Payroll and Benefits Guide - Ecuador

Ecuador
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Currency

United States Dollar
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Capital

Quito
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Employer Taxes

12.15%
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Date Format

dd/mm/yyyy
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Fiscal Year

1 Jan – 31 Dec

Fun Facts

Ecuador’s name comes from being in the middle of the equator. It’s the only country whose name is derived from a geographical feature.

Charles Darwin’s research done in the Galapagos Islands, Ecuador helped the development of the theory of evolution.

The highest capital city, Quito, is found in Ecuador at 2819 meters above sea level.

The country exports 25% of the world’s bananas.

Their Constitution is the first constitution that gives nature rights.

Potatoes came from the Andes region of Ecuador.

Ecuador

Contributions

Employee Payroll Tax

Social Security9.45%

Employer Payroll Tax

Social Security12.15%
Reserve Fund8.33%*

Payroll

Payroll Cycle

Pay is given either bi-weekly or monthly and must be given on the same date every month.

13th Salary

A 13th month and 14th month salary is required in Ecuador, with the former given in December and the latter in March or April.

Work Hours and Week

The country has a 40-hour, Monday to Friday work week.

Overtime

Depending on the work contracts, any overtime work done could be paid with a rate of either 150.00% or 200.00%
Ecuador

Leave

Paid Time Off

Every employee is entitled to 15 days of paid time off per year. After five years of employment, it is increases 16 days.

Public Holidays

There are 13 public holidays.

Sick Days

Employees are allowed up to two months of sick leave at a rate of 50% as long as they have provided a medical certificate and have contributed at least six months to the Ecuadorean Social Security Insitute (IESS).

Maternity Leave

Employees are given 12 weeks of maternity leave with it being split two weeks before the due date and the remaining after birth.

Paternity Leave

Fathers in Ecuador are granted 10 days of paid paternity leave, which is increased to fifteen days in the event of multiple or problematic births. When a child is born prematurely, fathers are entitled to 18 days of paid paternity leave.

Parental Leave

Employees in Ecuador are eligible to an optional unpaid leave for up to nine more months to care for the children during the first year of their lives after the conclusion of paid paternity leave, paid adoption leave, or the ending of maternity leave.

Other Leave(s)

In the case of death of a family member, three days of paid leave are given.

When an employee’s child is hospitalized, they may request leave of up to 25 days.

After adoption, employees must be given 15 days of paid leave to care for their new child.

An employee is entitled to a compensated leave of absence if asked to participate in Compulsory Military Service in the National Armed Forces. The following percentage of the compensation must be paid by the employer: a 100% salary for the first month of the leave of absence, 50% of the wage is paid for the second month of the absence from work, and 25% of the wages is given during the third month of absence from work.

Termination

Termination Process

The procedure for terminating a contract varies depending on the type of contract and the grounds for termination, as well as the employment agreement and any applicable collective agreements.

Notice Period

The notice time is specified in the employee’s employment contract or collect agreement; it is not a requirement under Ecuadorian law.

Severance Pay

For each year of service, severance pay is equal to one month’s salary, prorated for any partial years served. Three monthly payments (at the usual salary rate) are the minimum and maximum financial compensation, respectively.

For each year of service that has been completed, the employer may also grant a sudden dismissal incentive equal to 25.00% of monthly earnings.

Probation Period

Probation Period

The length of the probationary term in Ecuador varies depending on the position and is outlined in the employment contract. Probationary periods typically last up to three months.

Immigration

Due to Ecuador’s fairly lax visa regulations, visitors from the majority of nations can enter and stay there without a visa, but only for up to 90 days.

A long-stay visa is the temporary resident visa for Ecuador. It is given to foreigners who want to reside in Ecuador and work, study, or retire there. Before they expire, they can be renewed and issued for up to two years. The many temporary residence visas for Ecuador include:

  • For foreigners who have secured employment with a company in Ecuador, there is the Ecuador Work Visa.
  • For foreigners who have been admitted into an Ecuadorian institution or other academic program and intend to continue their studies there, the Ecuador Student Visa is appropriate.
  • An Ecuador Retirement visa is available to foreigners who want to retire in Ecuador and have the requisite funds to do so.

The visa papers may need to be translated into Spanish and legalized by the Ecuadorian Embassy or Consulate.An application for a permanent resident visa for Ecuador can be made if the foreigner has resided there for more than 21 months on a temporary resident visa.

VAT

The commonly used standard rate of VAT in Ecuador is 12.00%