- Overview: Ecuador
- Global HR Compliance
- Global PEO and payroll
- Expand without a company set up
- Contractor vs. employee: which is better?
Global HR Compliance in Ecuador
If you hire international workforce, or plan to hire, then Hiring and Firing Workforce in Ecuador Guide below will help you understand the nuances of labor legislation in the country.
There are two main reasons for companies hiring foreign workforce:
- Expanding into foreign markets to sell company product or products there. In this case, companies hire sales representatives who would exclusively represent their product in the target market and sell it to their local client base.
- Hiring the right foreign talent with a unique expertise, often related to IT sphere that cannot be found in the home country or that costs less compared to local specialist with similar skills.
After you have found the right candidate, the question is how to hire and provide compensation to this person so you as a business remain 100% compliant when working with global workforce. Another thing to consider is whether you want to keep the talent long-term and how you can do that.
If you need to hire foreign workforce in Ecuador so you can expand there, then our Global Employer of Record solution may be of help. We help you legally hire and reward your foreign workforce by making them employees via a global employment outsourcing service. This is simple as employ your in-house workforce with the only difference that workers can live anywhere in the world and Acumen International would be their legal employer on your behalf. This means we would bear all employment risks, not you. Also, we manage bonuses, vacations, sick leave and can rent the office and a car for your foreign sales representatives if that is what you need.
With our solution, you can test new foreign markets before deciding whether you are going to get established there. You gain flexibility and expand with reduced costs, and easily withdraw from the unattractive countries.
We are experts in global workforce employment in Ecuador, 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 Ecuador.
See the guide below for a general overview of labor rules and regulations in Ecuador. Or contact us if you need to employ workers in Ecuador or would like to get more details.
Hiring and Firing Workforce in Ecuador Guide
# Employment contracts
In general, labour contracts must be written and registered with the Office of the Labour Inspector. However, contracts can be implied. For employment to be established there must be evidence that the employee provides personal services in the course of an employment relationship for remuneration which is established in the contract, by law, collective bargaining contract or by custom.
There are several types and forms of employment contracts. These include, among others, fixed-term contracts, indefinite contracts, a specific job contract, contracts for task, piecework contracts, incidental work contracts, casual work contracts, seasonal contracts, part-time work contracts, contracts for work in another place (“enganche”), contracts for a group of workers and team labour contracts.
# Minimum (Statutory) Employment Rules and Regulations in Ecuador
# Hours of work:
Unless a special work shift or overtime is agreed, employees cannot work more than 40 hours per week.
# Probation period:
Generally, contracts provide for a trial period of 90 days, but the parties may waive the trial period.
# Annual leave:
Employees are also entitled to 15 days annual leave per year and an additional day if the employee has worked for the company for more than five years. Public sector workers are entitled to 30 days annual leave.
# Parental leave:
Maternity leave consists of two (2) weeks before giving birth and 10 weeks following birth; recent modifications to the Labour Code grants 10 additional days of maternity leave for multiple births. The modification also introduces paternal leave of ten (10) days with an additional eight (8) days in the case of a Caesarean or complicated birth, and 25 days if the child is born with a severe illness.
If the mother dies during labour or while she is on maternity leave, the father is entitled to the total or remaining leave. There is also leave for adoptive parents equal to 15 days from the day the child is given to them.
Finally, there is special leave, equivalent to 25 days, for parents with a child that has a degenerative illness; both parents can use this leave simultaneously or individually. Maternity leave and shortened workday for nursing biological mothers is available. Other “family friendly” rights include maternity leave for adoption parents, parental leave for fathers when the baby is born and leave for both parents when the child has a degenerative illness.
# Sick leave:
Employees must provide notice to the employer when they miss work because of a just cause. In the case of illness or disability, the employee must submit a doctor’s certificate in which the time of leave is determined and whether or not the leave should be paid.
When the worker satisfies the prescribed minimum requirements, the employer must pay the employee the benefits of general personal and family health insurance from the Ecuadorian Institute of Social Security (IESS). Furthermore, the employer must pay 50 percent of the worker’s salary or wages for the first three days of illness when not
# State minimum salary:
Ecuador’s Minimum Wage is the lowest amount a worker can be legally paid for his work. Most countries have a nation-wide minimum wage that all workers must be paid.
Ecuador’s minimum wage is US$366 per month in 2016. If working a full year, a bonus of 2 months’ pay increases the 12-month average to US$427 per month. Ecuador’s minimum wage was last changed in January 01, 2016.
# Employee dismissal:
For fixed-term contracts, notification is made through the Labour Inspector. In the event of a fair reason, the procedure called “Visto Bueno” is applied, in which the Labour Inspector must decide on whether the employment agreement may be terminated.
The employee may submit his resignation at any time and he will be entitled to a bonus for the time of service if he serves notice through the Labour Authority at least 15 days in advance. For fixed-term contracts, in the event that the employer ends the employment relationship, he must provide advance notice of at least 30 days and, in the event that the employee ends the relationship, he must provide advance notice of at least 15 days.
If the employee or employer notifies the appropriate authority the desire to terminate the employment contract without a just cause to do so, the employee receives a bonus equal to 25% of his or her last monthly salary for each year of service.
The severance pay corresponding to a dismissal without cause, in addition to the bonus for a dismissal with a “visto bueno” explained above, includes the following:
- Up to three (3) years of service: three months’ salary; and
- Over three (3) years of service: one month’s salary per each year of service up to a maximum of 25 months’ salary.
If the fired worker had been employed by the same company between 20 and 25 years on a continuous or interrupted basis, he or she will receive the proportional part of the retirement pension. Severance agreements require approval from the Labour Inspector and must be submitted no later than 30 days following the termination of the contract. If a disabled individual or an individual with a disabled person under his care who was hired in the disabled person’s place, is dismissed without cause, special severance pay equal to 18 months’ remuneration must be paid.