Indefinite contracts are a common type of employment contract in Ecuador and have a probation period of 90 days. Fixed-term contracts are allowed for some permanent activities, seasonal work, event-based work, on-call and specific projects. Employers can use a permanent-activities contract for work that is one to two years in duration.

The minimum wage in Ecuador is referred to as unified basic salary (“SBU”) and the minimum wage for economic sectors is 460 USD per month.

The standard working week in Ecuador consists of 40 hours a week, typically 8 hours per day for a five-day working week.

Overtime

All work above the standard working hours a week is paid as overtime and regulated by the employment contract/collective agreements. When an employee is requested to work overtime or work on holidays, there are maximums of four hours a day and 12 hours per week.

All overtime hours more than 40 hours a week are paid at an overtime compensation rate of either 150.00% or 200.00% of the employee’s regular salary; the rate depends on the work performed during overtime and the time when the overtime was worked. Overtime hours completed must be approved by the local labor inspector.

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 are entitled to sick leave of up to two months at 50% of their salary.

Employees who are covered are paid by the employer for the first three days and by IESS after that.

All sick absences require a professional medical certificate provided to the employer within 48 hours of the start date of the sick period.

Maternity Leave

New mothers are entitled to maternity leave of 12 weeks, two weeks before birth and ten weeks after birth.

Social Security and the employer share maternity payments; Social Security pays 75% and the employer pays 25%. Ten days are added for additional births.

New mothers are also entitled to nine months of shortened working days, six hours instead of eight.

Paternity Leave

In Ecuador, fathers are entitled to ten days of paid paternity leave, increasing to 15 days in the case of multiple/complicated births. Fathers are entitled to 18 days of paid paternity leave in the unfortunate circumstance of premature birth.

Parental Leave

In Ecuador, following the end of paid paternity leave, adoption leave or the conclusion of maternity leave employees are entitled to an optional unpaid leave for up to nine additional months to take care of the children within the first year of their life.

Full-time employees’ standard paid leave entitlement is 15 days per year following the completion of 1 year of service. After five years of continuous employment, an additional day is given per year (capped at an additional 30 days).

Depending on collective agreement/employment contract terms, an employee may be allowed additional leave types if approved between the employer and employee for the following:

• Bereavement leave: employees who have suffered the loss of an immediate family member are entitled to up to 3 days of paid bereavement leave.

• Childcare leave: employees are entitled to 25 days of leave should their child be hospitalized.

• Adoption leave: employers must grant adoptive parents 15 days of paid leave of absence from the date the child is legally delivered to them.

• Military leave: when an employee is called to partake in Compulsory Military Service in the National Armed Forces, the employee is entitled to paid absence. The employer is required to pay the salary, in the following proportion:
  

During the first month of absence from work, a 100% salary

During the second month of absence from work, 50% of the salary

During the third month of absence from work, 25% of the salary

Public holidays that fall on the weekend are usually lost.

Date Day Holiday

1 Jan 2024 - Monday/Tuesday - New Year’s Day
12 Feb 2024 - Monday - Carnival
13 Feb 2024 - Tuesday - Carnival
29 Mar 2024 - Friday - Holy Friday
3 May 2024 - Friday - Labor Day
24 May 2024 - Friday - Pinchincha Battle
9 Aug 2024 - Friday - Independence
11 Oct 2024 - Friday - Guayaquil’s independence
1 Nov 2024 - Friday - All Soul’s Day
4 Nov 2024 - Monday - Cuenca Independence
25 Dec 2024 - Wednesday - Christmas

Ecuador has universal healthcare which is free at the point of access. It is operated by the Ministry of Public Health and IESS (Ecuadorian Institute of Social Security). This includes pregnancy care both before and after the birth.

The termination process varies according to the employment agreement and collective agreements in place and is based on the type of contract and reason for termination.

Notice Period

In Ecuador, the notice period is stipulated in the employee’s employment contract/collect agreement; it is not a statutory obligation.

Severance Pay

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 of 25.00% of monthly wages for each completed year of service.

Probation Period

The probationary period in Ecuador is dependent on the type of role and is stipulated within the employment agreement. In general, probation periods are up to three months.

Employer Payroll Contributions
12.15% - Social Security
8.33%* - Reserve Fund (IESS), individual savings fund paid into from the second of employment, and is exempt from tax and social security levies.

20.48% - Total Employment Cost

Employee Payroll Contributions
9.45% - Social Security
9.45% - Total Employee Cost

Employee Income Tax
0.00% - 0-11,722 USD
5.00% - 11,722.01 USD – 14,935 USD
10.00% - 14,935.01 USD – 18,666 USD
12.00% - 18,666.01 USD – 22,418 USD
15.00% - 22,418.01 USD – 32,783 USD
20.00% - 32,783.01 USD – 43,147 USD
25.00%- 43,147.01 USD – 53,512 USD
30.00% - 53,512.01 USD – 63,876 USD
35.00% - 63,876.01 USD – 103,644 USD
37.00% - 103,644 USD and Above

Payroll Cycle

The payroll cycle in Ecuador is generally monthly or bi-monthly and employers must make salary payments on the same day of the month.

13th Salary

In Ecuador, it is mandatory to pay a 13th-month and even a 14th-month salary payment. Generally, the 13th-month salary is to be paid in December and the 14th-month salary in March or April.

Authority Payment Paid To Due Date Method

Taxes - Internal rents service - According to the ninth digit of the RUC - Only local accounts are supported

Social Security - Ecuadorian Institute of Social Security - Up to 15 of each month - Only local accounts are supported

Payroll - Ministry of Labor (Ministerio de Trabajo) - Until the end of the month - All 3 forms of payment are accepted

Thirteenth salary - Ministry of Labor (Ministerio de Trabajo)Until December 24 of each year - All 3 forms of payment are accepted

Fourteenth salary - Ministry of Labor (Ministerio de Trabajo)Until August 15 of each year All 3 forms of payment are accepted

Utilities -Ministry of Labor (Ministerio de Trabajo) -Until April 15 of each year -All 3 forms of payment are accepted

Judicial retention - Superintendency of Banks. Judiciary Council (Superintendencia de bancos) - Until 3 day of the following month - Only local accounts are supported

Ecuador has a very lenient visa policy and citizens from most countries can enter and stay without a visa – but only for up to 90 days.

The temporary resident visa for Ecuador is a type of long-stay visa. It is issued to foreigners who want to live, study, work, or retire in Ecuador. They can be issued for up to two years and can be renewed before they expire. The types of Ecuador temporary resident visas include:

The Ecuador Work Visa is for foreigners who have found a job with a company in Ecuador

The Ecuador Student Visa is suitable for foreigners who have been accepted into a university or other academic program in Ecuador and wish to pursue their studies there

For foreigners who want to retire in Ecuador and have the necessary financial means to do so, an Ecuador Retirement visa

The visa documentation must be legalized by the Ecuadorian Embassy or Consulate and may need to be translated into Spanish.

Once the foreigner has lived in Ecuador for more than 21 months under a temporary resident visa, an application can be made for a permanent resident visa for Ecuador.

The standard rate of VAT in Ecuador is 12%.