Expand your organization into Ecuador with or without an Ecuadorian entity
Ecuador has one of the largest economies in Latin America, with a focus on mining, oil, and agriculture, among other sectors. Its efforts to diversify are ongoing and many foreign organizations look to the country as an area of potential future growth.
If your business is planning an expansion into Ecuador, then you should expect things to potentially take longer than planned. While the country continues to improve its administrative processes, inefficiencies still remain which, along with the language and cultural barriers can make progress slow when trying to establish and grow a business.
New Horizons provides a full suite of targeted outsourcing solutions to assist organizations of all kinds with their expansion into Ecuador. We offer comprehensive professional employer organization (PEO), employer of record, and payroll services to help you expand faster and more successfully into Ecuador, without the hassle. In addition, our dedicated in-house recruitment branch can also help you to source, hire, and onboard new workers locally, even if you don’t have an entity in Ecuador.
Our services give you everything you need to start operating in the Ecuadorian market, potentially saving you thousands in expansion costs and getting you up and running faster.
Our Ecuador PEO simplifies your expansion
New Horizons enables your business to expand operations into Ecuador – without setting up a legal subsidiary.
Hiring in Ecuador: Employment law overview
Employment contracts in Ecuador
Contracts of employment in Ecuador can technically be either verbal or written, but we recommend always writing up formal contracts for each employee. These contracts should cover any relevant details such as wage/salary, expected working hours, benefits, and so on. The contracts should also be written in Spanish and reference the country’s official currency of the US dollar
Working hours in Ecuador
The standard working week for employees in Ecuador is 40 hours spread across five days. Work beyond this 40 hours should count as overtime and be paid at a rate of 150% of normal pay (or 200% for public holidays).
Public holidays in Ecuador
Ecuadorians recognize several annual public holidays. Many employees are entitled to the following days off work:
- New Year’s Day
- Independence Day
- Independence of Guayaquil
- Good Friday
- The Battle of Pichincha
- Labor Day
- All Souls’ Day
- Independence of Cuenca
- Christmas Day
Vacation leave in Ecuador
After five years of service with an employer, employees in Ecuador are entitled to 15 days of paid annual vacation leave. This allowance increases by one day per additional year of service up to a limit of 30 days.
Sick leave in Ecuador
Employees in Ecuador are generally entitled to up to two months of paid sick leave. This time off must be compensated at 50% or more of their normal pay.
Parental leave in Ecuador
Female employees in Ecuador are entitled to 12 weeks of paid maternity leave. 75% of their usual pay is covered by the country’s social security and the remaining 25% is covered by the employer.
Fathers are entitled to up to ten days of paid paternity leave in most cases.
Terminations and severance in Ecuador
Employees in Ecuador on fixed-term contracts are generally entitled to 30 days of notice prior to termination. Employees are also usually entitled to a severance payment which is often calculated as 25% of monthly salary for every year of service.
Taxation and withholdings in Ecuador
Income tax in Ecuador is paid via a Pay As You Earn (PAYE) model, so employers need to withhold their employees’ taxes and file a report at the end of every tax year. The taxation is progressive, so higher earners pay a higher percentage in tax. Rates vary from 0% to 35%.
Employees and employers in Ecuador need to pay a percentage of salary into the nation’s social security program, paying 9.45% and 12.15% respectively. The employer contribution changes after the employee has been with them for more than two years.
Health coverage in Ecuador
Ecuador has a comprehensive state-funded healthcare system, so individuals do not need private insurance. However, some employers may choose to offer it as part of their benefits packages.
Ecuador compensations & benefits
Compensation laws in Ecuador
The minimum wage in Ecuador for the unskilled labor category is $400 per month. However, it is important to note that 13th and 14th month salaries are mandatory in the country.
Benefit management in Ecuador
Building a benefits system for your Ecuador workforce can be difficult and complicated to navigate if you are not familiar with the country, its customs, and its employment laws. To set it up independently, it can take several weeks and potentially lead to unexpected delays.
At New Horizons, we specialize in running the setup and management of Ecuadorian employee benefits systems so you don’t have to. We’ll take care of everything, using our knowledge and experience to ensure you are compliant and ready to hire in Ecuador.
New Horizons will help you expand your business into Ecuador more efficiently
New Horizons’ Ecuador PEO, employer of record, and payroll outsourcing services provide your business with everything you need to start trading in Ecuador rapidly and compliantly. Our specialized team of experts will ensure that you are set up and trading in Ecuador in as little as 48 hours, and could save you up to 82%% in expenditure, even if you haven’t established an entity in Ecuador.
Our team can take care of your organization’s benefits, expenses, payroll, and compliance work in Ecuador, along with any ongoing HR administration. As the only global PEO with an in-house recruitment team, New Horizons can also find, hire, and onboard your local employees, using our Ecuadorian subsidiary as employer of record so you don’t need to establish an entity.
Get in touch with our team to learn more about how our services could help you expand into Ecuador more effectively.