Hire employees and contractors in Ecuador

Remote’s guide to employing in Ecuador.

  • Capital city

    Quito

  • Currency

    United States Dollar
    ($, USD)

  • Population size

    17,300,000

  • Languages spoken

    Spanish

  • Availability

    Remote-Owned Local Entity

    We own our own entity in the countries where we operate to shield your company from risk and provide you and your employees with the signature Remote experience.

Facts & Stats

The Republic of Ecuador (República del Ecuador) is a sovereign democracy that boasts an increasing GDP powered by commodities like petroleum and agricultural products.

The country has seen a decline in poverty and Ecuador now hosts a competitive labor market for businesses looking to expand into South America and attract Spanish-speaking talent.

  • Capital city

    Quito

  • Currency

    United States Dollar
    ($, USD)

  • Languages spoken

    Spanish

  • Population size

    17,300,000

  • Ease of doing business

    Medium

  • Cost of living index

    $$ (90 of 139 nations)

  • Payroll frequency

    Bimonthly/Monthly

  • VAT - standard rate

    12% (0% on imported supplies)

  • GDP - real growth rate

    0.1%

Grow your team in Ecuador with Remote

To employ in Ecuador, companies must own a local legal entity in the country or work with a global employment solution. Managing payroll, benefits, taxes, and compliance in Ecuador can get complicated, especially without established local relationships.

Remote’s global employment solution makes it easy for your company to employ workers in Ecuador quickly, efficiently, and in full compliance with all applicable labor laws. We take on the responsibility and legal risks of international employment so you can focus on hiring great talent and growing your business.

Risks
of misclassification

Like many other countries, Ecuador treats self-employed individuals or contractors and full-time workers differently and there are risks associated with misclassification.

Employing in Ecuador

The Ecuadorian Constitution and Labor Code spells out provisions for employee protections and workers’ rights at the federal level, applying to Ecuador’s workforce of 4.2 million. Employees in Ecuador enjoy protections against discrimination based on age, religion, sexual orientation, gender expression, and race.

Common questions that could come up during the hiring process include minimum wage, overtime rates, and guaranteed paid time off. Remote can help you offer a complete, competitive, and compliant benefits package to your employees in Ecuador.

Public holidays

Date
Holiday Name
Extra information
Friday, December 31, 2021New Years DayOriginally January 1st
Monday, February 28, 2022Carnival HolidayVary every year
Tuesday, March 1, 2022Carnival Holiday
Friday, April 15, 2022Good FridayVary every year
Monday, May 2, 2022Labor Day/May DayOriginally May 1st
Monday, May 23, 2022The Battle of Pichincha HolidayOriginally May 24th
Friday, August 12, 2022Day off for Independence DayOriginally August 10th
Monday, October 10, 2022Independence of Guayaquil HolidayOriginally October 9th
Thursday, November 3, 2022Cuenca Independence Day
Friday, November 4, 2022All Souls' DayOriginally November 2nd
Monday, December 26, 2022Christmas DayOriginally December 25th

Minimum Wage

The Ecuadorian government has set the minimum wage at:

  • $400 per month base rate, excluding social benefits, plus a 13th and 14th salary, or
  • $466.66 per month, factoring in mandatory 13th and 14th salaries prorated over the year

Payroll Cycle

For customers of Remote, all employee payments will be made in equal monthly installments on or before the last working day of each calendar month, payable in arrears.

13th salary

Ecuador’s ‘13th salary’ consists of an additional monthly bonus equivalent to the proportional monthly part of one twelfth of everything received by the employee in the year. This payment can be paid once a year, but if offered it must be paid by December 22nd.

14th salary

Ecuador’s 14th salary is equal to the government monthly minimum wage ($400 for 2020) and is payable in March or August depending on the location of the workplace. The employee can request to receive it in an accumulated manner, in which case it must be paid before March 15 in the Coastal and Insular regions, and until August 15 in the Highlands and Amazon regions.

Onboarding Time

We can help you get a new employee started in Ecuador fast. The minimum onboarding time we need is only 14 working days.

Our team ensures your employees are onboarded and paid as quickly as possible while keeping your business compliant with all local employment legislation. The minimum onboarding time begins after the employee submits all required information onto the Remote platform. The onboarding timeline is also dependent upon registration with local authorities.

For all non-nationals of the country of employment, the Right to Work assessment (if applicable) will add three extra days to the total time to onboard. There may be extra time required if we need to follow-up on the right to work assessment.

Please note, payroll cut-off dates can impact the actual first day of employment. Remote has a payroll cut-off date of the 10th of the month unless otherwise specified.

Competitive benefits package in Ecuador

At Remote, we’re obsessed with helping you craft the best possible employee experience for your team. We are leading the way in practicing “fair equity,” which means making sure employees everywhere have access to both the required and supplemental benefits they need to thrive (and that will allow you to attract the best local talent).

Our benefits packages in Ecuador are tailored to fulfill the local needs of your employees. Typically, our packages contain some or all of the following benefits:

  • Health Insurance
  • Dental Insurance
  • Vision Insurance
  • Mental Health Support
  • Pension or 401(K)
  • Life and Disability Insurance

In order to access specific information about our benefits packages in Ecuador, start onboarding your first employee with Remote today.

Taxes in Ecuador

Learn how employment taxes and statutory fees affect your payroll and your employees’ paychecks in Ecuador.

  • Employer

    • 12.15% - Social Security

  • Employee

    • 9.45% – Social security

    • 0% - Up to $11,315

    • 5% - $11,315 – $14,416

    • 10% - $14,416 – $18,018

    • 12% - $18,018 – $21,639

    • 15% - $21,639 – $43,268

    • 20% - $43,268 – $64,887

    • 25% - $64,887 – $86,516

    • 30% - $86,516 – $115,338

    • 35% - Over 115,338

VAT

VAT is known as impuesto al valor agregado (or IVA) in Ecuador and calculated at a rate of 12%. This applies to all transfers of ownership or imports of corporeal personal property, copyright, industrial property and related rights, and the provision of services.

Types of leave

Paid Time Off

Employees are entitled to 15 days of continuous annual leave, including weekends (i.e. 11 working days + 4 weekend days).

Public Holidays

Ecuadorian law mandates that employees should take the 12 public holidays off, and if the nature of the job or the employment contract requires an employee to stay on the job during a public holiday, the employer will compensate with a working day off.

Payment for public holidays depends on the agreement reached between employers and their staff, i.e., it should be pre-negotiated.

Sick Leave

Up to 2 months, at 50% of the employee’s salary.

Maternity leave

New mothers are entitled to 12 weeks of paid maternity leave, of which the employer will be responsible for 25% while social security covers the rest.

Paternity/ Parental leave

The employer is required to grant the working father a paid parental leave of 10 days for a natural birth, 15 for multiple births or birth by C-section, and 23 days if the baby is premature or has special needs.

Education leave

Employees who obtain a scholarship for studies abroad after spending more than 5 years with a company are entitled to an entire year of absence, with their salaries paid for 6 months, provided the scholarship is in a field related to the employee’s work activity.

Other leave

  • Bereavement leave: employees are entitled to one day of paid leave for the death of any 1st or 2nd-degree relative.
  • Hospitalization leave: parents are entitled to 25 days of leave if any of their children are hospitalized.
  • Adoption: adoptive parents are entitled to 15 days of leave, from the day their child is handed over to their legal custody.

Employment termination

Termination process

Employee contracts can be terminated if a reasonable just cause is established, such as dishonesty, negligence, fraud, or any other work-related offenses. That aside, notice should be provided in advance – provided both parties agree to it.

Notice period

There is no notice stipulated notice period and employers are only required to adhere to whatever agreement spelled out in the employment contract.

Severance pay

Without the appropriate termination notice, employees are entitled to receive a severance package equivalent to one month’s salary multiplied by the number of years the worker has stayed with the employer, up to 25 years.

Probation periods

A probationary period can be defined upon hiring an employee, up to a maximum of 90 days.

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