- Overview: Uruguay
- Global HR Compliance
- Global PEO and payroll
- Work permit for hiring expats via PEO
- Expand without a company set up
- Contractor vs. employee: which is better?
Global HR Compliance in Uruguay
If you hire international workforce, or plan to hire, then Hiring and Firing Workforce in Uruguay 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 Uruguay, 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 Uruguay 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 Uruguay.
Hiring and Firing Workforce in Uruguay Guide
# Employment Agreements
Permanent employment contracts
The employment contract does not need to fulfill any formal requirements, it reaches the agreement of the will of the two contracting parties.
Casual employment contracts
Seasonal duties, substitutions or specific jobs can be performed through fixed-term employment agreements in writing. Upon expiry of a definite-term agreement, if services are still being rendered, the relationship could become indefinite. There is no legal regulation regarding maximum number of successive standard FTCs and maximum cumulated duration of successive standard FTCs.
Collective bargaining is governed in Uruguay by the Collective Bargaining Act. The Collective Bargaining Act does not only govern salary council negotiations but also bargaining at all labor law levels. Within the framework of collective bargaining, wage collective bargaining agreements are made between employers and unions in which not only wages are agreed but also other aspects such as working conditions, additional benefits, etc.
# Employment Termination and Severance Pay (Dismissal)
An employee can resign at any moment.
The employer has the right to dismiss its workers and is obliged to pay compensation. Dismissals may be direct, when the employer expressly or tacitly manifests its will to terminate the employment relationship, or indirect, when the employer breaches the employment contract in such a way that the worker is considered dismissed and stops working.
Parties are free to agree termination under any conditions as far as they respect public policy.
# It is prohibited to dismiss
There is no rule establishing the way in which a labour relationship should be terminated. There are rules which relate to severance payments but not as the procedure to be followed when terminating the employment. Certain categories of workers have a special protection against dismissal (maternity, sickness, professional disease or labour accident, sexual harassment). This protection entails for the employer the payment of a special severance indemnity which is higher than the regular severance pay.
# Notice period
Parties may terminate an agreement on notice. No minimum period of notice is required.
# Severance payments
Dismissal is always allowed provided this special indemnity is paid.
- Sickness: Double severance indemnity for an employer who dismisses an employee during sick leave or after 30 days of his return to work.
- Professional illness or labour accident: Triple severance indemnity for an employer who dismisses an employee during a professional illness leave or labour accident or after 180 days of his return to work.
- Pregnancy or maternity leave: severance indemnity plus 6 months salary for an employer who dismissed an employee due to pregnancy or after a period of 6 months of her reincorporation to work.
- Sexual harassment: an employee, who suffered from sexual harassment, can terminate the employment agreement and claim the general severance indemnity plus 6 monthly salaries.
# Employee Benefits and Contributions
Mandatory benefits required by law to be provided by an employer: Public holidays entitlement, annual leave, special time off entitlement, maternity and paternity leave, Aguinaldo annual bonus entitlement.
# Probationary period
No statutory regulation regarding length of probationary period exist in Uruguay. Common practice is to stipulate a 3 months trial period as a clause of the employment agreement.
There are no restrictions on overtime work in Uruguay. Overtime must be paid at double the normal rate when it is on a working day. When it is a non-working day the rate is two and a half times.
# Work hours
The law establishes allowed working hours as follows:
- Not more than 8 hours per day
- Not more than 48 hours per week in industry and 44 hours per week in commerce.
# Annual Leave
Every employee is entitled to 20 days of paid holiday every year. For every 5 years of work with the same employer they are entitled to 1 additional day per year.
During the firs t year of employment the employee is not entitled to any holiday – during that first year they accumulate the right to take holiday in the following year.
Special time off
Special time off applies to all workers who meet established requirements and is granted in addition to annual paid leave. They cannot be substituted by salary or complementary items, they do not generate right to vacation salary, and it is possible to agree benefits that surpass the minimum established in the law.
Employers must provide three days of leave for newly married employees (provided the employee gave at least 30 days of notice) and three days bereavement leave. Additionally, employees are entitled to a day off when they give blood and full pay if they are ever called on to testify in a trial.
# Sick Leave
While employers are not required to provide paid sick leave, employees are entitled to sick time compensation through institute of social security (BPS). Workers who for medical reasons are unable to work, whether due to illness or an accident at work, may be entitled to sickness benefit. The BPS may grant up to 1 year of coverage for the illness of a worker, with another maximum extension, or 2 years alternated within the last 4 years, for the same ailment.
# Parental Leave
Maternity rights and leave
The financial assistance is provided to the female worker during the period in which the worker is on pre and post-natal leave, covering 6 weeks before the expected date of delivery (42 days before) up to 8 weeks after childbirth (56 days after).
Premature Labor – Postpartum leave is extended until completing 14 weeks.
Overdue Labor - Postpartum leave will NOT be reduced.
Parental Allowance for Newborn Care
Both the father and the mother may benefit from this subsidy, with the possibility of alternating its use. During the period of reduction of working hours, 50% of the subsidy to which s/he was entitled is paid, the payment is made month by month. This option starts from the day after the end of the Maternity Benefit and up to 6 months of age of the child.
Paternity rights and leaves
Male workers are entitled to three days of leave for the birth of a new baby paid by employer. In addition, fathers receive 10 days of leave paid by BPS.
Acumen International can help you fast-track your possibilities of entering and expanding your business in Uruguay by providing you with our Employer of Record solutions that allows you to jumpstart your global operations almost immediately, cost-effectively and compliantly.