Expand your organization into El Salvador even without a Salvadoran entity
As with many of the surrounding countries in Central America, El Salvador has struggled with socioeconomic issues for several decades. Nevertheless, the nation does show signs of potential for future growth, and there are certainly opportunities to be had for foreign organizations.
However, expanding your organization to El Salvador can take longer than expected. The language barrier and the nation’s unique set of business and employment laws can be difficult to navigate, and bureaucratic procedures can be slow. These factors and more can present delays, and the expansion process can take weeks or even months to get traction.
A popular way of bypassing the complex administrative procedures is to outsource to a global professional employer organization (PEO). At Horizons, our tailored PEO, employer of record, and payroll services are designed specifically to help organizations of all kinds expand abroad faster and more efficiently, including into El Salvador.
Our in-house recruitment team can also find, recruit, and onboard your local employees, and take care of any ongoing HR administration. Our team will provide everything you need to expand into El Salvador more efficiently, potentially saving you thousands in expansion costs.
Why expand in El Salvador with Horizons?
Horizons enables your business to expand its operations into China – without setting up a legal subsidiary.
Hiring in El Salvador: Employment law overview
Employment contracts in El Salvador
When hiring in El Salvador, employers can technically use either verbal or written contracts. However, we recommend always writing up formal contracts with any relevant details of the agreement such as compensation, benefits, expected working hours, and so on. COntracts should also be written in Spanish and use the currency of the US dollar.
Working hours in El Salvador
Normal working hours in El Salvador are 44 hours per week spread over up to six days.
Public holidays in El Salvador
There are several public holidays every year in El Salvador, and many employees receive the following days as leave from work:
- New Years Day
- San Salvador Celebrations
- Independence Day
- Maundy Thursday
- Good Friday
- All Saints’ Day
- Christmas Day
El Salvador vacation leave
Employees in El Salvador are usually entitled to 15 days of paid vacation leave annually.
El Salvador sick leave
Employers in El Salvador must cover full pay up to the first three days of employee sick leave. Beyond this, the country’s social security scheme covers three-quarters of pay for any further sick leave.
Parental leave in El Salvador
Female employees in El Salvador are entitled to 12 weeks of paid maternity leave. This leave is covered at normal pay, with 75% paid by the state and the remaining 25% covered by the employer. There is no mandatory paternity leave allowance, but many employers do choose to offer some.
Terminations and severance in El Salvador
Generally, there is no requirement to give notice of termination in El Salvador, but it is good practice to do so. Employees may also wish to add terminations clauses to employment contracts.
Severance payments are common and generally equal around one month of salary for every year of service.
Taxation in El Salvador
Employers and employees in El Salvador must pay a percentage of salary toward the nation’s social security scheme at rates of 7.5% and 3% respectively.
Income tax in El Salvador is progressive, with rates between 0% and 30% depending on income level. For non-domiciled individuals, the rate is fixed at 30%.
Corporate tax in El Salvador is 30%.
Health coverage in El Salvador
Due to the poor quality of public healthcare in El Salvador, many people use private care. For this reason, many employers offer private medical insurance as part of their benefits packages.
El Salvador compensations & benefits
Compensation laws in El Salvador
El Salvador does not have a single fixed minimum wage. The precise minimums differ depending on the type of work, so it is important that you understand which categories your employees fall into to ensure compliance with the law.
Benefit management in El Salvador
Setting up a benefits system for your Salvadoran employees can be difficult and complicated to navigate if you are unfamiliar with the country and its labor laws. If you want to tackle the setup independently, you can expect it to take several weeks and potentially present delays to your expansion process.
Alternatively, you could use a payroll outsourcing firm to handle your Salvadoran payroll. At Horizons, our El Salvador payroll experts can set up and manage your benefits system for you, freeing you to focus on your successful expansion.
Horizons helps businesses expand into El Salvador faster
Horizons’ El Salvador-specific PEO, employer of record, and payroll outsourcing can provide your business with everything needed to start trading in El Salvador quickly and compliantly. Our El Salvador experts will help you set up your operation and begin trading in El Salvador in as little as 48 hours, and could save you up to 82% in expansion costs, whether or not you’ve already registered an entity in the country.
We will handle your expenses, payroll, and legal compliance in El Salvador, as well as all HR work. And as the only global PEO with a dedicated recruitment team in-house, we can also source and hire your local employees, using our Salvadoran subsidiary to act as employer of record so you don’t need to have a Salvadoran entity.
Talk to our El Salvador payroll experts today to learn how our services can assist your expansion into El Salvador.