Guide to employment, payroll and benefits in

Ecuador

Rivermate offers complete payroll, benefits and compliance services for

Ecuador

01. Overview

Last updated: 

August 19, 2021

Currency
United States Dollar
Capital
Quito
Ease of doing business
57.7
Language
Spanish
Population
17643054
GDP growth
2.37%

02. Grow your team in

Ecuador

with Rivermate

Payroll, benefits, taxes, and compliance can be difficult to manage in

Ecuador

, particularly if you don't have established local relationships. You can hire employees in

Ecuador

effectively, conveniently, and in full compliance with all relevant labor laws using Rivermate's global employment solution. We handle the responsibilities and legal risks associated with foreign employment so you can concentrate on growing your company.

03. Summary

Ecuador, officially the Republic of Ecuador, is a country in northwest South America bordered on the north by Colombia, on the east and south by Peru, and on the west by the Pacific Ocean. The Galápagos Islands in the Pacific, some 1,000 kilometers west of the mainland, are also part of Ecuador. Quito is the capital. The modern-day Ecuadorian territories were once home to a number of Amerindian tribes who were eventually absorbed into the Inca Empire during the 15th century. During the 16th century, Spain colonized the region, which gained independence as part of Gran Colombia in 1820, and then became its own sovereign state in 1830. Ecuador's ethnically diverse population reflects the legacy of both empires, with the majority of its 17.1 million inhabitants being mestizos, accompanied by significant minorities of European, Native American, and African ancestors. The official language is Spanish, which is spoken by the majority of the population, but there are 13 indigenous languages recognized, including Quechua and Shuar. Ecuador is a middle-income representative democratic republic and developing country that relies heavily on commodities, especially petroleum and agricultural products. It is governed as a presidential republic with a representative government. The United Nations, Organization of American States, Mercosur, PROSUR, and the Non-Aligned Movement all have the country as a founding member. Ecuador, one of the world's 17 megadiverse nations, is home to many endangered plants and animals, including those of the Galápagos Islands. The new constitution of 2008 is the first in the world to recognise legally enforceable Rights of Nature, or ecosystem rights, in recognition of the country's unique ecological heritage. According to the Center for Economic and Policy Research, poverty decreased from 36.7% to 22.5% between 2006 and 2016, with annual per capita GDP growth of 1.5 percent. The country's Gini index of economic disparity fell from 0.55 to 0.47 at the same time.

04. Public holidays

05. Types of leave

Paid time off

In the Dominican Republic, there are actually no arrangements for sick leave.

Public holidays

Ecuador recognizes twelve public holidays.

Sick days

Employees who have contributed to the Ecuadorean Social Security Institute (IESS) for 180 days in the six months previous to the onset of illness, or 189 days in the eight months prior to the onset of illness.Employees who are insured are paying for the first three days by their boss, and the rest is covered by IESS.

Maternity leave

New mothers are entitled to a 12-week maternity leave, which begins two weeks before the due date and ends ten weeks after the due date. Social protection and the company split the payment. Social protection covers 75% of the cost, while the employer covers 25%. Additional births are given a further ten days.

Paternity leave

New fathers are entitled to ten days of paternity leave, fifteen days for caesarean or multiple pregnancies, and eighteen days for premature or special-needs infants. For severe injury or sickness, an extra 25 days are added.

Parental leave

There are currently no statutory regulations in the Ecuador regarding parental leave.

Other leave

When an infant is admitted to the hospital, each parent is entitled to 25 days of leave.For the death of a first or second degree parent, bereavement leave is one day of paid leave.

06. Employment termination

Termination process

Contracts may be terminated without severance (with consent from the labor authorities) for lack of discipline, dishonesty, major crime against the employer, grave incapacity, or non-compliance with rules. Unless otherwise specified, 30 days notice is necessary.

Notice period

There is no legal requirement for a notice period. The majority of the time, it is something that is agreed upon in the job contract.

Severance pay

Employees are entitled to one paycheck for each year of employment, up to a maximum of 25 months of compensation, without notice. Additionally, for each year worked, a sudden dismissal bonus equal to 25% of monthly compensation is paid. After twenty years of service, the employee is entitled to a retirement pension.

Probation period

The probation period lasts for three months.

07. Working hours

General

In Ecuador, the standard workweek is 40 hours. Typically, employees work eight hours per day, five days a week.

Overtime

Overtime hours are limited to four per day and twelve per week, but must be approved by the local labor inspector. Overtime hours worked on a regular basis are compensated at a rate of 150 percent of the regular rate. Saturday, Sunday, and holiday work is compensated at a rate of 200 percent of the regular rate.

08. Minimum wage

General

Ecuador's minimum wage increased to $400 per month in 2020 and will remain there in 2021. Keep in mind that Ecuador's compensation laws require employers to pay employees on the last day of the month on a semi-monthly or monthly basis. Employers typically pay 40% of an employee's monthly wage in the first half of the month and 60% at the end of the month.

09. Employee benefits

General

There is universal healthcare that is available for free at the point of use. It is run by the Ministry of Public Health and the IESS (Ecuadorian Institute of Social Security). This covers prenatal treatment as well as postpartum care.

10. Why Rivermate as your Employer of Record / PEO?

Establishing an entity in

Ecuador

to hire a team takes time, money, and effort. The labor law in

Ecuador

has strong worker employment protection, requiring great attention to details and a thorough awareness of local best practices. Rivermate makes expanding into

Ecuador

simple and effortless. We can assist you with hiring your preferred talent, managing HR and payroll, and ensuring compliance with local legislation without the hassle of establishing a foreign branch office or subsidiary. Our PEO and Global Employer of Record solutions in

Ecuador

give you peace of mind so you can focus on running your business.

Please contact us if you'd like to learn more about how Rivermate can help you hire employees in

Ecuador

via our Employer of Record / PEO solution.

Ready to get started? Our friendly staff is ready to assist you with all your questions, let's connect.