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Employment Agreement Essentials

Understand the key elements of employment contracts in Honduras

Types of employment agreements

In Honduras, the labor market offers a variety of employment agreements to accommodate different work arrangements. The most common types are as follows:

Indefinite Term Contracts

Indefinite term contracts are the most prevalent type of employment agreement in Honduras. They establish a long-term relationship between the employer and the employee without a predetermined end date, and are governed by the Honduran Labor Code.

Key Points:

  • Termination: Either party can terminate the contract with advanced notice, as stipulated in Article 116 of the Labor Code. The required notice period varies depending on the employee's length of service.
  • Benefits: Employees under indefinite contracts are entitled to all Honduran labor benefits, including annual leave, social security contributions, and severance pay upon termination.

Fixed-Term Contracts

Fixed-term contracts are used to establish employment for a predetermined period. These are suitable for temporary projects, seasonal work, or probationary periods.

Key Points:

  • Duration: The contract duration is freely agreed upon by both parties.
  • Renewal: Renewal is possible through mutual agreement and should be documented in writing.
  • Termination: Early termination by the employer may require severance pay depending on the circumstances.

Verbal Agreements

The Honduran Labor Code recognizes verbal employment agreements for specific situations.


  • Domestic Service: Verbal agreements are common for domestic workers.
  • Short-Term Work: They are also valid for incidental or temporary work not exceeding 60 days.

Additional Considerations:

  • Collective Bargaining Agreements (Convenios Colectivos): These agreements establish working conditions for a group of employees represented by a labor union. They are negotiated between the union and one or more employers and take precedence over individual employment contracts.
  • Independent Contractor Agreements: For individuals providing services without being employees (e.g., consultants, freelancers), independent contractor agreements are used. These agreements should clearly outline the independent contractor relationship and differentiate it from an employment contract.

Essential clauses

Employment agreements in Honduras are highly recommended to establish a clear and enforceable framework for the employer-employee relationship. These agreements should outline the rights and obligations of both parties.

Basic Information

The agreement should clearly identify the employer (company name and legal representative) and the employee (full name and national identification number). It should also specify the employee's job title, department, and a brief description of their duties and responsibilities.

Compensation and Benefits

The agreement should state the employee's base salary amount, currency, and payment frequency. It should also outline any additional benefits offered, such as health insurance, vacation time, paid leave, and social security contributions.

Term and Termination

The agreement should specify whether the employment is for a definite or indefinite term. It should also outline the grounds for termination by either party, following the legal requirements for notice periods and severance pay.

Work Schedule and Hours

The agreement should define the standard workweek and daily working hours, adhering to Honduran maximum limits. It should also establish procedures and compensation for overtime work.

Confidentiality and Intellectual Property

If applicable, the agreement should include a clause requiring the employee to maintain confidentiality regarding the employer's trade secrets or sensitive information. It should also specify ownership rights over any intellectual property created by the employee during their employment.

Applicable Law and Dispute Resolution

The agreement should state that the Honduran Labor Code and other relevant Honduran laws govern the interpretation and enforcement of the agreement. It should also establish a mechanism for resolving any disputes arising from the agreement, such as mediation or arbitration.

Probationary period

The Honduran Labor Code provides a structure for probationary periods in employment contracts. The key points are as follows:

Maximum Duration

Probationary periods are limited to a maximum of two months (or 60 days) by Honduran law. This means that an employer cannot require an employee to work for a longer period under probationary conditions.

Termination During Probation

During the probationary period, both the employer and the employee have more flexibility to end the employment relationship. In this case, notice periods are not legally required.

Key Points to Remember

  • The probationary period serves as a phase for employers to assess an employee's skills and suitability for the role.
  • Employees can use this period to see if the position meets their expectations.
  • The probationary period should be clearly stated in the employment contract.

Although the Labor Code sets the maximum duration, employers can choose to set a shorter probationary period in the contract, depending on the specific role.

Confidentiality and non compete clauses

Confidentiality clauses are a common feature in Honduran employment agreements. They serve a vital function in safeguarding an employer's trade secrets and other sensitive business information. Employees are legally obligated to maintain the confidentiality of such information during and after their tenure.

Scope of Confidentiality

The confidentiality clause should unambiguously specify the kind of information deemed confidential. This could encompass:

  • Trade secrets
  • Customer lists
  • Marketing strategies
  • Financial data
  • Information about unreleased products

Employee Obligations

The clause should detail the employee's specific responsibilities concerning confidential information. These responsibilities might include:

  • Not revealing confidential information to unauthorized individuals, whether within or outside the company.
  • Utilizing confidential information solely for job-related purposes.
  • Taking all reasonable measures to protect confidential information, such as using secure passwords and avoiding discussions in public places.
  • Returning all confidential information to the employer upon termination of employment.

Non-compete clauses in Honduras are somewhat more complicated. The Honduran Constitution guarantees the right to work, and courts typically view non-compete clauses with suspicion. However, under certain conditions outlined in Article 1360 of the Honduran Civil Code, they may be enforceable.

Enforceability of Non-Compete Clauses

For a non-compete clause to be enforceable in Honduras, it must satisfy the following conditions:

  • Reasonable Time Limit: The restriction on competing with the employer should be limited to a reasonable period after employment ends. This period will be evaluated on a case-by-case basis, considering factors like the seniority of the employee and the nature of the business.
  • Geographic Scope: The geographic restriction on competition should be reasonable and limited to the area where the employee worked or had access to confidential information.
  • Protection of Legitimate Interest: The non-compete clause must protect a legitimate interest of the employer, such as trade secrets or customer relationships.

Alternatives to Non-Compete Clauses

Given the difficulties of enforcing non-compete clauses, employers in Honduras might consider alternative strategies to safeguard their interests, such as:

  • Confidentiality Agreements: As previously mentioned, robust confidentiality agreements can prevent the disclosure of sensitive information even after employment ends.
  • Non-Solicitation Agreements: These agreements prevent employees from soliciting the employer's clients or employees for a certain period after termination.
  • Focus on Trade Secrets: Employers should prioritize identifying and protecting their trade secrets, as these are more effectively protected by law.
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