Payroll and Benefits Guide - Guatemala

Guatemala
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Currency

Quetzal
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Capital

Guatemala City
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Employer Taxes

12.67%
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Date Format

dd/mm/yyyy
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Fiscal Year

1 Jan – 31 Dec

Fun Facts

At nearly 17 million people as of 2021, Guatemala is the most populated nation in Central America.

Famous for their world-class Arabica beans, Guatemala produces and exports large amounts of coffee.

Most of the cotton required to create blue denim, which is used to produce jeans, comes from Guatemala.

The “most beautiful lake in the world,” Lake Atitlan, is located there.

It is frequently referred to as the “land of eternal spring.”

Marimba is the country’s official instrument.

Guatemala

Contributions

Employee Payroll Tax

Social Security4.83%

Employer Payroll Tax

Social Security10.67%
Professional Training Institute1.00%
Workers Recreational Institute1.00%

Payroll

Payroll Cycle

Depending on the kind of work done by the employee and what is outlined in the employment contract, salaries are paid monthly, bimonthly, weekly, daily, or hourly.

13th Salary

Two bonuses per year, equal to one month’s income each, should be given to salaried personnel as payments for the 13th and 14th months. Each year, the bonus 14 (“Bono 14”) is due in July, and the Christmas bonus is due in December.

Work Hours and Week

In Guatemala, a regular workday is 8 hours long, with a maximum of 12 hours per day allowed throughout the week. However, senior executives and domestic workers are not subject to working hours.

A maximum of 36 hours per week—six hours per day—can be spent working at night. and 6 a.m. The upper limit is extended to 42 hours per week if the shift consists of both daytime and nighttime employment.

Overtime

Every hour worked in excess of 44 in a workweek is regarded as overtime, and is compensated at a rate of 150% of the usual wage.

Guatemala

Leave

Paid Time Off

Employees are awarded a yearly limit of 15 paid leaves following the conclusion of a 12-month period of nonstop work with the employer. Any days that aren’t utilized up will be forfeited. Before leaving on vacation, employees are granted a holiday allowance equal to 130% of their wage.

Public Holidays

There are 12 public holidays in Guatemala.

Sick Days

If the employee, the illness, or the injury are not covered by the IGSS-regulated benefits, the employer will provide sick leave benefits in accordance with its own rules or by the Guatemalan Institute of Social Security (Instituto Guatemalteco de Seguridad Social) (IGSS).

The length of the employment determines how long sick pay, which is to be paid at a rate of 50% the usual rate is calculated to be:

  • Those who have worked for two to six months are entitled to one month of paid sick time
  • Those who have worked for six to nine months are entitled to two months of paid sick time
  • Those who have worked for more than nine months are entitled to three months of paid sick time

Additionally, the employer may try to temporarily fill the employee’s responsibilities, which can be ended when the person comes back.

Maternity Leave

Employees are given 12 weeks of maternity leave starting at 30 days before the due date and the remaining after birth.

They are entitled to 42 days of paid leave in the case of a miscarriage or stillbirth.

Paternity Leave

Paternity leave is not required to be provided by law.

Parental Leave

Parental leave is also not required to be provided by law.

Other Leave(s)

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

When an employee is married, they may request leave of up to five days.

If an employee is a member of a labor union, they may take up to six days of paid leave to perform union duties.

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 usually specified in the employee’s employment contract or collect agreement. Otherwise, they proceed as follows:

  • Those with employment of up to six months are given a week’s notice.
  • Those with employment of six months to a year are given at least ten days notice.
  • Those with employment of one to five years are given two weeks’ notice.
  • Those with employment of more than five years are given two weeks’ notice.

Severance Pay

If an employee is let go without good reason, they are entitled to severance and have 30 days to file a lawsuit. The employee receives up to 12 months of severance pay if the employer is unable to prove its validity in court.

Additionally, companies are prohibited from dismissing trade union members, women working while expecting a child, while on maternity leave, right after giving birth, or while engaged in a class action lawsuit or an illegal business closure.

Severance pay is often set at an amount equivalent to between two days and four months of the usual wage rate of pay should an employee be let go due to force majeure, death, or economic reasons.

Probation Period

Probation Period

In Guatemala, the probation period is usually two months.

Immigration

If a foreign individual travels to Guatemala to engage in paid employment, this establishes a relationship where they are under the control and administration of a Guatemalan employer. In that scenario, the foreign national must submit an application for a residence and work permit for migrant workers.

Business travelers may now visit Guatemala under the categories of Traveler or Tourist to conduct consultancy and advisory services as a result of the abolition of the Business Visa. Nationals of countries that require visas must get the necessary entrance visa in order to enter Guatemala.

The foreign national must submit an application for a work permit to the Labor Ministry after receiving a residence permit for migrant workers (or after submitting the corresponding application with the Guatemalan Institute of Immigration (Instituto Guatemalteco de Migración)).

The Temporary Residence and Work Permit is the primary option for work authorization.

The authorization for Temporary Residence is given for an initial stay of up to five years, and it is renewed for the same period. The corresponding work permit is annually renewed and valid for one year.

 

 

VAT

The commonly used VAT rate in Guatemala is 12.00%