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Guatemala, formally the Republic of Guatemala (Spanish: Repblica de Guatemala), is a Central American nation bordered to the north and west by Mexico, to the east by Honduras, to the southeast by El Salvador, and to the south by the Pacific Ocean. It is the most populated nation in Central America and the 11th most populous country in the Americas, with an estimated population of roughly 17.2 million people. Guatemala is a representative democracy, with Nueva Guatemala de la Asunción, popularly known as Guatemala City, as its capital and biggest city.
The heart of the Maya civilization, which spanned Mesoamerica, was traditionally located in modern-day Guatemala. The majority of this territory was acquired by the Spanish in the 16th century and claimed as part of the viceroyalty of New Spain. Guatemala gained independence from Spain and Mexico in 1821. Guatemala joined the Federal Republic of Central America in 1823, which disintegrated in 1841.
Guatemala had chronic instability and civil warfare from the mid-to late-nineteenth century. It was governed by a succession of tyrants supported by the United Fruit Company and the United States government beginning in the early twentieth century. The authoritarian tyrant Jorge Ubico was deposed in 1944 by a pro-democratic military coup, launching a decade-long revolution that resulted in extensive social and economic changes. In 1954, a military coup supported by the United States ended the revolution and established a dictatorship.
Guatemala saw a violent civil war between the US-backed government and leftist rebels from 1960 to 1996, involving genocidal atrocities of the Maya community by the military. Guatemala has experienced both economic development and successful democratic elections since a United Nations–negotiated peace treaty, but continues to suffer from high rates of poverty and crime, drug cartels, and instability. According to the Human Development Index, Guatemala is ranked 31st out of 33 Latin American and Caribbean nations in 2014.
The richness of ecologically important and distinct habitats in Guatemala, which includes numerous endemic species, adds to Mesoamerica's status as a biodiversity hotspot.
In their first year of employment, employees are entitled to 15 days of leave.
Guatemala recognizes twelve public holidays.
Sick insurance is charged at half the daily pay rate that is paid by either the employer or social security, depending on the cause for the illness.
The duration of sick leave is determined by the period of service:
1 month of paid sick leave after 2–6 months of work
6–9 months of work + 2 months of paid sick leave
3 months of paid sick leave after 9 months of work
If the employee does not return at the end of the sick leave, the work arrangement is permanently terminated (called a "absolute suspension"), and all workplace and employee duties are suspended. In this case, the plaintiff has the right to cancel the work arrangement, but the employer cannot do so unless there is good reason.
Furthermore, the contractor may seek to fill the employee's responsibilities on a contractual basis, and may be dismissed until the employee returns.
Beginning 30 days before the scheduled due date, mothers are entitled to 84 days of maternity leave.
The mother is entitled to 42 days of paid leave in the case of a miscarriage or stillbirth.
Guatemala currently has no provisions in the law regarding paternity leave.
Guatemala currently has no provisions in the law regarding parental leave.
In the case of the loss of a partner or infant, bereavement leave is a three-day paid leave.
Employee wedding – 5 days paid time for the employee's wedding.
A member of a labor union's executive committee can take up to six days of paid leave to perform union duties. A individual in this situation may be entitled to extra unpaid leave.
A judicial summons entails a half-day paid leave.
Except for giving written notice and for reasonable cause, Guatemala lacks a standardized termination procedure. However, there are few instances in which an employer must request permission to terminate an employee: if the person is pregnant or nursing; if the employee is active in the creation of a union; and if the employee is involved in “collective conflict” under collective bargaining.
The duration of the notice period is determined by the length of employment. The notice period is one week for jobs lasting less than six months. The notice period is at least 10 days for jobs lasting six months to one year. The notice period is at least two weeks for employees who have been with the company for one to five years. There will be a month's notice period for employees who have worked for more than 5 years.
The probationary period in Guatemala usually lasts for two months.
Severance payments are only made when a court rules that an employee was terminated without cause. The employee may be reinstated, and will receive back pay from the date of termination, or he or she may receive severance pay equal to one month's salary for each year worked. Additionally, if an employee receives non-cash benefits such as use of an employee vehicle, a mobile phone, or meals, they are entitled to 30% of their income for each year of service.
The standard work week is 44 hours long and includes eight hours of sleep. This can be increased to a maximum of 48 hours per week by adding two hours per day. Managers and supervisors are permitted to work a maximum of 12 hours per week. Employees are entitled to 30 minutes of rest per day and one day of rest after five days, but the law makes no reference to a specific day.
Nighttime work is limited to 36 hours per week, divided into six six-hour shifts between 6 p.m. and 6 a.m. If the shift includes daytime work, the cap is increased to 42 hours.
Employees under the age of 14 are not permitted to work nights or overtime. Their workweek is limited to 38 hours, with a maximum of seven hours per day.
Overtime is defined as hours worked in excess of 44 in a workweek and is compensated at 150 percent of the standard rate. Employees in hazardous environments are not permitted to work overtime. Overtime pay is paid to employees who work on a rest day or a public holiday.
The minimum wage in Guatemala varies by sector, according to the country's compensation laws. Non-agricultural employees, for example, earn 92.88 Guatemalan quetzals per day as of January 2021. Employees in export-sector factories should be paid 84.88 quetzals per day. Employees earning the minimum wage should be required to receive a monthly bonus of 250 quetzals. Salaried employees should also receive two mandatory yearly bonuses, each equal to one month's salary.
Probationary period, annual leave, public holidays, sick leave, maternity leave, paternity leave, overtime pay, severance pay, and 13th month pay are among the mandatory benefits stipulated by Guatemalan labor law.
Social security benefits are also included in statutory benefits.
Companies in Guatemala are imposed a corporate tax rate of 25 percent.
Individuals in Guatemala are subject to an income tax rate between 5 percent and 7 percent. The actual percentage depends on the income bracket the individual belongs to.
The value-added tax (VAT) or goods and sales tax (GST) in Guatemala is currently set at 12 percent.
If a foreign citizen comes to Guatemala for paid labor in a paid activity, he or she enters into a relationship with a Guatemalan employer that involves dependency on and control by the Guatemalan employer. In such instance, the foreign national must apply for a residence and work permit as a migrant worker.
Following the abolition of the Business Visa, business travelers may now visit Guatemala as Tourists or Travellers to execute consultancy and advising activities. Visa nations must get the necessary entry visa in order to enter Guatemala, but they are no longer needed to apply for a Business Visa once there. As a business traveler, you may remain for up to 90 days in a row, with the option of extending your stay for another 90 days.
After obtaining a migrant worker's residence permit (or filing the related migrant worker's residence application with the Guatemalan Institute of Immigration (Instituto Guatemalteco de Migración), the foreign national must apply for a work permit with the Labour Ministry.
The Temporary Residence and Work Permit is the most common kind of work authorization. The Temporary Residence Permit is valid for up to five years and is renewed for the same period. The associated work permit is valid for one year and is renewed on an annual basis.
Employers may utilize indefinite employment contracts that have no end date or length. There must be a period for fixed-term contracts, and the duties for the work must be indicated for contracts for a particular project.
There is no legislation that governs the limitations on employee background checks. Employers, on the other hand, are not permitted to discriminate against applicants based on their criminal background or marital status. Employers cannot also include gender or other discriminatory considerations while advertising a position.
There is no set length for assignments. This is usually indicated in the employment contract for fixed-term employments.
Guatemalan Quetzal (GTQ)
United States Dollar (USD)
The procedure of establishing a Guatemala subsidiary will be determined by a number of business and geography considerations. First, decide on a physical site for your workplace and explore the surrounding neighborhood. Some areas or localities in Guatemala may have different or extra subsidiary laws that affect incorporation.
You should also consider how you want to run your firm. Guatemala allows you to organize as a limited liability company (LLC), a public limited company, a branch, or a representative office. Each choice will either promote or restrict your activities, so selecting the appropriate organization for your company objectives is critical.
Because of the restricted liability between the parent and subsidiary, many businesses opt to establish as an LLC. The following actions are required to establish a Guatemala subsidiary as an LLC:
1. Selecting two persons to stand in front of a lawyer and sign the articles of incorporation
2. Depositing a minimum initial investment of Q5,000 in a local bank that is connected to the national financial system
3. Making certain that each shareholder holds at least one share of equity
4. Registering the corporation with the General Mercantile Registry of the Republic (National Mercantile Registry)
5. Obtaining business credentials as well as a tax ID number (NIT)
6. Issuing and legalizing the company's records for accounting and legal purposes, as well as shareholder meetings
7. Submitting books for assessment and authorization to the Superintendencia de Administración Tributaria (SAT)
The Guatemala subsidiary laws that you must follow are determined by the company you choose. LLCs need two owners who must each provide Q2,000 to the company's paid-up capital. You will also need one director to assist in the management of the organization. These persons may all be foreigners, however if your director does not live in Guatemala, you must choose a local legal representative.
LLCs must also submit audited financial accounts to the Register of Commercial Entities on a yearly basis. To be compliant, you must pay a corporation tax rate of 25%. Finally, as soon as your business begins operations, you must register with the local tax administration and the Social Security Administration.