HR Software for Ecuador
Leave Policy
Maternity Leave
Employees are entitled to 12 weeks of paid vacation. The first 2 weeks must be taken before the expected due date. During this period the employee receives 100% of his salary. Social security covers 75% and the employer covers the remaining 25% of the basic salary.
Paternity Leave
Employees are entitled to 10 days of paid paternity leave, which must be after the birth of the child. The employee receives 100% of his salary during this period and the employer is responsible for this compensation.
Parental Leave
There is no parental leave law in Ecuador. However, employees may be entitled to maternity and paternity leave.
Sick Leave
Employees are entitled to up to 70 days of paid sick leave. Depending on the duration, this vacation is paid at different rates and by different payers:
| Period | Pay | Payer |
|---|---|---|
| 0 – 3 days | 50% of base salary | Employer |
| 4 – 70 days | 75% of base salary | Social Security |
| 4 – 70 days | 25% of base salary | Employer |
| 70 days and over | 66% of base salary | Social Security |
| 70 days and over | 34% of base salary | Employer |
Pay & Tax
Minimum Wage Requirements
The minimum wage is $450 per month.
Individual Income Tax
Personal income tax ranges from 0% to 37%. Income tax is calculated at progressive rates.
Payroll Cost
The cost to the employer is generally estimated at 12.5% of the employee’s salary in the first year of employment and approximately 20.5% of the employee’s salary in the second year and thereafter:
- Social Security – 12.15%
- Reserve fund – 1 month’s salary, calculated as 8.33% of the annual salary (paid from the second year of employment)
- 13th Monthly Salary (Christmas Bonus) – 1 month’s salary calculated as 8.33% of the total salary earned between December of the previous year and November of the current year.
- 14th Month Salary (Education Bonus/School Fees) – 1 Month Salary (currently $450)
- Profit sharing – 15% of the company’s net income, divided among all employees of the company
- One-time mandatory processing fee for Wet Ink employment contract – USD 80
Overtime Pay & Maximum Hours
The standard working hours are 8 hours per day and 40 hours per week. The normal working week lasts from Monday to Friday.
Termination
Termination Requirements
Dismissals must take into account complex rules and the regulations of the country in which an employee is employed. Off-boarding is always carried out by the employer with the main participants. It may include ad hoc fees as well as required or recommended steps in certain termination cases.
Terminations in Ecuador can be complex. In Ecuador, employers can terminate at their own discretion (outside of the probationary period), which results in a higher severance payment.
Compliant terminations are:
- Voluntary by the employee
- By mutual agreement
- Unilaterally by the employer due to:
1. Probationary period
2. Objective reasons
3. Disciplinary dismissal
4. Performance due to unsuitability for the position - When the contract expires
Notice Period
According to the law, there is no notice period. However, the employer and the employee can agree on the duration of the employment contract.
Severance for Employees
In Ecuador, all employees who are fired without cause are entitled to severance pay. The severance payment is 30 days’ salary per year of service up to 25 months based on compensation.
To protect you from unforeseen financial risks arising from dismissals, IceHrm applies a severance pay provision in all employment contracts in this country. IceHrm has extensive expertise in managing litigation risk around the world and our severance provision calculation is based on applicable common law or statutory requirements and best local practices. If your employee resigns or is not entitled to severance pay, you will receive a refund of any unused amounts.
Statutory Time Off
Paid Time Off
Full-time employees are entitled to 15 calendar days of paid time off (PTO) per year. On the IceHrm platform, employees will see an allotment of 11 days of PTO because it is displayed in workdays. PTO is credited monthly at 1.25 days per month after 12 months of work. Paid time off includes Saturdays and Sundays.
After 5 years of employment, the duration of the exemption increases by 1 day per year, up to 30 calendar days.
Part-time employees are entitled to the same vacation pay as full-time employees (15 calendar days).
Public Holidays
In Ecuador there are 10 national holidays as well as several regional holidays, which depend on the employee’s place of residence.
National holidays include:
- New Year Day
- Carnival Day
- Labor Day
- Pichincha Battle
- Independence Day
- Guayaquil Independence Day
- Day of the Death
- Independence of Cuenca
- Christmas Day
Onboarding
Onboaridng
Onboarding takes 4 working days. The documents must be completed 1 day before the start date.
The employee must complete a medical examination at least 2 days before starting work, which must be renewed annually according to Ecuadorian law.
Additional Info
Employment Contract Details
The contracts must be written in Spanish and can be bilingual. They must be in writing and signed by both parties.
A contract must contain:
- Surname
- Place of birth
- Date of start of work
- Length of employment
- Job Description
- Termination Conditions
Probation Period
The duration of the probationary period is 90 days.