Expand your business into Nicaragua, even without an entity
Nicaragua has come through many years of political tensions to become significantly more stable. Several industries such as tourism and various exports have grown in recent years and many foreign organizations recognize the country’s potential for growth.
If your organization is planning an expansion into Nicaragua, then you should be prepared for a complex process. While the rewards are worth it, Nicaragua’s unique business and employment regulations, cultural customs, and language can all result in costly delays to any expansion efforts.
At Horizons, we offer full support to organizations planning an expansion into Nicaragua. Our bespoke professional employer organization (PEO), employer of record, and payroll services can offer everything needed to expand your business into Nicaragua, whether or not you have already established a Nicaraguan entity.
We have an in-house recruitment team, so we can source, recruit, and onboard your new staff members. Additionally, you can use our Nicaraguan subsidiary to act as employer of record for your new hires, so you don’t even need to register an entity in the country but will have total autonomy over your employees. Our outsourcing solutions could save you thousands in expansion costs, and can help you expand in a compliant, flexible, and scalable way.
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Hiring in Nicaragua - Employment Law Overview
Nicaragua employment contracts
Employers in Nicaragua must provide a written contract of employment for every employee. These contracts should include all relevant details of the employment agreement, including compensation, benefits, terminations terms, and so on. They should be written in Spanish and references to money should be in Nicaraguan córdoba, although US dollars are also frequently used.
Working hours in Nicaragua
The standard working week for employees in Nicaragua is 48 hours spread across five or six days.
National holidays in Nicaragua
There are several annual public holidays in Nicaragua. Employees regularly receive the following days as leave from work each year:
- New Year’s Day
- Indigenous Resistance Day
- Holy Thursday
- Good Friday
- Immaculate Conception
- Christmas Day
- Liberation Day
- Battle of San Jacinto
- Independence Day
Vacation in Nicaragua
Employees in Nicaragua are generally entitled to 30 days of paid vacation leave each year.
Sick leave in Nicaragua
For non-work-related sickness, employees in Nicaragua can take up to 26 weeks (six months) or paid leave. The first three days of sick leave are not necessarily paid, but many companies do choose to cover this time.
For work-related sickness, employees can take up to one year of paid sick leave.
Maternity and paternity leave in Nicaragua
Female employees in Nicaragua are entitled to 12 weeks of paid maternity leave, with four weeks to be taken before the birth and eight weeks after. Usually, 60% of normal salary is covered by social security payments and 40% is covered by the employer.
Fathers are not entitled to any paternity leave as standard, but some employers do choose to offer an allowance as part of their benefits packages.
Employee severance and terminations in Nicaragua
Permission to terminate employees must be received from Nicaragua’s Labor Inspection Department, otherwise you will be open to legal action. In general, notice periods of around 15 days are provided to employees prior to termination. Additionally, severance payments are often necessary, with around one month of salary being paid for every year of service (although the amount per year varies for longer tenures).
Tax laws in Nicaragua
Employers and employees in Nicaragua must contribute part of salaries to social security. Employers must pay 18.5% and employees must pay 6.35%.
Income tax in Nicaragua is progressive, with rates ranging from 0% to 30% depending on income level.
Corporate tax in Nicaragua is 30% in most cases.
Health insurance in Nicaragua
There is a public health system in Nicaragua, but many employers also offer provate medical insurance as part of their benefits packages.
Nicaragua compensations & benefits
Compensation laws in Nicaragua
The mandatory minimum wage for employees in Nicaragua varies depending on the type of work they are engaged in. For example, agricultural workers are entitled to at least NIO4,286.33 per month, but government workers are entitled to at least NIO5,345.25 per month. Because of this variation, it is important that you determine which category your workers are in when deciding salaries.
Benefit management in Nicaragua
Setting up a system of employee benefits for your employees in Nicaragua can be difficult. The complex regulations and organization can require a lot of time, effort, and investment on the part of employers.
Outsourcing your benefit management process to Horizons ensures that you can adhere to ensure compliance and speed up the process significantly. Our Nicaragua employment experts will help you to find and arrange your benefits, advise on your strategy, and ensure compliance with the law, potentially saving you a significant amount of time and money.
Why choose Horizons' services for your expansion into Nicaragua?
Horizons’ Nicaragua PEO, employer of record, and payroll outsourcing services pro your business with everything you need to start trading in Nicaragua rapidly and compliantly. Our specialized team of experts will ensure that you are set up and trading in Nicaragua in as little as 48 hours, and could save you up to 82%% in expenditure, even if you haven’t established an entity in Nicaragua.
We can handle all of your expenses, payroll, benefits, and legal compliance in Nicaragua, as well as all related human resources administration. As the only global PEO with an in-house recruitment team, we can also find and hire your local staff, providing our Nicaraguan subsidiary to act as employer of record for your hires so you don’t even need to establish a Nicaraguan entity.
Get in touch with our Nicaragua experts today to find out more about our outsourcing services for Nicaragua expansion.