How to use an Employer of Record in the Dominican Republic

The Dominican Republic boasts a rapidly growing upper-middle-income economy and 91% adult literacy, thanks to its free basic education, and strong social security nets for the country’s workforce of 4.8 million. The Dominican Republic has become one of the most attractive labor markets in the Caribbean. And it’s no wonder why corporate giants like Xerox, Google, Amazon, and Cisco have a significant presence in the country.

If you’re wondering how to add an employee in the Dominican Republic to your team, you’re in the right place. Hiring abroad can be a challenging process. Apart from opening a legal entity in the Dominican Republic, you’ll have to stay compliant with local labor laws, and handle the HR and admin work of managing employees. 

Alternatively, you could partner with an employer of record (EOR) to do the hard work for you. An employer of record can fulfill local employment regulations on your behalf and meet your ongoing administrative needs.

But, how do you find an EOR that best fits your needs? In this article, we’ll explain how to use an EOR to hire workers in the Dominican Republic, what are the costs and benefits of using an EOR, and how to vet and choose a provider that’s right for your business.

Five steps to hiring employees in the Dominican Republic using an employer of record

Pricing, service features, and internal buy-in: there’s so much to consider when choosing an employer of record. Here’s a step-by-step process you can use to vet potential EOR providers and determine which one works best for your needs.

Step 1: Weigh up the pros and cons of each potential partner.

Before shopping around for an employer of record provider, you need to figure out the services a potential partner should have to help you start hiring in the Dominican Republic. It can be difficult to know where to start, especially if you’re looking to hire abroad for the first time. For instance, here are some features you could look for:

• Global payroll services

• Benefits and compensation 

• Onboarding processes

• Compliance with local labor laws

• Data security and intellectual property protection.

Step 2: Take the time to select the most appropriate EOR service provider.

Essentially, an employer of record functions as your company’s legal representative and administrative extension in the Dominican Republic. You have to make sure that the EOR owns its own local entity in the Dominican Republic, rather than relying on third-party companies to offer certain services. Be careful about using partner-dependent entities, as you cannot ensure stable pricing or data security. Ideally, potential EOR providers should:

• Own their legal entities in the Dominican Republic

• Provide payroll support that gets your employee(s) paid on time

• Keep abreast of changing regulations, so they can keep your operations compliant

• Proactively keep your data and intellectual property secure

• Help you manage the fine details of hiring in the Dominican Republic: payroll taxes, levies, filings, benefits administration, etc.

Step 3: Check the reviews, testimonials, and coverage of your shortlist of providers

To get a good understanding of the EOR’s services and how they treat their employees, review the company website, third-party review sites, client testimonials, and online press coverage. Social proof can help you verify an EOR’s reputation, whittle your list of EORs down further, and bring you closer to finding the ideal provider.

Step 4: Ensure that the EOR solution for the Dominican Republic will provide a best-in-class employee experience

An employer of record will help you manage your employees and stay compliant with any local labor regulations. But more importantly, the EOR serves as the face of your brand. Your employees are at the receiving end of the services provided by the EOR. This is why you should ensure that they treat your employees well. Your potential EOR partner should have the capability to:

• Pay salaries on time

• Onboard new employees without friction

• Provide enough support for any employee queries.

Step 5: Work with your partner to make sure you always provide a fair and equitable compensation package

Salaries for remote roles can vary widely depending on local costs of living, market rates, and government-mandated minimum wages.

According to Payscale, a senior developer based in Mumbai earns just over $12,000 annually, while an individual in the same position in London earns $94,449 annually. Roughly 7.8 times more.

While outsourcing may help you save on costs, an employer of record can help you figure out a fair wage for whatever roles you’re hiring for, factoring in market rates, local costs of living, and experience levels. Additionally, your EOR should be able to work out a modern benefits package factoring in local laws, as well as the individual’s experience, role, and skill level.

Step 6: Make sure your partner will guard your intellectual property and maintain data security for your business

Remote work often makes the management of intellectual property complicated. If you’re not careful, you might lose the rights to the work produced by your employee.  A potential employer of record should have a proven record of securing customer data and ensure you gain control of the IP produced by your workforce.

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What are the benefits of using an employer of record in the Dominican Republic?

Once you’ve decided to hire in the Dominican Republic, an EOR can make your life easier by managing the processes involved in hiring and paying employees in the Dominican Republic. An employer of record helps you design and manage your HR operations and remain compliant with any legal requirements for a fraction of what an internal HR and legal team would cost.

An employer of record helps companies hiring in the Dominican Republic to:

• Maintain a local entity that’s authorized to hire in the Dominican Republic

• Have legally binding contracts with employees that state the terms of employment

• Manage payroll effectively to ensure your employee(s) get paid on time

• Ensure your employees are correctly classified according to government regulations

• Manage the termination process and ensure employees are only let go on legal grounds

• Pay any required taxes and levies to stay compliant with tax rules.

Learn more about how when to use an employer of record and how to choose a partner that's right for your business.

How much does it cost to use an EOR in the Dominican Republic?

While an employer of record may offer the infrastructure needed to hire and maintain a team in the Dominican Republic, there’s one big question you need to answer before making a choice: pricing.

Given how crowded the EOR market is, it can be tricky to choose the right EOR. Legacy EOR providers may support a large network of countries, but they tend to charge enterprise rates. However, they may not always guarantee top-notch security or help you settle local taxes and levies. Smaller EOR players, on the other hand, charge less for their services but may not have the flexibility or infrastructure needed to manage the entire process of hiring in the Dominican Republic.

Compared to other EOR providers, Remote offers an extensive employer of record service that helps you onboard new employees, manage payroll, and stay compliant with local labor rules, all for an affordable, flat price. Our Fair Price Guarantee means that there are no surprise costs or hidden fees.

Hiring in the Dominican Republic

Hiring in the Dominican Republic is regulated by the Labor Code which defines provisions for employment contracts, working hours, benefits, vacation, and remuneration.

Understanding how these labor standards work in practice will help you create a strategy for entering the Dominican labor market successfully and in compliance with the law.

Employment contracts and agreements in the Dominican Republic

In the Dominican Republic, employers are not required to issue a contract to officially hire permanent employees. It’s sufficient to simply put them on your payroll and remit payroll taxes on their behalf.

Fixed-term and seasonal contracts, however, require agreements that spell out the terms of employment and the tasks at hand.

Labor compliance in the Dominican Republic

Businesses are required to follow certain labor standards that are aimed at creating a conducive working experience for their employees physically, psychologically, and financially. These include:

• Protecting employees from any form of discrimination due to race, religion, nationality, ideology, political affiliation, sex, financial, social, or physical condition

• Ensuring working hours don’t exceed eight hours daily or 44 hours per week

• Paying workers a minimum vital and adjustable wage for their efforts

• Providing dignified and safe working conditions

• Equal pay for equal work

Payroll and payroll taxes in the Dominican Republic

Dominican employee payroll and income taxes are capped at 6.41% and 25% respectively and are withheld by the employer.

Employer payroll taxes cover pensions and disability (7.1%), health insurance (7.09%), labor risk (1.1%), and INFOTEP, a vocational training program (1%), coming out at 16.29% of total payroll expenses.

Understanding how hiring Dominican employees will affect your tax position can help you plan to reduce your tax burden and avoid double taxation.

Employment benefits and compensation in the Dominican Republic

More than just paying market-rate salaries, Dominican labor law mandates several statutory benefits that employers are required to provide.

Maternity and paternity leave

Female employees are entitled to 14 weeks of paid maternity leave, with full wages paid by the government. This can be supplemented with an additional six months’ unpaid leave following maternity leave.

Fathers are entitled to two days’ paternity leave, with 100% of their wages paid by the government.

Healthcare and sick leave

All employees in the Dominican Republic are covered by universal health insurance funded by payroll contributions.

Remote can help you set up private healthcare and insurance benefits that offer better coverage and build loyalty with your team.

Vacation and holidays

Full-time employees are entitled to 14 days of paid leave after their first year with an employer, which increases to 18 paid days off after five years of service.

There are 13 paid public holidays, and employees are entitled to double pay if they’re required to work on a public holiday.

Pensions

Employer and employee pension contributions (7.1% and 2.87% respectively) fund the Dominican Republic’s mandatory pension system that guarantees a pension for retirees who have made at least 360 monthly contributions at age 60.

Remote can help you design and provide competitive benefits for your contractors and employees globally so that you can build a stronger workforce that sticks for the long term.

Dominican Republic severance pay and employee terminations

Employers can terminate a contract for any reason whatsoever but are required to provide a written notice explaining the grounds for termination and to issue severance payments if an employee is let go without just cause.

Notice periods range from seven to 28 days, while severance payments are capped at 23 days’ salary, both depending on an employee’s tenure.

What are the risks of employee misclassification in the Dominican Republic?

Like its Latin American neighbors, the Dominican Republic enforces stringent labor standards, and misclassifying your employees can result in fines, taxes, and having to pay back wages. 

An employer of record can help you classify full-time employees and contractors correctly and set clearly defined boundaries based on the type of employment you’re offering your Dominican workforce. Remote has a team of experts who can help mitigate misclassification risks and help you maintain legal compliance in the Dominican Republic and beyond.

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Get started with an employer of record in the Dominican Republic

Once you’ve found your ideal candidate in the Dominican Republic, you’ll have to open your own entity in the country to hire and start working with them. In addition, you’ll have to spend a significant amount of time and money to figure out logistics, file the paperwork, and deal with HR processes involved in international hiring.

It can be a hassle to manage the process from start to finish, but partner with a reliable employer of record, and you can employ workers abroad easily! Remote’s EOR services are hard to beat when it comes to hiring and paying workers in the Dominic Republic or anywhere else in the world. We offer a full-stack range of services — onboarding procedures, taxes, payroll, data security and IP protection, benefits and stock options, and compliance. 

Remote simplifies hiring in the Dominican Republic so that you can focus on business growth. Use Remote to:

• Leverage an owned entity that authorizes you to hire employees in the Dominican Republic

• Manage payroll and disburse salaries efficiently

• Accurately classify your hires to avoid fines, penalties, and labor disputes

• Keep compliant with local labor and tax rules

• Offer your employees competitive salaries and benefits

• Secure your company’s data and retain rights to your intellectual property

Remote makes it fast, safe, and easy to hire in the Dominican Republic. Learn more about our employer of record services. Or get started with Remote and start onboarding top talent in the Dominican Republic today!