Nicaragua
Knowledge Base
Frequently asked question, important data and information on EOR.
General information
The minimum wage in the country is connected to the industry where the employee works and ranges from NIO 5,196.34 to NIO 11,628.95
Labor Law
Laws that regulate Labor Relationship
Labor code
Onboarding guide
Requirements for a labor contract
• The place and date of its conclusion.
• The identification and domicile of the parties and, if applicable, the name and surname of the legal representative of the employing entity.
• Description of the work and the place or places where it is to be performed.
• The daily and weekly duration of the workday and whether it is daytime, mixed, or nighttime.
• Indication of whether the contract is for a fixed term or an indefinite term;
• The amount of the remuneration, its form, periods, and place of payment, and whether it is agreed per unit of time, per unit of work, per task or piecework, by commission or by participation in sales collections or profits and any other wage supplement, as well as the form of calculation of the remuneration;
• The signatures of the grantors or their legal representative, or digital impression or signature upon request of those who do not know how or are unable to sign, in the presence of two witnesses.
The lack of any of the indicated elements does not exempt the parties from complying with this provision. In any case, it shall be understood to be completed, as applicable, by the provisions of the labor legislation or collective bargaining agreement. “
Pre-hire Medical exam
No
Types of contracts
•Indefinite
•Fixed-term: The Labor Code does not mention the maximum term of a Fixed-term contract. But it may be extended twice in a row. After the second extension of a Fixed-term contract, it is considered Indefinite and independent of each extension.
Probation Period
The probation period is 30 days
Are offer letters mandatory in the country?
Not Mandatory
Are digital signatures in labor contracts valid?
Not Permitted
Mandatory onboarding documents
• Curriculum/CV
• Identity card
• Police Record
• Health Certificate
• Mandatory onboarding documents
• Work Certificates
• Personal Letters of Recommendation
• Registration to INSS (Provide the number)
• Bank Account No. (If you have one)
• Driver’s License (If applicable)
Statutory benefits
Annual Bonus
An extra month of salary (Aguinaldo) must be paid by the employer by the first 10 days of December of each year.
Additional bonus
Doesn’t Apply
Leaves (medical, maternity, paternity, etc.)
• Maternity: 12 weeks paid maternity leave (4 weeks before childbirth and 8 weeks after childbirth). If twins are born, the mother receives 10 weeks after childbirth. When it comes to maternity benefits, INSS is obliged to pay 60% of the employee’s wage and the employer is obliged to pay the remaining 40%; so that the employee receives 100% of her salary as a maternity benefit.
• Sick Days: Up to 26 weeks of sick leave, paid at 60% of the regular wages by Social Security from the 4th day of sickness. The first three days of sick leave are unpaid.
However, if the employee is hospitalized, or it is a work-related illness or injury, the 3-day waiting period/unpaid leave is waived.
• Paternity Leave: 5 business days paid Paternity leave after the child’s birth.”
Annual Leave (days per year)
15 paid days of vacation for each 6 months of continuous work for the same employer.
How do vacation days expire?
If the employment contract expires before a worker can acquire annual leave entitlement, compensation for leave is made in proportion to the number of months and the number of hours worked in a week.
Official Holidays
• 1 Jan, New Year’s Day
• 6 Apr, Maundy Thursday
• 7 Apr, Good Friday
• 1 May, Labour Day
• 19 Jul, Liberation Day
• 14 Sep, Battle of San Jacinto
• 15 Sep, Independence Day
• 8 Dec, Immaculate Conception
• 25 Dec, Christmas Day
Working on holidays and Sundays
Paid at 100% extra on top the regular wage
Number of Working hours
8 hours a day, 48 hours a week. 7.5 hours a day, 45 hours a week for night-time work
Overtime
After 48 hours per week, 200% of the employee’s regular salary is paid. When an employee is required to work overtime or work on holidays, there is a limit of 9 hours per week. If it’s performed on a holiday or weekend the employees are entitled to a 24-hour rest period.
Social Security (what does it cover)
• Sickness
• Maternity
•Disability
•Old Age
•Death
•Professional Risks
Payroll
Salary payment currency
Córdoba (NIO)
Can salary be paid in a different currency other than the local currency?
Permitted
Payment frequency
Monthly
VAT percentage
15% standard, 0% exports of goods and services.
Income Tax
Nicaragua taxes its citizens and all residents and non-residents on their income originating in Nicaragua. Residents are subject to income tax according to the progressive tax rates ranging from 0% to 30%. For more information see https://taxsummaries.pwc.com/nicaragua/individual/taxes-on-personal-income
Tax Payer Identification Number
Tax Identification Numbers – NIT (Número de Identificación Tributaria)
Offboarding
Voluntary resignation
The employee will receive a severance payment, but if the contract was for a specific term and that term has expired, the employee will only receive the payment of his or her Christmas bonus (proportional or total, depending on the date of departure), vacation (if accrued) and outstanding wages.
Contract termination
The individual contract or employment relationship ends:
• due to expiration of the agreed term or conclusion of the work or service that gave rise to the contract;
• due to death or permanent disability of the employer that brings as a precise consequence the termination of the company; or by death or permanent disability of the worker;
• by conviction or custodial sentence of the worker;
• by definitive cessation of the industry, commerce or service based on legally substantiated economic reasons and duly verified by the Ministry of Labor;
• by final judicial resolution whose consequence is the definitive disappearance of the company;
• by termination of the contract in accordance with the law;
• by retirement of the worker;
• due to force majeure or fortuitous event when they bring as a precise consequence the closure of the company.
Justified Dismissal
The employer is justified in dismissing the employee and can include the following where: the employee commits a serious offense endangering the life and/or the physical integrity of the employer or his/her co-workers, the employee violates the terms of the employment contract, the employee makes a slanderous expression against the employer, discredits the company, or causes economic damage.
Unjustified Dismissal
The employer has no justifiable cause to dismiss the employee. This triggers the payment of severance pay (which can be up to 5 months of salary and can include other labor benefits).
When the employer terminates the employment contract for an indefinite period and without just cause, it will pay the worker compensation equivalent to:
• One month’s salary for each of the first three years of work;
• Twenty days of salary for each year of work from the fourth year on.
In no case the compensation will not be less than one month or more than five months. The fractions between the years worked will be settled proportionally.
Minimum Notice Period
If the contract was for an indefinite term, the worker may terminate it by giving fifteen days’ written notice to the employer.
Immigration
Visa process
1. The applicant must submit the application and the requested documents.
2. Once the Residence Authorization Resolution has been approved, the applicant must make the guarantee deposit, equivalent to a return ticket to their country of origin, which will be deposited in the DGME box, for which they must present two proformas from two different airlines. .
3. Once the residence application is authorized, it is required to make the guarantee deposit, equivalent to a return ticket to your country of origin that will be deposited in the DGME box, so you must present two proformas from two different airlines.
To take in account that, exceptionally, additional documentation may be requested. (Article 63 numeral 7 of the Regulations to Law 761, General Law on Migration and Aliens).
Visa documents
• Certificate of Criminal Record authenticated by the competent authorities of the Country of residence for the last five years, applies to people of legal age
• Health Certificate authenticated by the competent authorities of the country of residence for the last five years
• Birth Certificate authenticated by the competent authorities.
• Marriage Certificate authenticated by the competent authorities of the Country of residence for the last five years.
• Professional diploma, authenticated by the competent authorities, this is a requirement only for those who work as a resource.
Documents to be processed in Nicaragua:
• Complete photocopy of the passport, which must be valid for no less than six months from the date on which the application is submitted to Migration
• Two passport-size photos.
• Personal letter requesting personal residence
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