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How to hire and pay employees in Ecuador
Slasify
Jun 21, 2025
Before Hiring in Ecuador
Discover the global hiring and employment landscape in Ecuador— where diverse geography meets economic opportunity. This country offers a strategic position in South America, marked by its stable economic policies and a commitment to sustainable growth. Ecuador is an attractive market for businesses with its rich natural resources and a government supportive of foreign investment.
Explore the employment essentials including payroll, personal income tax, statutory contributions, annual leaves, minimum wage, terminations, visa requirements, and more. Gain valuable compliance insights for a smooth entry into the dynamic Ecuador market with Slasify's global premium HR platform.
At a Glance
| Capital | Quito |
| Currency | United States Dollar (USD) |
| Payroll Cycle | Monthly |
| Minimum Wage | USD 460 per month |
| Annual Leave | 15–30 days |
| Personal Income Tax | Up to 37% |
Personal Income Tax
| Taxable Income (USD) | Progressive Tax Rate (%) |
|---|---|
| Up to 11,902 | - |
| 11,903–15,159 | 5 |
| 15,160–19,682 | 10 |
| 19,683–26,031 | 12 |
| 26,032–34,255 | 15 |
| 34,256–45,407 | 20 |
| 45,408–60,450 | 25 |
| 60,451–80,605 | 30 |
| 80,606–107,199 | 35 |
| Over 107,199 | 37 |
Local Tax
There are no local taxes for employment income Ecuador.
Statutory Contributions
Employer Contributions
| Contribution rate | Note | |
|---|---|---|
| Social Security (IESS) | 12.15% | This includes contributions to the IECE and SECAP. |
| Reserve Fund | 8.33% |
This shall be paid either directly to the employee or into a reserve fund with the IESS from the second year of employment. No income tax or social security contributions are levied on reserve fund payments. |
Employee Contributions
| Contribution rate | |
|---|---|
| Social Security (IESS) | 9.45% |
Payment of Wages
The term of payment for salaries shall not exceed a month and employees who are paid by task have the right to receive their payment based on the value of their work in each week.
Minimum Wage
Effective January 1, 2024, the unified basic salary (SBU) in Ecuador is set at USD 460 per month. However, it is important to note that each sector may have their own respective minimum wages.
Statutory Bonus
Employees in Ecuador are entitled to be paid a 13th and 14th month salaries and, at their written request, these bonuses may be accumulated and paid out by the following deadlines:
| Bonus | Amount | Deadline |
|---|---|---|
| 13th month salary (Christmas bonus) | Employees are entitled to be paid monthly by their employers the portion of their Christmas bonus proportional to one-twelfth of the remuneration they receive during the calendar year | December 24 |
| 14th month salary | Employees are entitled to receive a monthly bonus equivalent to one-twelfth of the SBU | March 15 (Coastal and Insular regions) or August 15 (Sierra and Amazonian regions) |
In addition to the above, employers are also obligated to distribute 15% of their net profits to their employees, prorated according to the employee's time worked in the year, as follows:
| Distribution of net profits to employees | |
|---|---|
| 10% of net profits | This shall be divided among all employees without considering the remuneration received by each employee during the year corresponding to the distribution |
| 5% of net profits | This shall be given in proportion to the employees' family responsibilities in a manner defined in the Work Code |
The above amount shall be paid out to the employee by April 15 of each year, with the employer sending the Regional Labor Directorate the receipt of the profits by the employee, and the profits distributed to employees shall generally not exceed 24 times the SBU. In the event that the value exceeds this amount, the excess will be delivered to the Social Security solidarity benefits regime.
Employees do not have rights to profits if they receive bonuses or gratuities whose amount is equal to or exceeds the established profit sharing percentage.
Termination
An indefinite-term employment contract can only be terminated for the causes established in the Work Code, provided that the proper procedures therein are also followed.
| Reasons justifying dismissal | Reasons justifying resignation |
|---|---|
| Repeated and unjustified lack of punctuality or attendance at work, or abandonment of work for a period of more than 3 consecutive days without just cause | Serious injuries inflicted on the employee, their spouse or partner, ascendants or descendants |
| Serious indiscipline or disobedience to the legally approved internal regulations | |
| Lack of probity or immoral conduct | A decrease or lack of payment or punctuality in the payment of the agreed remuneration |
| Serious injuries inflicted on the employer, their spouse or partner, ascendants or descendants, or representative | |
| Manifest ineptitude with respect to the occupation or work for which they committed themselves | |
| Unjustified complaint against the employer regarding its Social Security obligations | Employer requiring the employee to perform a task other than that agreed upon, except in cases of urgency provided for in Article 52 of the Work Code |
| Non-compliance to the safety, prevention and hygiene measures required by law, its regulations or the competent authority | |
| Contradicting, without due justification, medical prescriptions and opinions | Workplace harassment committed or permitted, by action or omission, by the employer or their legal representatives |
| Commission of workplace harassment towards a co-worker, the employer or a subordinate |
Note: In any case, unilateral termination by either party requires prior approval from the labor inspector.
Notice Period
There is no statutory notice period in Ecuador unless otherwise agreed by the concerned parties.
Severance Pay
Employers who untimely dismiss their employees shall pay them the following severance:
| Length of service | Severance pay |
|---|---|
| Up to 3 years | 3 months' remuneration |
| More than 3 years | 1 month's remuneration per year of service, up to a maximum of 25 months' remuneration |
For the purpose of determining severance pay entitlement, the fraction of a year shall be considered a full year.
Probationary Period
In every indefinite-term employment contract, when it is concluded for the first time, a trial period may be established up to a maximum duration of 90 days. Either party may freely terminate their employment contract during such periods.
No more than one trial period may be established between the same worker and employer, regardless of the type of contract.
Work Time Rules
Standard Working Hours
Standard working hours in Ecuador are subject to a maximum of 8 hours per day and 40 hours per week.
Break Period
Employees are entitled to up to 2 hours of break period after the first 4 hours of work in a standard workday. This break period may be reduced to only an hour if, in the opinion of the Regional Director of Labor, circumstances so dictate.
Furthermore, during the 12 months after childbirth, the nursing mother's day shall only last 6 hours, effectively meaning that they are entitled to 2 additional hours of break for breastfeeding.
Overtime
By written agreement between the concerned parties, employees may work overtime, provided that it is authorized by the labor inspector and does not exceed 4 hours per day and 12 hours per week.
| Overtime | Overtime pay |
|---|---|
| Overtime performed during the day until midnight | 150% of the employee's daytime remuneration |
| Overtime performed from midnight until 6:00 a.m. | 200% of the employee's daytime remuneration |
Weekly Rest Days
Employees are entitled to 2 consecutive paid rest days per week, which shall generally fall on Saturdays and Sundays.
If work cannot be interrupted on Saturdays and Sundays, another equal time of the week shall be designated for rest by agreement between the concerned parties. These rest days shall be paid with the amount equivalent to the full remuneration in accordance with the nature of the work or industry.
The employee who unjustifiably misses half a continuous day of work during the course of the week shall have the right to 6 days' remuneration, and those who unjustifiably misses a full day of work during the week shall only be entitled to remuneration for 5 days.
Employees may be required to work on their rest days when there is a need to avoid serious damage to the establishment or operation threatened by the imminence of an accident, or due to a fortuitous event or force majeure that requires urgent attention. It is not necessary to obtain prior authorization from the labor inspector, but the employer will be obliged to notify them within 24 hours following the danger or accident.
The work that is carried out on the employee's rest days shall be paid at 200% of their normal remuneration.
Note: Work on rest days is also permitted when the work cannot be interrupted due to the nature of the needs they satisfy, for reasons of a technical nature or because its interruption causes harm to the public interest.
Holiday and Leave Entitlements
Public Holidays
In addition to their weekly paid rest days, employees shall also enjoy mandatory rest during public holidays. There are 11 days of public holidays in Ecuador for 2024.
| Holiday | Date |
|---|---|
| New Year's Day | January 1 |
| Carnival | February 12–13 |
| Good Friday | March 29 |
| Labor Day Holiday | May 3 |
| Battle of Pichincha Holiday | May 24 |
| National Day Holiday | August 9 |
| Independence of Guayaquil Holiday | October 11 |
| All Souls' Day Holiday | November 1 |
| Independence of Cuenca Holiday | November 4 |
| Christmas Day | December 25 |
Performing work on public holidays are generally prohibited, and is only allowed under similar circumstances to work performed on weekly rest days.
Annual Leave
Employees are entitled to 15 continuous days of paid annual leave, including non-working days. Those who have at least 5 years of service shall be entitled to an additional day of leave for each additional year of service or receive payment in lieu of the additional leave days.
The additional leave an employee is entitled to due to their seniority shall not exceed 15 days unless the parties, through an individual or collective contract, agree to extend such benefit.
In any case, the employment contract shall state the period in which the employee will begin to enjoy their annual leave. Otherwise, the employer must inform their employees of the annual leave period 3 months in advance.
| Postponement of leave by the employer | Accumulation of annual leave days |
|---|---|
|
When it comes to technical or trust work for which it is difficult to replace the employee for a short time, annual leave may be postponed for up to a year. In this case, if the employee does not enjoy their leave due to their termination, they shall be entitled to the remuneration corresponding to those not taken, with a 100% surcharge. |
The employee may not use their leave entitlements for up to 3 consecutive years to accumulate them in the fourth year. |
Note: Employees shall be paid their remuneration corresponding to their annual leave period in advance.
Sick Leave
Employers are obligated to grant their employees the paid time off as necessary to be assisted by the doctors of the General Insurance Directorate of Individual and Family Health of the IESS.
The employee who suffers from a non-occupational illness must communicate this fact, in writing, to the employer and the respective labor inspection within the first 3 days of the illness, and have their condition verified.
Where the employee is not entitled to the benefit from the IESS, the employer shall pay their employees at 50% of their remuneration for up to 2 months per year.
Maternity Leave
Working mothers are entitled to 12 weeks of paid maternity leave for the birth of their child.
| Circumstances | Extended maternity leave |
|---|---|
| Multiple births | Maternity leave shall be extended by 10 days |
| Child born with a special ability or severe congenital issues | Maternity leave shall be extended by 90 days |
| Multiple births and at least a child is born with a special ability or severe congenital issues | Maternity leave shall be extended by 100 days |
| Inability to work due to illness related to pregnancy or childbirth | Employee cannot be terminated for this reason for up to a year, though they will not be paid for the time that exceeds the 12 weeks of paid maternity leave |
Employees on maternity leave retain their right to be paid in full, with the employer paying the portion of their pay not covered by the IESS.
Paternity Leave
Working fathers are entitled to 10 days of paid paternity leave for the birth of their child.
| Circumstances | Extended paternity leave |
|---|---|
| Multiple births or births by cesarean section | Paternity leave shall be extended by 5 days |
| Child born prematurely or in special care conditions | Paternity leave shall be extended by 8 days |
| Child born with a degenerative, terminal or irreversible disease, or with a degree of severe disability | Paternity leave shall be extended to 25 days |
In the event of the mother's death during childbirth or while she is on maternity leave, the father may make use of all or, where applicable, the remaining part of the leave period that would have corresponded to the mother if she would not have died.
Parental Leave
Once the maternity or paternity leave has concluded, the employee shall be entitled to an optional and voluntary leave without pay for up to 9 months to take care of the children within the first year of their child's life. This leave shall also apply mutatis mutandis to adoptive parents.
Other Leave
| Leave | Paid/Unpaid | Duration | Note |
|---|---|---|---|
| Adoption Leave | Paid | 15 days | For employees who adopt a child, which will run from the date on which the child is legally delivered to them. |
| Bereavement Leave | Paid | 3 days | For employees in the event of the death of their partners or relatives up to the second degree of consanguinity or affinity. |
| Carer's Leave | Paid | 25 days | For employees with children who need medical treatments for a degenerative disease. |
| Gender Violence Leave | Paid | - | For female employees who are victims of gender violence to process and access the administrative or judicial measures issued by the competent authority. |
| Judicial Leave | Paid | - | For employees to satisfy judicial requirements or notifications. |
| Military Service Leave | Paid | - |
For employees who are called in for military service. These employees shall be paid at 100% of their salary in their first month of absence, 50% in their second month and 25% in their third month. The employee shall return to work within 30 days following their discharge, |
| Union Leave | Unpaid | - | For employees to carry out commissions of the association to which they belong. |
| Voting Leave | Paid | 4 hours | For employees to exercise their right to vote in the popular elections. |
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