no more than 26 weeks for the same illness.
A male worker is entitled to two days paid leave in order to be at the birth of his child.
# Sick leave:
Employment is suspended when an employee suffers an illness, professional risks occur at work or the employee is proven to be temporarily incapacitated and cannot work. The law does not establish a specific amount of time off, and these are causes of partial suspension of contract, until the employee fully recuperates from the illness, but if the employee is incapacitated to continue labor for more than nine months, the contract is suspended definitely. Pension for disability will be granted initially for a year, and could continue for equal periods, previous proof that the conditions of disability persists.
# State minimum salary:
Guatemala’s minimum wage varies by sector. 81.87 Guatemalan quetzales per day for agricultural and nonagricultural work,74.89 quetzales per day for work in export-sector factories. Minimum wage workers get a mandatory monthly bonus of 250 quetzales. Salaried workers receive two mandatory yearly bonuses of one month’s salary each. Guatemala’s minimum wage was last changed in January 2016.
# Employee dismissal:
The termination of a labor contract occurs when one or both parties decide to terminate the relationship. The actions or omissions of one of the parties can result in the contract being terminated. An employer must be able to demonstrate a “potentially fair” reason for dismissal. Whether the reason identified is fair, depends on the tribunal’s view as to the reasonableness of the employer’s actions.
The following are just causes which allow the employer to instantly terminate the labor contract without incurring liability:
- When the worker during the performance of his work acts in an openly immoral manner or insults, commits slander or assaults his employer or his representatives who are directing the work;
- When the worker commits any of the acts set out above, in against a fellow worker;
- When the worker insults, commits slander or assaults his employer or his representatives who are directing the work, outside of the workplace outside working hours. Employment will be terminated where there is no provocation but the worker can no longer work with the other workers / employer as a result of his actions;
- When the worker intentionally commits a crime or misdemeanor against the employer’s / fellow workers / third party property when a worker reveals the secrets;
- When a worker is absent for two complete consecutive working days or during six half working days in one calendar month without permission or a just cause;
- When a worker expressly refuses to follow the employer’s health and safety procedures;
- When a worker infringes any of the prohibitions of the Labour Code, or of the duly approved internal work regulations, after the employer has given him one written notice. Notice will not be necessary in where a worker is in breach due to intoxication;
- When the worker has misled the employer as to his qualifications and ability to do the job;
- When the worker is guilty of a major offence or given a custodial sentence imposed by a court of law;
- When the worker breaches a term of the employment contract. It is understood that if the dismissal is based on an act which is also prohibited by penal laws, the employer will have the right to bring a suit before the common penal authorities for such actions.
The employee may resign if the employer:
- Does not pay the worker the complete salary on the usual date and place that have been agreed upon. The deductions that have been authorized by the law are accepted;
- Lacks integrity or honesty at work, or when he conducts himself in an openly immoral manner or resorts to insults, slander or assault against the worker. A worker may also resign if the employer’s agent is guilty of any of the behaviour listed above;
- Discriminates against or harasses a worker. A worker can also resign if he suffers discrimination or harassment by the employer’s relative, dependent where the employer knew or authorized such action.
- Maliciously causes material damage to the tools or utensils of the worker;
- Or a member of his family or agent, Suffers from a contagious disease, provided the worker has been in immediate contact with the person to which this refers;
- Does not provide a safe working environment for the work and there is a real danger to the security and health of the worker or his family;
- Demotes a worker, pays the worker less or fundamentally changes the worker’s working conditions.; and
- Fundamentally breaches the employment contract.
Notice is not provided for in most employment contracts.
There is no minimum notice periods for Employers, but for employees notice periods are as follows:
- Before six months of continuous services, at least one week’s notice;
- After six months of continuous services, but less than one year, at least 10 days’ notice;
- After one year of continuous services, but less than 5 years, at least 2 weeks’ notice; and
- After 5 years of continuous services, at least 1 month’s notice.
In contracts with undefined term the first two (2) months are reputed as probation, and any party can unilaterally, without responsibility. Normal contractual principles apply to severance payments included in the contract.
In cases of redundancy and unfair dismissal, there are statutory payments, which are calculated by reference to the employee’s age, length of service and salary (subject to certain statutory caps, reviewed annually). In cases of unfair dismissal only, the severance payment will include an additional compensatory element (damages) to reflect the losses suffered by the individual, but this is again subject to a cap (reviewed annually).