Country Payroll Guide Ecuador

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Key Facts

Capital
Quito
Date format
dd/mm/yyyy
Currency
United States Dollar (USD)
VAT
the standard rate is 12%

Contributions

Employers

Pension
Pension - 11.15%
Reserve Fund
Reserve Fund - 8.33% (after one year)
Total Employment Cost
Total Employment Cost - 19.48%

Employees

Social Security
Social Security - 9.45%
Total Employee Cost
Total Employee Cost - 9.45%

Minimum Wage

Minimum Wage
The minimum wage in Ecuador is 400 USD per month.

Payroll

Payroll Cycle
Monthly
13th Salary

The 13th salary is paid on December 22nd, and the 14th (which is equal to a monthly minimum wage) is paid between March and August.

Income Tax

Employee Income Tax (1)
0 - 11,212 USD - 0%
Employee Income Tax (2)
11,212 - 14,285 USD - 5%
Employee Income Tax (3)
14,285 - 17,854 USD - 10%
Employee Income Tax (4)
17,854 - 21,442 USD - 12%
Employee Income Tax (5)
21,442 - 42,874 USD - 15%
Employee Income Tax (6)
65,297 - 85,729 USD - 25%
Employee Income Tax (7)
85,729-114,288 USD - 30%
Employee Income Tax (8)
114,288 USD and above - 35%

Working Hours

General Working Hours

40 hours per week.

Overtime

Regular overtime hours are paid at the rate of 150% of the regular pay. Work performed on Saturday, Sunday, or holidays are paid at a rate of 200% of the regular pay.

Leave

Paid Time Off

Employees receive 15 days of paid leave annually. After five years of continuous service, an additional day is given per year.

Public Holidays

12 days.

Sick Days

Employees qualify for sick pay if they have 180 days of continuous contribution to the Ecuadorean Social Security Institute (IESS) within six months prior to the onset of illness, or 189 days of continuous contribution within eight months prior to onset of illness. Employer pays for the first three days and the IESS covers the remainder.

Maternity Leave

New mothers are entitled to maternity leave of 12 weeks; two weeks before birth and 10 weeks after birth. Payment is shared by the social security and the employer. Social security pays 75%, the employer pays 25%. 10 days are added for additional births.

Paternity Leave

New fathers are entitled to 10 days of paternity leave, 15 days for caesarean or multiple births, or 18 days for babies who ae premature or require special care. 25 additional days are added for sever disability, or illness.

Parental Leave

No statutory regulations.

Other Leave

Hospitalization Leave: each parents is entitled to 25 days leave if their child is hospitalized.

Bereavement leave: one day of paid leave for the death of 1st or 2nd degree relative.

Termination

Termination Process

Contracts can be terminated with just cause with out severance (with approval from labor authority) for:  lack of discipline, dishonesty, serious offense against the employer, serious incompetence, or non-compliance with regulations. Otherwise, 30 days notice is required.

Notice Period

There is no statutory notice period, it is usually something that is agreed upon in the employment contract.

Severance Pay

If employees are not given notice, they are entitled to receive one paycheck for every year employed by the company, with a maximum of 25 months of payments. Additionally, sudden dismissal bonus is offered at 25% of monthly wages for each year employed. For over 20 years of employment, the employee is entitled to retirement pension.

Probation Period

3 months.

Visa

Employment Visa

The right visa for your employees might vary based on the nature of the work they’ll be doing for your company in Ecuador and how long they intend to live in the country. For non-resident visas, foreign workers will generally need a Work Visa, otherwise known as a 12-VI Visa. This visa applies to foreign nationals who are traveling to Ecuador for business or other professional purposes.