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Ecuador

Ecuador Guide

Ecuador is an attractive destination for companies looking to hire talent due to its strategic location, skilled workforce, and competitive costs. This guide provides detailed information on labor laws, benefits, requirements, and best practices for hiring in Ecuador. 

General Information

Currency:

United States Dollar (USD)

Main Language:

Spanish

Population:

Approximately 18 million

Capital:

Quito

Employer Costs and Social Contributions

  • IESS (Social Security) – 12.15% (Employer Contribution) 
  • Reserve Fund – 8.33% (Applicable after the first year of employment) 
  • Work Risk Insurance – 0.55% (Varies by risk level) 

Hiring and Employment Conditions

Ecuadorian labor law recognizes several types of employment contracts:  

 

Types Of Contracts: 

  • Indefinite-term contract (Most common) 
  • Fixed-term contract (For specific projects or time periods, max 2 years) 
  • Occasional contract (Temporary work, max 180 days) 
  • Apprenticeship contract (For training purposes, max 2 years) 

 

Benefits and Compensation

Mandatory Benefits: 

  • Social Security (IESS) 
  • Retirement and Pension Fund 
  • Work Risk Insurance 

 

Additional Payments: 

  • 13th Salary: Equivalent to one month’s salary, paid in December. 
  • 14th Salary: Equivalent to one month’s salary, paid in March (Sierra region) or September (Coastal region). 
  • Reserve Fund: Equivalent to 8.33% of the monthly salary, paid after one year of employment. 

 

Minimum Wage

  • The national minimum wage for 2024 is USD 460 per month. 

Working Hours

Ecuadorian labor law establishes a standard work week of 40 hours, divided into: 

  • Day Shift: 8 hours per day, Monday to Friday 
  • Night Shift: 7-hour shifts between 7:00 PM and 5:59 AM 

 

Overtime Pay:  

  • Up to 2 extra hours per day: 150% of the hourly rate 
  • Holiday and Sunday work: 200% of the hourly rate 

Payroll

  • Payroll Cycle: Employees are paid monthly, typically at the end of the month. 

 

  • 13th and 14th Salary: Mandatory additional payments made annually. 

Leaves

Maternity Leave: 

  • 12 weeks of paid leave at 100% salary, covered by IESS. 
  • Additional unpaid leave available upon request. 

 

Paternity Leave: 

  • 10 days of paid leave for new fathers. 
  • Extended leave is possible for medical complications or multiple births. 

 

Sick Leave: 

  • Paid leave covered by IESS after the third day of illness. 
  • Employer covers the first three days at full salary. 

Termination

Ecuador has strict labor protections, and termination without cause requires severance pay. 

 

Valid Termination Reasons: 

  • Voluntary resignation 
  • Mutual agreement 
  • Justified cause (e.g., misconduct, negligence) 

 

Severance Pay: 

  • One month’s salary per year of service, up to a maximum of 25 months. 

 

Notice Period: 

  • 30 days for terminations without cause. 
  • Immediate termination is possible for just cause. 

 

Vacations and Holidays

Vacation Days: 

  • Employees are entitled to 15 days of paid vacation per year after one year of employment. 
  • After 5 years, employees receive an extra 1 day per year, up to a maximum of 30 days. 

 

National Holidays: 

  • January 1 – New Year’s Day 
  • February/March – Carnival (2 days) 
  • March/April – Good Friday 
  • May 1 – Labor Day 
  • May 24 – Battle of Pichincha 
  • August 10 – Independence Day 
  • October 9 – Guayaquil Independence Day 
  • November 2 – All Souls’ Day 
  • November 3 – Cuenca Independence Day 
  • December 25 – Christmas 

Compliance Requirements

Required Documentation for Hiring: 

  • National ID (Cédula) or Passport (for foreign workers) 
  • Social Security Number (IESS) 
  • Proof of Address 
  • Taxpayer Registration (RUC or RISE for independent contractors)