Ecuador
Knowledge Base

Frequently asked question, important data and information on EOR.

General information

$ 450 USD per month

Labor Law

Laws that regulate Labor Relationship

• Labor Code
• Constitution of the republic of Ecuador
• Tax Code

Onboarding guide

Requirements for a labor contract

• The type or types of work that are the object of the contract;
• The manner in which it is to be performed: whether by units of time, by units of work, by task, etc.;
• The amount and form of payment of the remuneration;
• The duration of the contract;
• The place where the work or labor is to be performed; and,
• The statement of whether or not penalties are established, and if so, the manner of determining them and the guarantees for their effectiveness.

Article 21

Pre-hire Medical exam

Not mandatory

Types of contracts

•Indefinite term
•Fixed term
•Seasonal
•Temporary
•Occasional

Probation Period

The probation period is Maximum of 3 months Art. 15.

Are offer letters mandatory in the country?

Not Mandatory

Are digital signatures in labor contracts valid?

Not Permitted

Mandatory onboarding documents

• ID Card (both sides)
• Birth certificate
• Proof of address
• Bank account proof
• RUC Number

Statutory benefits

Annual Bonus

Mandatory: Art. 111 Employers are entitled to be paid until December twenty fourth of each year, a remuneration equivalent to one-twelfth of the remunerations they have received during the calendar year.

Additional bonus

14th month is also mandatory and may be paid in installments or one lump sum by employee request. The total bonus should equal 15% of employer profits, subject to a cap of 24 times the minimum wage.

Leaves (medical, maternity, paternity, etc.)

• Sick leave: Employees who have 180 days of continuous contribution to the Ecuadorean Social Security Institute (IESS) within six months prior to the onset of illness, or 189 days of continuous contribution within eight months before the start of illness. Employees who are covered are paid by the employer for the first three days and by IESS after that.
• Maternity Leave Duration: 12 weeks paid. In the case of multiple births, 10 additional days are provided | Paternity Leave Duration: 10 days in cases of normal delivery, and in cases of multiple births or cesarean section, it can be extended for 5 days.
• When babies are born prematurely or in special care, an extension of 8 days may be given.
• When the child is born with a disability or degenerative, terminal or irreversible disease, the father may take up to 25 days of paid paternity leave.
• In the event of the mother’s death, the father may use the remaining period of maternity leave.
• Bereavement leave: employees who have suffered the loss of an immediate family member are entitled to one day of paid -bereavement leave.
• Childcare leave: employees are entitled to 25 days of leave should their child being hospitalized.

Annual Leave (days per year)

15 days per year, increasing to 16 days of paid leave after five years of continuous employment. An employee must have served one year of service to be entitled to the standard paid leave entitlement.

How do vacation days expire?

If the employee has not taken the vacations, is entitled to the equivalent of the remunerations corresponding to the time of the vacations not taken, without surcharge.

Official Holidays

• 1 Jan New Year’s Day
• 2 Jan New Year Holiday
• 20 Feb Carnival
• 21 Feb Carnival
• 7 Apr Good ,day
• 1 May Labour Day
• 24 May Battle of Pichincha Holiday
• 10 Aug National Day
• 9 Oct Independence of Guayaquil
• 2 Nov All Souls’ Day
• 3 Nov Independence of Cuenca
• 25 Dec Christmas Day
The law indicates that when a national holiday falls on Wednesday, Thursday or Saturday, it is moved to the nearest Friday. When the holiday falls on Sunday or Tuesday, it is moved to the nearest Monday.

Working on holidays and Sundays

Paid at 100% on top of the regular wage.

Number of Working hours

8 hours a day, 40 hours a week, typically for a five-day working week.

Overtime

Paid at 50% to 100% extra on the top of the regular wage. The rate depends on the work performed during overtime. Overtime is permitted up to 12 hours a week.

Social Security (what does it cover)

• Health
• Retirement
• Unemployment
• Old age, among

Social security institution: IESS

Payroll

Salary payment currency

United States Dollar (USD)

Can salary be paid in a different currency other than the local currency?

No.

Payment frequency

Monthly or bi-monthly, employers must make salary payments on the same day of the month.

VAT percentage

12.00% is applied to imports and transfers of goods and services.

Income Tax

Residents and non-residents are taxed at progressive income tax rates ranging from 0% to 37% For more information see https://taxsummaries.pwc.com/ecuador/individual/taxes-on-personal-income

Tax Payer Identification Number

Taxpayer Unique Registry – RUC (Registro Único de Contribuyente)

Offboarding

Voluntary resignation

• For serious insults made by the employer, his family members, or representatives to the employee, his spouse or common-law spouse, ascendants, or descendants
• For decrease or lack of payment or lack of punctuality in the payment of the agreed upon remuneration
• For the employer demanding that the worker perform work other than that agreed upon, except in the cases of urgency provided for in Article 52 of this Code, but always within the terms of the contract or agreement

Contract termination

• Agreement between the parties, only they can terminate the contract, it must be recorded in writing. (Act of Settlement)
• For reasons provided for in the contract.
• By conclusion of the work or work period.
• Death of the worker or disability of the employer.
• Extinction of the legal person.
• Due to insolvency.
• Fortuitous events.

Justified Dismissal

• For repeated and unjustified failure to be on time or to attend work or for abandonment of work for more than three consecutive days without just cause, provided that such causes have occurred within a monthly work period
• For serious indiscipline or disobedience to legally approved internal regulations
• For lack of probity or immoral conduct of the employee
• For serious insults to the employer, his spouse, or common-law spouse, ascendants or descendants, or their representative
• For manifest ineptitude of the worker, with respect to the occupation or work for which he/she committed himself/herself
• For unjustified denunciation against the employer with respect to his Social Security obligations. However, if the denunciation is justified, the stability of the worker will be assured for two years, in permanent jobs.
• For not complying with the safety, prevention, and hygiene measures required by the law, by its regulations, or by the competent authority; or for contravening, without due justification, the prescriptions, and medical opinions.

Unjustified Dismissal

Without legal cause, it shall pay the employee an indemnity equivalent to fifty percent of the total remuneration, for all the time remaining for the termination of the agreed term.
Likewise, when the worker does so, it will pay to the employer, as indemnity, twenty-five percent of the total remuneration, for all the time remaining for the termination of the agreed term.

Should financial compensation for an employment termination relationship without a cause be required, the amount and calculation are determined in the Ecuadorian Labor Code.
Severance pay is equivalent to a one-month salary payment for each year of service, pro-rated for any part-year worked. The minimum financial compensation is three monthly payments (at the regular salary rate), and the maximum is 25 monthly payments.
Additionally, the employer can offer a sudden dismissal bonus at 25.00% of monthly wages for each completed year of service

Minimum Notice Period

The majority of companies include a notice period in their employment contracts, even though there is no legal requirement for one.

Immigration

Visa process

For foreign nationals who intend to live and work in Ecuador, the first step is to get in touch with the Ecuadorian embassy in their country of residence. Applicants should confirm the list of necessary documents with the embassy and gather all of them for submission.

After submitting all of the required documents, applicants should remain in their country of residence while awaiting the decision of the Ecuadorian officials. Upon approval, they may travel to Ecuador to begin working.

Visa documents

The requirements for an Ecuadorian visa will vary depending on the type of visa the applicant needs. The general requirements included for each visa, however, follow:

• A passport that’s valid for a minimum of six months
• Two recent passport photos, which should be in color
• A copy of the applicant’s CV
• A medical certificate
• A police background check to prove that the applicant has no criminal record in their country of residence
• A completed visa application form
• Proof of payment of the visa application fee
• For a comprehensive list of all required documents, we recommend getting in touch with the Ecuadorian embassy in the applicant’s country of residence.

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