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.
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.
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.
|Date||Holiday Name||Extra information|
|New Year's Day|
|Labour Day (in lieu)||Office holiday|
|Labour Day||Actual holiday falls on Saturday|
|Battle of Pichincha Day|
|First Cry of Independence|
|Guayaquil Independence Day (in lieu)||Office holiday|
|Guayaquil Independence Day||Actual holiday falls on Saturday|
|All Souls’ Day|
|Cuenca Independence Day|
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
- For customers of Remote, all employee payments will be made in equal monthly instalments 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.
Competitive benefits package in Ecuador
Remote can help you provide a competitive and compliant benefits package for your employees in Ecuador. Beyond statutory benefits, employers should consider offering additional benefits to attract and retain the best talent. A competitive benefits package may include perks such as:
Taxes in Ecuador
Learn how employment taxes affect your payroll and your employees’ paychecks in Ecuador.
- 12.15% - Social Security
- 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 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
Employees are entitled to 15 days of continuous annual leave, including weekends (i.e. 11 working days + 4 weekend days).
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.
Up to 2 months, at 50% of the employee’s salary.
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.
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.
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.
- 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.
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.
There is no notice stipulated notice period and employers are only required to adhere to whatever agreement spelled out in the employment contract.
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.
A probationary period can be defined upon hiring an employee, up to 90 days.