Employment in Ecuador is governed by the Labour Code (Código del Trabajo), and employees must be registered with the Ecuadorian Social Security Institute (IESS) from their first day. Mandatory extra salaries and profit sharing make Ecuadorian payroll distinctive. Here is what employers need to know.
The Labour Code sets minimum paid vacation and family leave. Sickness and maternity benefits are paid largely by the IESS for employees who meet its contribution requirements.
15 uninterrupted calendar days, including non-working days, after each year of service. From the sixth year, 1 extra day per year up to 15 extra days.
Fully paid. The IESS pays 75% of salary for insured employees and the employer pays the remaining 25%.
Paid leave for the father at birth. 5 more days apply for multiple births or a caesarean, and longer periods for premature births or serious illness.
Employees who are ill need a medical certificate, ideally validated by the IESS. The employer covers the first days of illness, and the IESS pays a sickness subsidy from the fourth day to employees who meet its contribution requirements.
Set up each Ecuadorian leave type in IceHrm with its own accrual, carry forward and approval rules, including the extra vacation days that come with long service. Employees see their live balance before they apply, and managers see who is away on a shared calendar. Leave management →
The Ministry of Labour sets the unified basic salary (salario básico unificado, SBU) every year. Sector tables can set higher minimums for particular jobs.
From 1 January 2026, up from US$470 in 2025.
8 hours a day, 5 days a week. Saturdays and Sundays are normally rest days.
50% for supplementary hours (up to 4 a day and 12 a week) and 100% for hours worked on rest days and public holidays.
Work between 7 pm and 6 am is paid with a 25% premium on top of the normal rate.
Capture attendance, overtime and night hours in IceHrm and feed them straight into payroll, so premiums reflect what was actually worked. Time & attendance →
Ecuador taxes individual income at progressive rates on a calendar-year basis. Employers withhold income tax monthly based on each employee’s projected annual income and file the withholdings with the Internal Revenue Service (SRI).
| Taxable income | Tax on lower limit | Rate on excess |
|---|---|---|
| US$0 – US$12,208 | – | 0% |
| US$12,208 – US$15,549 | – | 5% |
| US$15,549 – US$20,188 | US$167 | 10% |
| US$20,188 – US$26,700 | US$631 | 12% |
| US$26,700 – US$35,136 | US$1,412 | 15% |
| US$35,136 – US$46,575 | US$2,678 | 20% |
| US$46,575 – US$62,005 | US$4,965 | 25% |
| US$62,005 – US$82,679 | US$8,823 | 30% |
| US$82,679 – US$109,956 | US$15,025 | 35% |
| Over US$109,956 | US$24,572 | 37% |
On top of gross salary, employers pay IESS contributions and budget for the 13th and 14th salaries, the reserve fund and profit sharing.
Of total remuneration, for private sector employees. Special rates apply in some sectors.
Deducted from the employee’s pay and paid over by the employer every month.
Of monthly pay, from the second year of service.
Budget for the 13th salary (about one extra month of pay a year), the 14th salary (one unified basic salary) and 15% of annual profit for profit sharing, in addition to the percentages above.
Build Ecuadorian pay the way you already structure it, with your own salary components, deductions and formula columns, such as IESS, reserve fund and monthly 13th and 14th salary columns. Want to know how well IceHrm handles payroll calculations for Ecuador? Contact us or see Payroll →
An employer can end an indefinite contract for just cause through the “visto bueno” procedure before a labour inspector. Dismissing an employee without just cause (despido intempestivo) is possible but triggers statutory compensation.
The Labour Code does not require the employer to give notice of dismissal. An employee who resigns must notify the labour authority at least 15 days in advance.
| Length of service | Compensation |
|---|---|
| Up to 3 years | 3 months’ pay |
| More than 3 years | 1 month’s pay per year of service, up to 25 months |
When employment ends by resignation (desahucio) or dismissal without just cause, the employer also pays a bonus of 25% of the last monthly salary for each year of service. Final settlement (liquidación) includes the proportional 13th and 14th salaries and unused vacation, and must be registered with the Ministry of Labour.
Ecuador has 11 national public holidays. The government can move some holidays to the nearest Friday or Monday to create long weekends, and cities also celebrate their own foundation or independence days.
Employees who work on a public holiday are paid with a 100% premium.
Leave groups give each office its own holiday calendar, so teams in Quito and Guayaquil each get their local days off automatically, and moved holidays can be updated in one place. Holiday calendars →
The standard contract in Ecuador is indefinite. Written contracts must be registered with the Ministry of Labour, and every employee must be enrolled with the IESS from the first day of work.
A probation period of up to 90 days can be agreed for a new indefinite contract, and only once with the same employee. Either party can end the relationship during probation without compensation.
Send contracts for e-signing, store them with IESS and Ministry of Labour registrations on the employee’s record, and track onboarding with task lists so nothing is missed on day one. Documents & e-signing →
This guide is general information to help you plan HR processes, not legal, tax or financial advice. Employment law and rates change regularly and awards, enterprise agreements and state rules may give employees more than the minimums shown here. Always confirm current requirements with the official sources or a qualified adviser.
Configure leave types, accrual rules and public holidays for Ecuador, keep employee records and contracts in one place, and run payroll with your own salary components. Want to know how IceHrm handles payroll calculations for Ecuador? Talk to us.
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