Employer of Record in Ecuador

General Information

• Currency: United States Dollar (USD)
• Employer Taxes: Unknown
• Payroll Frequency: Bi-Monthly / Monthly
• Employee Costs: 9.45%
• Capital: Quito
• Fiscal Year: 1 January – 31 December

Main Aspects of the Labour Code

Minimum Wage

General: In Ecuador, the minimum wage is known as the Unified Basic Salary (SBU). As of now, the minimum monthly wage across various economic sectors stands at 460 USD.

Payroll

Payroll Cycle: In Ecuador, the payroll cycle is typically monthly or bi-monthly, and employers are required to ensure that salary payments are made on the same date each month.

13th Salary

In Ecuador, employers are required to provide both a 13th-month and 14th-month salary to employees. The 13th-month payment is typically made in December, while the 14th-month payment is usually given in March or April.

Working Hours

In Ecuador, the standard workweek is 40 hours, typically divided into 8 hours per day over a five-day workweek.

Overtime: Any work exceeding the standard weekly hours in Ecuador is classified as overtime and governed by employment contracts or collective agreements. Employees may work a maximum of 4 overtime hours per day and 12 hours per week. Overtime is compensated at either 150% or 200% of the employee’s regular wage, depending on the nature of the work and the time it was performed. Additionally, all overtime must receive prior approval from the local labor inspector.

Leave

Annual Leave (Vacation):

Full-time employees in Ecuador are entitled to 15 days of paid leave per year after completing one year of service. Additionally, for every year of continuous employment after five years, employees earn one extra day of paid leave, up to a maximum of 30 additional days.

Public Holidays

Public holidays that fall on the weekend are usually lost.

Sick Days

Employees who have contributed continuously to the Ecuadorian Social Security Institute (IESS) for 180 days within the six months preceding the onset of illness, or 189 days within the previous eight months, are eligible for sick leave. They are entitled to receive up to two months of sick leave at 50% of their salary.

For the first three days of sick leave, the employer is responsible for the payment, after which IESS takes over. To validate the sick leave, employees must submit a professional medical certificate to their employer within 48 hours of the start of their absence.

Maternity Leave

New mothers in Ecuador are entitled to 12 weeks of maternity leave, with two weeks taken before the birth and ten weeks after. Maternity payments are shared between the Social Security system (IESS), which covers 75%, and the employer, who covers the remaining 25%. For multiple births, an additional ten days of leave is granted.

Furthermore, new mothers have the right to work reduced hours for up to nine months after returning to work, allowing them to work six hours per day instead of the usual eight.

Paternity Leave

In Ecuador, fathers are entitled to 10 days of paid paternity leave, which increases to 15 days in cases of multiple or complicated births. Additionally, in the event of a premature birth, fathers are granted 18 days of paid paternity leave.

Parental Leave

In Ecuador, after paid paternity leave, adoption leave, or maternity leave concludes, employees can take an optional unpaid leave for up to nine months to care for their children during the first year of life.

Other Leave

Depending on the terms of the collective agreement or employment contract, employees may be eligible for additional leave types approved by both the employer and employee:

• Bereavement leave: Employees may take up to 3 days of paid leave for the loss of an immediate family member.
• Childcare leave: Employees can take 25 days of leave if their child is hospitalized.
• Adoption leave: Adoptive parents are entitled to 15 days of paid leave from the date the child is legally placed with them.
• Military leave: Employees called for Compulsory Military Service are entitled to paid absence, with the following salary proportions: 100% for the first month, 50% for the second month, and 25% for the third month.

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