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Employ Candidates Compliantly in Uruguay

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  1. Overview: Uruguay
  2. Global HR Compliance
  3. Global PEO and payroll
  4. Work permit for hiring expats via PEO
  5. Expand without a company set up
  6. Contractor vs. employee: which is better?
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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 

Fixed-term  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 agreement  

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.

Employer decision 

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.

Mutual agreement 

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.

# Overtime

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.

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