4. Types of leave

There is no information about the types of leave for this country.
Learn more about 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

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.

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.

5. Employment termination

There is no information about employment information for this country.

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.

Probation period

The probation period lasts for three months.

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.

6. Working hours

There is no information about the working hours for this country.

General working schedule

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.

7. Minimum wage

There is no information about the working hours for this country.

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.

8. Employee benefits

There is no information about the working hours for this country.

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.

9. Taxes

There is no information about the working hours for this country.

Corporate tax

Companies in Ecuador are subject to a corporate tax rate of 25 percent.

Individual income tax

Individuals in Ecuador are imposed an income tax rate of between 0 and 35 percent. The actual percentage depends on the income bracket the individual belongs to.

VAT, GST and sales tax

The value-added tax (VAT) or the goods and sales tax (GST) in Ecuador varies depending on the good or service provided. The standard tax rate is set at 12 percent, but luxury goods receive a 15-percent tax rate, and goods for export are tax-exempt.

10. VISA and work permits

There is no information about the working hours for this country.

Ecuador has an extremely lax visa policy, and nationals of most countries may visit and remain without a visa for up to 90 days.

Ecuador's temporary resident visa is a sort of long-stay visa. It is granted to foreign nationals who want to live, study, work, or retire in Ecuador. They are valid for a period of up to two years and may be renewed before they expire.

The Ecuador Work Visa is intended for foreigners who have obtained employment with an Ecuadorian enterprise.

The Ecuador Student Visa is intended for international students who have been admitted into a university or other academic program in Ecuador and desire to continue their studies there.

Ecuador Retirement visa is available to those who desire to retire in Ecuador and have the appropriate financial resources.

The Ecuadorian Embassy or Consulate must legalize the visa documents, which may need to be translated into Spanish.

After a foreigner has resided in Ecuador for more than 21 months on a temporary resident visa, he or she may apply for a permanent residence visa in Ecuador.

11. Employer Of Record service terms

There is no information about the working hours for this country.

Employment contracts

Employment contracts in Ecuador may be either verbal or written, although a formal contract outlining the terms and conditions of employment is preferred. The written contract should contain the employer and employee, the location of work, the responsibilities to be done, the compensation and payment intervals, vacation and other leave entitlements, the probation period (if applicable), and any other provisions agreed upon by the parties.

Minimum assignment length

There is no set length for assignments. This is usually indicated in the employment contract for fixed-term employments.

Payment currency

United States Dollar (USD)

13.Opening a subsidiary in Ecuador

There is no information about the working hours for this country.

How to set up a subsidiary

Establishing a subsidiary in Ecuador may be a time-consuming and difficult procedure, but you can make it simpler by considering key elements. Because various cities and localities may have their own rules, geography might have an influence on Ecuador's subsidiary laws. If you are unsure about where to locate your office, we suggest consulting with a lawyer, accountant, or consultant who can assist you in locating the city most welcoming to foreign investment.

Another key factor to examine is the nature of your company. You may incorporate as a limited liability company (LLC), corporation, or branch office, among other options. The most frequent option is an LLC, which limits owners' liability depending on the amount of money invested. Keep in mind that as an LLC, you can only designate one business objective, but you may record up to five additional economic activities.

Creating your Ecuador subsidiary as an LLC entails a number of stages, including:

(1) Defining the aim of your company and its economic activity

(2) Creating and signing bylaws for your firm

(3) Getting your firm registered with the necessary authorities

(4) Deeds and appointments are signed in front of a notary.

(5) Obtaining a registration certificate from the Superintendence of Companies and Mercantile Registry

(6) Obtaining a local tax identification number

(7) To activate, open a corporate bank account and deposit a minimum share capital

(8) Obtaining an economic activity license (LUAE) and a municipal patent

Subsidiary laws

Many businesses opt to establish as an LLC since Ecuador subsidiary rules are generally favorable to foreign investment. Your LLC must have at least two members and a maximum of fifteen. Foreign firms are not permitted to join. The minimum share capital requirement is $400, and at least 50% of your capital must be paid in when you form.

In addition, your firm should select a legal representative who can assist you in complying with Ecuador's subsidiary legislation. Every January, your lawyer must provide to the Superintendent of Firms a list of foreign companies that are partners or shareholders in your company. Name, nationality, residence, and notarized copies of the certificate are required.

13. Why choose Rivermate as your Employer of Record / PEO in Ecuador

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.

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