Employment Law

Nicaraguan Employment Contract

Employers in Nicaragua must provide each employee with a written employment contract. These contracts should include all relevant details of the employment agreement, including compensation, benefits, termination provisions, etc. Although U.S. dollars are also often used, they should be written in Spanish and references to the currency should be in Nicaraguan Cordoba.

Fixed term

Indefinite

Working Hours in Nicaragua

The standard working week for Nicaraguan employees is 48 hours, divided into five to six days.

Nicaragua Tax Laws

Employers and employees in Nicaragua are required to contribute part of their wages to social security. Employers must contribute 18.5% and employees must contribute 6.35%.

Nicaragua's income tax is progressive, with rates ranging from 0% to 30% depending on income level.

Corporate tax in Nicaragua is 30% in most cases

Health Insurance in Nicaragua

Nicaragua has a public health system, but many employers also offer proven health insurance as part of their benefits package.

Holiday Policy

Nicaragua Vacations

Employees in Nicaragua are generally entitled to 30 days of paid leave per year.

Nicaragua Sick Leave

Employees in Nicaragua can take up to 26 weeks (six months) of paid leave for non-work-related illness. The first three days of sick leave are not necessarily paid, but many companies do choose paid sick leave.

Employees are entitled to up to one year of paid sick leave for work-related illness.

Maternity and Paternity Leave in Nicaragua

Female employees in Nicaragua are entitled to 12 weeks of paid maternity leave, four weeks before and eight weeks after the birth. Typically, 60% of regular wages are paid by social security and 40% by the employer.

As standard, fathers are not entitled to any paternity leave, but some employers do choose to offer a stipend as part of their benefits package.

In addition, female employees are entitled to "flexible" paid parental leave of up to 30 days. This does not need to be ongoing and should be negotiated with the employer.

To receive full maternity leave benefits, a woman must be the primary caregiver of a newborn or recently adopted child. Employees must also have been employed by the same company for at least 10 of the past 13 months. In addition, employees need to meet local residency requirements, earn less than $150,000 in the previous fiscal year, and are not allowed to return to work while on maternity leave.

The spouse or partner of a female employee on maternity leave is entitled to two weeks of paid leave. This cost is paid by the government as long as the employee has not received paid leave from their employer. They are also paid according to the national minimum wage.

In addition, employees are entitled to unpaid parental leave for up to 12 months.

Employee Severance Pay and Termination in Nicaragua

You must obtain permission from the Nicaraguan Labor Inspectorate to fire an employee, otherwise you will face legal action. Generally, employees are given approximately 15 days' notice before termination. In addition, severance pay is usually required, which is approximately one month's salary for each year of service (although the annual amount varies for longer tenures).

Salary and Benefits

Nicaragua’s Reparations Law

The mandatory minimum wage for Nicaraguan employees varies depending on the type of work they perform. For example, agricultural workers earn at least 4,286.33 NIO per month, while government workers earn at least 5,345.25 NIO per month. Because of this difference, determining the category your employees fall into is important when determining wages.

Benefits Administration in Nicaragua

Setting up an employee benefits system for employees in Nicaragua can be difficult. Complex regulations and organizations can require significant time, effort and investment from employers.

Outsourcing your benefits administration processes to Remoly ensures you can maintain compliance and significantly speeds up the process. Our Nicaraguan employment experts will help you find and arrange your benefits, advise you on your strategy, and ensure compliance with the law, potentially saving you significant time and money.