Country Payroll Guide Nicaragua

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Key Facts

Capital
Managua
Date format
dd/mm/yyyy
Currency
Nicaraguan Córdoba (NIO)
VAT
the standard rate is 15%

Contributions

Employers

Pension and Disability (less than 50 employees)
Pension and Disability (less than 50 employees) - 12.5%
Pension and Disability (more than 50 employees)
Pension and Disability (more than 50 employees) - 13.5%
Health Insurance
Health Insurance - 6%
Labor Healthcare
Labor Healthcare - 1.5%
War Victims
War Victims - 1.5%
Total Employment Cost
Total Employment Cost - 0% to 22.5%

Employees

Pension & Disability
Pension & Disability - 4.75%
Health Insurance
Health Insurance - 2.25%
Total Employee Cost
Total Employee Cost - 7%

Minimum Wage

Minimum Wage
The minimum wage in Nicaragua is between 4286.33 and 9592.40 NIO per month.

Payroll

Payroll Cycle
Monthly
13th Salary

Employees receive a 13th salary within the first 10 days of December.

Income Tax

Employee Income Tax (1)
Less than 100,000 NIO - 0%
Employee Income Tax (2)
100,001 - 200,000 NIO - 15%
Employee Income Tax (3)
200,001 - 350,000 NIO - 20%
Employee Income Tax (4)
350,001 - 500,000 NIO - 25%
Employee Income Tax (5)
Over 500,000 NIO - 30%

Working Hours

General Working Hours

45 – 48 hours per week.

Overtime

Overtime pay is paid at a rate of 200%.

Leave

Paid Time Off

Employees who have completed at least 6 months to 1 year of employment are entitled to 15 days of paid leave.

After 1 year of employment, the employee is entitled to 30 days of paid leave.

Public Holidays

9 public holidays.

Sick Days

Sick leave is paid from the 3rd day of illness and the benefit is for up to 6 months and is covered by social security.

Pay for sickness is 60% of the regular wages. However, if the employee is hospitalized, the 3 day waiting period is waived.

Maternity Leave

Maternity leave is 12 weeks and is paid at the rate of 100% of the regular wages in which 60% of this is paid by the employer and 40% is paid by social security.

Maternity leave can begin 4 weeks from the expected due date. For multiple births, maternity leave is extended to 14 weeks.

Paternity Leave

Fathers are entitled to 5 business days of paid leave.

Parental Leave

There is no statutory law on parental leave in Nicaragua.

Termination

Termination Process

To terminate employees, employers must request for termination from the labor inspection department. At the time of dismissal, the employee is entitled to remaining vacation pay and their annual bonus. Notice of termination is also required.

Notice Period

Employees must provide 15 days notice.

Severance Pay

The employer must pay severance when the employee is terminated for an unjust cause.  The severance pay is calculated at one month’s salary for the first 3 years of employment and 20 extra days of wages for every year after. Severance is capped at 5 months in payments.

Probation Period

The probation period is 30 days, during which either party can terminate the employment agreement for any reason.

Visa

Employment Visa

Employees who plan to remain in Nicaragua over the long term should apply for a residency visa.

There are two types of residency visas in Nicaragua:

  1. Temporary residence visas, which are valid for one year
  2. Permanent residence visas, which are valid for five years