Employer Record in Ecuador

Basic information

Capital:Quito

Time zone: GMT-5

Languages: Spanish

Currency code:USD

Human Resources at a Glance 

Contract Terms

Contracts must be in Spanish and can be bilingual. They must be in writing and signed by both parties.
A contract must include:

• name
• place of birth
• start date
• length of the employment
• job description
• termination conditions

Guidelines Regarding Probation Period/Trial Period

The probation period lasts 90 days.

Regulations and Rules Regarding Working Hours

Standard working hours are 8 hours per day, 40 hours per week. The standard work week is from Monday to Friday.

Overtime is paid according to the following rates

In addition to 40 hours per week, overtime from 19:00 to 24:00 shall be paid 50% of the normal salary (unless agreed by both parties, the overtime hours shall not exceed 4 hours per day and 12 hours per week); For overtime work from midnight to 6am and on weekends and holidays, 100% of the regular wage shall be paid as overtime pay; Under certain special circumstances or with prior authorization, overtime pay may be 125% of regular pay.

Minimum Wage Requirements

The minimum wage is USD 450 per month.

Payroll Cost for Employers

The employer cost is generally estimated at 12.5% of the employee’s salary during the first year of employment, and approximately 20.5% of the employee’s salary during and after the second year:

• Social Security – 12.15%
• Reserve Fund – 1-month salary, calculated as 8.33% of the annual salary (paid from the second year of employment)
• 13th month salary (Christmas Bonus) – 1 month salary, calculated as 8.33% of the total salary earned between the period from December of the previous year to November of the current year.
• 14th Salary (Educational/School Bonus) – 1 monthly minimum wage (currently USD 450)
• A profit-sharing bonus – 15% of the corporate net income divided among all the company’s employees
• One-off Mandatory Wet Ink Employment Agreement Handling Fee – USD 80

Termination

Grounds

Terminations must respect complex rules and the rules of an employee’s employment country. The off-boarding is always handled by the Employer with the primary stakeholders. It may include ad-hoc fees as well as required or recommended steps on specific termination cases.
Terminations in Ecuador can be complex. There is at-will termination in Ecuador for employers (outside the probation period) and will include higher severance payment.
Compliant terminations include:
– Voluntarily by the employee
– By mutual agreement
– Unilaterally by the employer based on:
– probation period
– objective grounds
– disciplinary dismissal
– performance due to unsuitability for the job
– By the expiration of the contract

Notice Period

By law, there is no notice period. However, the employer and employee may agree on the length of the employment contract.

Severance compensation

In Ecuador, all employees who are terminated without cause are entitled to severance pay. Severance pay is 30 days of salary per year of service up to 25 months based on compensation.

Payment & leave Compensation & Holidays

SalaryPayment

Monthly

Payslip Payroll

No explicit provision

Annual Leave

After one year of service, you can enjoy 15 days of paid vacation, and after five years, you can increase by one day, up to 30 days/year. The 15 days paid leave pay is the total annual salary divided by 24 months.

Sick Leave

Employees are entitled to paid sick leave for up to 70 days. This leave is paid at different rates and by different payers depending upon length:

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

Maternity & Parental Leave

Employees are entitled to 12 weeks of paid leave. The first 2 weeks must be taken before the estimated time of the due date. The employee will receive 100% of the salary during this period. Social Security will be responsible for 75%, and the employer will cover the remaining 25% of the basic salary.

In Ecuador, no law covers parental leave. However, employees may be entitled to maternity leave and paternity leave.

Tax and Social Security Information

Personal Income Tax

The individual income tax ranges from 0% to 37%. Income tax is calculated according to progressive rates.

Social security

• Social Security
• Private Healthcare – Allianz (optional)

Public Holidays 2024

Holidays	Date
New Year’s Day	1.1
Carnival	2.12-2.13
Good Friday	3.29
Labour Day	5.3
Battle of Pichincha Holiday	5.24
National Day Holiday	8.9
Independence of Guayaquil Holiday	10.11
All Souls’ Day Holiday	11.1
Independence of Cuenca Holiday	11.4
Christmas Day	12.25