Employment Law

Employment Contracts in Ecuador

Technically, employment contracts in Ecuador can be oral or written, but we recommend always writing a formal contract for each employee. These contracts should cover all relevant details such as wages/salaries, expected working hours, benefits, etc. The contract should also be written in Spanish and indicate the country’s official currency, the U.S. dollar

Fixed Yerm

Indefinite

Working Hours in Ecuador

The standard working week for Ecuadorian employees is 40 hours, 5 days. Hours worked in excess of 40 hours shall be considered overtime and shall be paid at 150% of the normal rate (200% on public holidays).

Holiday Policy

Ecuador Holidays

After five years of service to the employer in Ecuador, the employee is entitled to 15 days of paid annual leave. This allowance increases by one day for each additional year of service, up to a maximum of 30 days.

Ecuador Sick Leave

Employees in Ecuador are generally entitled to up to two months of paid sick leave. This leave must be compensated at 50% or more of regular wages.

Parental Leave in Ecuador

Female employees in Ecuador are entitled to 12 weeks of paid maternity leave. 75% of their usual wages are borne by the state social security, and the remaining 25% is borne by the employer.

In most cases, fathers are entitled to up to ten days of paid paternity leave.

Dismissal and Severance in Ecuador

In Ecuador, employees on fixed-term contracts are generally entitled to receive 30 days' notice before termination. Employees are also generally entitled to severance pay, which is usually calculated at 25% of monthly salary for each year of employment.

Ecuador Taxes and Withholding Taxes

Income tax in Ecuador is paid through a pay-as-you-go (PAYE) model, so employers are required to withhold taxes from their employees and file reports at the end of each tax year. Taxes are progressive, so people with higher incomes pay a higher proportion of taxes. Rates range from 0% to 35%.

Employees and employers in Ecuador are required to include a certain percentage of their wages into the national social security plan, paying 9.45% and 12.15% respectively. Employer contributions change after the employee has worked for more than two years.

Health Insurance in Ecuador

Ecuador has a comprehensive state-funded healthcare system, so individuals do not need private insurance. However, some employers may choose to offer it as part of a benefits package.

Salary and Benefits

Ecuador’s Compensation Law

The minimum wage for the unskilled labor category in Ecuador is US$400 per month. However, it is worth noting that the 13th and 14th month wages are mandatory in the country.

Benefits Administration in Ecuador

Establishing a benefits system for the Ecuadorian workforce can be difficult and complex if you are unfamiliar with Ecuador's national, customary, and employment laws. Standalone setup can take weeks and may cause unexpected delays.

We will use our knowledge and experience to handle everything to ensure you are compliant and ready for employment in Ecuador.