Global HR Compliance in Uruguay

Uruguay maintains a transparent and predictable employment framework underpinned by detailed labour legislation and compulsory social security registration. Every employment relationship must be formalised in writing and registered with the Banco de Previsión Social (BPS), ensuring full visibility of contracts, taxes, and benefits.

For global employers, the system is reliable but procedural. Workforce registration, payroll reporting, and contribution remittance must align across BPS, the tax authority (DGI), and the Ministry of Labour. Errors in sequencing or documentation can lead to penalties or registration delays.

Through Acumen International’s Global Employer of Record (EOR) solution, companies can employ professionals in Uruguay without establishing a local entity. We handle contract execution, payroll processing, tax and social security compliance, and immigration coordination for foreign specialists, enabling compliant, fully registered employment under Uruguayan law.

Why Companies Hire in Uruguay

Uruguay attracts international employers seeking a combination of legal stability, skilled talent, and reliable administration. The country offers a highly literate workforce, predictable regulation, and straightforward access to regional markets across South America.

Common hiring scenarios include:

Regional representation — appointing local staff to manage operations or client relations across the Southern Cone without establishing a full subsidiary.
Shared services and finance operations — using Uruguay’s strong IT, legal, and accounting base for nearshore or multilingual back-office functions.
Technical and professional roles — hiring engineers, analysts, or compliance professionals to support cross-border or project-based delivery.
Contract-to-employee transitions — regularising long-term contractor arrangements to reduce misclassification or permanent establishment exposure.

Uruguay’s consistent legal environment and advanced digital administration make it suitable for both long-term and project-based hiring. Through Acumen’s EOR model, employers can engage staff quickly, maintain compliance with local registration and payroll rules, and scale operations with minimal administrative load.

Non-Compliance Risks in Uruguay

Uruguay’s employment system is structured, transparent, and strictly regulated. While it provides a high level of legal certainty, it leaves little room for informal or flexible arrangements. Non-compliance often arises not from intent but from procedural oversight — late registration, incorrect reporting, or incomplete social security payments.

Key compliance risks for foreign employers include:

Improper registration — failure to enrol employees with the Banco de Previsión Social (BPS) before the start date can invalidate insurance coverage and trigger penalties.
Misclassification — long-term contractors or consultants treated as self-employed may be reclassified as employees, creating retroactive liability for unpaid contributions and benefits.
Permanent establishment (PE) exposure — direct hiring or supervision of staff without a legal entity may create a taxable presence, even if commercial activity is limited.
Tax and reporting errors — payroll and withholding data must align between the BPS and the General Tax Directorate (DGI). Mismatched filings are automatically flagged through Uruguay’s integrated systems.
Labour inspection findings — authorities routinely review compliance records, including contract templates, payslips, and social security submissions.

Global Employer of Record Solutions

Acumen International offers a Global Employer of Record solution, enabling seamless employment of your workforce in Uruguay:

Employment and Payroll Management: We act as the legal employer, handling all payroll and benefit provisions without the need to establish local entities.
Comprehensive Compliance: Ensure full compliance with Uruguay’s employment regulations, safeguarding against legal risks.

Benefits of Partnering with Acumen International

Single Provider Solution: Streamline your global employment processes by eliminating the need to collaborate with multiple local staffing agencies and legal advisors.
Expertise in Local Compliance: Our in-depth understanding of Uruguayan labour laws ensures that your employment practices meet all regulatory requirements.
24/7 Professional Support: Our team of English-speaking experts is available 24/7 to assist with any employment-related queries, regardless of time zones.
Tailored Labor Solutions: We provide customized employment solutions that are legally compliant and catered to your specific business needs.
Local and Global Network: With our qualified local partners, rest assured that your workforce adheres to all local tax, social security, and immigration laws.

Navigating the employment landscape in Uruguay can be complex, but with Acumen International, you gain a trusted partner who simplifies global hiring. Our expertise and tailored solutions ensure that your international workforce strategy is executed with precision and compliance.

Global Payroll Calculator for Employment Cost Estimations

The Global Payroll Calculator (GPC) offers an advanced solution for instantly calculating employment costs across 190 countries, streamlining your global hiring strategy and ensuring cost-effective decisions.

Key Features & Benefits

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Built-in Compliance:
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- Updates in real-time to reflect the latest tax and labour laws.

Unique Solutions for Global Expansion Challenges

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With Global Payroll Calculator, you gain a powerful tool at your fingertips, designed to optimise your global employment strategies and ensure that your international operations are cost-effective and compliant. Enjoy a free trial to experience firsthand how GPC can transform your global payroll processes.

Guide on Hiring and Firing International Talent in Uruguay

Employment Contracts in Uruguay

Employment in Uruguay is governed by the Labour Code and related regulations administered by the Ministry of Labour and Social Security. Every employment relationship must be supported by a written contract specifying the main terms and registered with the Banco de Previsión Social (BPS) before work begins.

Contract Types

Uruguayan law recognises several forms of employment contracts:

Indefinite-term contracts – the standard form of employment, continuing until either party lawfully terminates.
Fixed-term contracts – allowed only when the work is time-limited or project-based; automatic renewal converts them to indefinite status.
Seasonal contracts – permitted in industries with cyclical demand, such as tourism or agriculture.
Part-time contracts – valid when working hours are proportionally reduced and clearly stated in writing.

Verbal agreements are legally recognised but not recommended, as written contracts are required to register employment and prove compliance.

Mandatory Elements

Each contract must include:

Full details of the employer and employee
Job title and description of duties
Type and duration of contract
Working hours and place of work
Salary structure, payment frequency, and benefits
Reference to applicable collective bargaining agreements
Conditions for termination and notice

Collective bargaining agreements (CBAs) apply across most sectors and may introduce additional benefits, leave entitlements, or wage scales. Employers must confirm whether a relevant CBA governs their sector before drafting contracts.

Acumen International ensures that all employment contracts issued through its EOR framework are compliant with Uruguayan law, properly registered, and aligned with applicable collective agreements.

Probationary Period and Employment Termination in Uruguay

Probationary Period

Uruguayan law does not formally define a nationwide probationary period, but collective bargaining agreements (CBAs) and common practice recognise up to three months for most roles.
During this time, either party may terminate the employment relationship with shorter notice and no severance obligation, unless otherwise stated in the CBA or contract.
After the probation period, the employee acquires full rights to notice, severance pay, and other statutory protections.

Termination of Employment

Employment contracts in Uruguay may be terminated by mutual agreement, resignation, or dismissal.
There is no requirement for cause to terminate an indefinite contract, but notice and severance obligations apply.
Dismissal for disciplinary cause is allowed only when the employer can demonstrate serious misconduct; such cases are rare and must be supported by evidence.

Notice Period

Uruguayan law does not prescribe a fixed statutory notice period.
Instead, notice terms are typically set in the contract or relevant CBA.
In the absence of specific provisions, most employers provide one to two weeks’ notice or payment in lieu.

Severance Pay

Employees dismissed without just cause are entitled to statutory severance pay equal to:

One month’s salary per year of service, capped at six months’ salary.
Partial years are calculated on a pro-rata basis.
Additional payments may apply if the contract or CBA grants enhanced benefits.

Severance is not owed in cases of:

Termination during probation
Dismissal for proven serious misconduct
Resignation by the employee

All outstanding salary, accrued leave, and bonuses must be settled at the end of employment.

Uruguay maintains a comprehensive social protection system managed by the Banco de Previsión Social (BPS). Both employers and employees must contribute to mandatory schemes covering pensions, health care, and labour insurance. All payments are consolidated through monthly BPS filings, which integrate with the General Tax Directorate (DGI).

Employer contributions (approximate averages based on sector):

Pension, health, and labour insurance: 12.625% to 19.5% of gross salary
Labour accident insurance (Banco de Seguros del Estado): typically 0.1% to 1.5%, depending on risk category

Employee contributions:

Pension and health insurance: 18.1% of gross salary (deducted at source)

Exact rates vary by industry, collective agreement, and whether the employee is covered by additional pension or health funds.

Mandatory Benefits

Employees in Uruguay are entitled to:

Paid annual leave (20 working days minimum after one year of service)
Paid public holidays (approximately 12 per year)
Mandatory 13th-month bonus (“Aguinaldo”), equal to one-twelfth of annual pay, paid in June and December
Paid sick leave, partially reimbursed by BPS
Maternity leave of 14 weeks, fully paid under the social insurance scheme
Paternity leave of 13 consecutive days
Statutory severance pay in case of dismissal without cause
Enrolment in the national health insurance and pension system

Employers must register new hires with BPS before the start date and submit monthly electronic declarations of wages and contributions. Late submissions or underpayments result in automatic fines and interest.

Through Acumen International’s Employer of Record solution, all statutory contributions, filings, and payments are managed directly within the Uruguayan system, ensuring compliance and seamless coordination with payroll and benefits administration.

Minimum Wage and Payroll Compliance in Uruguay (2025)

Minimum Wage

Uruguay maintains a unified national minimum wage applicable to all full-time employees. As of 1 January 2025, it stands at 23,604.00 Uruguayan pesos (UYU) per month. Sectoral collective agreements often set higher thresholds, and in those cases the more favourable rate prevails.

Wage Payment and Frequency

Salaries are normally paid monthly in local currency through the banking system. Each payslip must specify gross pay, allowances, deductions, and statutory withholdings. Electronic transfer is the standard method, while cash payment is permitted only in limited cases authorised by labour authorities.

Payroll Reporting and Compliance

All employees must be formally registered before starting work. Employers submit monthly electronic payroll declarations that consolidate salary data, income-tax withholdings, and social-security contributions to the national authorities. Personal income tax (IRPF) is withheld at progressive rates ranging from 10 % to 36 %, depending on earnings and family circumstances.
Payroll records and declarations must be retained for inspection and reconciled annually with the tax and social-insurance systems.

Non-compliance, including late registration, under-declaration, or omission of records, automatically generates fines and interest.

Acumen International ensures that all employee registrations, salary payments, and reporting obligations are managed through the correct national systems, providing employers with fully compliant, audit-ready payroll operations in Uruguay.

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