Nicaragua is the largest country in Central America, covering an area of approximately 130,373 square kilometers.
Payroll and Benefits Guide - Nicaragua
Fun Facts
The country is bordered by Honduras to the north and Costa Rica to the south.
Lake Nicaragua, also known as Cocibolca, is the largest freshwater lake in Central America and the 19th largest in the world.
The country is famous for producing some of the finest coffee in the world, known as “Nicaraguan Gold.”
The official currency of Nicaragua is the córdoba, named after the country’s national hero, Francisco Hernández de Córdoba.
The country has a beautiful Caribbean coastline with stunning beaches and crystal-clear waters.
Contributions
Employee Payroll Tax
| Contribution Type | Rate |
| Pension & Disability | 4.75% |
| Health Insurance | 2.25% |
Employer Payroll Tax
| Contribution Type | Rate |
| Pension and Disability | 12.50% |
| Pension and Disability | 13.50% |
| Health Insurance | 6.00% |
| Labor Healthcare | 1.50% |
| War Victims | 1.50% |
| Training Fund | 2.00% |
Payroll
Payroll Cycle
In Nicaragua, the payroll frequency is stipulated in the employment contract. Employees are typically paid on a weekly or monthly basis.
13th Salary
In Nicaragua, 13th-month payments are mandatory and the employer must pay an additional month’s salary within the first 10 days of December.
Work Hours and Week
The standard working week in Nicaragua consists of 48 hours per week 8 hours per day.
Monday – Saturday
Overtime
All work above the standard working hours is paid as overtime and regulated by employment contracts/collective agreements. When an employee is requested to work overtime or work on holidays, there is a limit of 9 hours per week.
Leave
Paid Time Off
Employees are entitled to 15 days of paid leave following six months of consecutive employment.
Sick Days
Employees are entitled to up to 26 weeks of sick leave paid at 60% of the regular wages by Social Security from the 4th day of sickness.
Maternity Leave
Maternity leave in Nicaragua is 12 weeks of paid leave. An employee must take four weeks of leave before the birth of the child and eight weeks following the birth.
Paternity Leave
The father/partner is entitled to five business days of paid paternity leave after the child’s birth.
Parental Leave
There are no provisions in the law regarding parental leave.
Termination
Termination Process
The termination process varies according to the employment agreement and collective agreement in place and is based on the type of contract and reason for termination.
Notice Period
Employees in Nicaragua must provide employers with 15 days’ notice. During the probation period, no notice is required to terminate.
Severance Pay
Severance pay is according to the length of employment.
Probation Period
Probation Period
The probation period is 30 days, during which either party can terminate the employment agreement for any reason.
VISA
VISA
Nicaragua’s immigration system provides several options for employers of foreign nationals. Requirements, processing times, employment eligibility, and benefits for accompanying family members vary by permit type.
VAT
The standard rate of VAT in Nicaragua is 15.00%