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How to hire and pay employees in Uruguay
Slasify
Jun 21, 2025
Before Hiring in Uruguay
Discover the global hiring and employment landscape in Uruguay—a stable and progressive country in South America known for its high quality of life and favorable business conditions. With its skilled workforce and robust legal framework, Uruguay is an ideal location for businesses aiming to expand in the region.
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 Uruguay market with Slasify's global premium HR platform.
At a Glance
| Capital | Montevideo |
| Currency | Uruguayan Peso (UYU) |
| Payroll Cycle | Monthly |
| Minimum Wage | UYU 22,268 per month |
| Annual Leave | 20 days |
| Personal Income Tax | Up to 36% |
Personal Income Tax
| Taxable Income (BPC, where 1 BPC = UYU 6,177) | Progressive Tax Rate (%) |
|---|---|
| Up to 7 | - |
| 7–10 | 10 |
| 10–15 | 15 |
| 15–30 | 24 |
| 30–50 | 25 |
| 50–75 | 27 |
| 75–115 | 31 |
| Over 115 | 36 |
Local Taxes
There are no local taxes on employment income in Uruguay.
Statutory Contributions
The employer's and employee's retirement contribution shall be calculated based on the employee's salary up to UYU 256,821.
| Base de Prestaciones y Contribuciones (BPC) | UYU 6,177 |
|---|
Employer Contributions
| Contribution rate | |
|---|---|
| Retirement | 7.5% |
| Health Insurance | 5% + CCM, if applicable* |
| Labor Restructuring Fund | 0.1% |
| Labor Credit Guarantee Fund | 0.025% |
*Note: Some employers may also be required to make additional contribution for subsidized service and a mutual contribution supplement (CCM).
Employee Contributions
| Contribution rate | |
|---|---|
| Retirement | 15% |
| Health Insurance | 3%–8% |
| Labor Restructuring Fund | 0.1% |
The contribution for Health Insurance are determined as follows:
| Family situation | Basic contribution | Additional contribution | Total contribution |
|---|---|---|---|
| Remuneration up to 2.5 BPC | |||
| Without spouse or cohabitant, and no child | 3% | 0% | 3% |
| Without spouse or cohabitant, but with child | 3% | 0% | 3% |
| With spouse or cohabitant, but no child | 3% | 2% | 5% |
| With spouse or cohabitant, and with child | 3% | 2% | 5% |
| Remuneration greater than 2.5 BPC | |||
| Without spouse or cohabitant, and no child | 3% | 1.5% | 4.5% |
| Without spouse or cohabitant, but with child | 3% | 3% | 6% |
| With spouse or cohabitant, but no child | 3% | 3.5% | 6.5% |
| With spouse or cohabitant, and with child | 3% | 5% | 8% |
Payment of Wages
Employees are required to pay their employees' salaries by the following deadline:
| Pay frequency | Deadline |
|---|---|
| Monthly | Within the first 5 working days, and never after the first 10 calendar days, of the month following the one in which payment is due |
| Bi-monthly | Within 5 working days after the expiration of the fortnight that must be paid |
| Weekly | At the end of the respective week. |
Minimum Wage
Effective January 1, 2024, the minimum wage in Uruguay is set at UYU 22,268 per month.
Statutory Bonus
Employers are obligated to pay a bonus equivalent to a month's salary within the 10 days prior to December 24 of each year. This can be paid in installment as follows:
| First installment | Second installment |
|---|---|
| In June, calculated based on the bonus earned from December 1 until May 30 | In December, calculated based on the bonus earned in the remaining period |
In the event of termination due to resignation or dismissal, the employee has the right to receive the bonus in proportion to the time worked. However, if the employee is dismissed due to notorious misconduct, they shall lose the right to receive this bonus.
Note: This bonus is calculated at one-twelfth of the total salary paid in money by the employer in the 12 months prior to December 1 of each year.
Termination
There are no statutory regulations surrounding termination in Uruguay, provided that it is neither discriminatory nor retaliatory in nature.
| Category | Protections |
|---|---|
| Pregnant employee |
In case of dismissal, a pregnant employee or recent mother is entitled to additional compensation equivalent to 6 months' salary. This compensation is only lost in case of dismissal for cause. The right to this compensation is acquired from the moment the employer knows about the pregnancy up to a certain period of time (6 months) after their return from maternity leave. More information |
| Sick employee |
The employee who suffers from an illness cannot be dismissed during the period in which they are entitled to the corresponding health insurance nor during the next 30 days, except in the case of dismissal for cause or cause unrelated to the illness. If this prohibition is violated, the employee has a right to a compensation that is double the ordinary one. |
| Employee injured in a labor accident |
An employee who suffers a work-related accident or illness cannot be dismissed during the period in which they are entitled to the corresponding insurance nor during the 180 days after medical discharge. If this prohibition is violated, then the employer will be faced with 2 different kinds of compensation depending on the time when the dismissal takes place. If the employee is dismissed after the medical discharge, but before their actual return to the job, the employer must pay 3 times the ordinary compensation. If the dismissal takes place within the 180 days after the return, the employee is entitled to claim the fixed ordinary compensation and all the remaining wages until the period is completed. |
Notice Period
There are no statutory regulations surrounding notice periods in Uruguay unless otherwise stated under a collective agreement or an individual employment contract.
Severance Pay
Employees shall be entitled to a severance equivalent to a month's salary for each year of their service or a portion thereof, up to a maximum of 6 month's salary.
In the event that the employee is dismissed for just cause, i.e. notorious misconduct, they shall no longer be entitled to receive any severance.
Probationary Period
Probationary periods can be agreed between the employer and employee in writing, and they shall not exceed a maximum duration of 3 months.
During the probationary period, the contract can be rescinded at any time and with no expression of cause, and this termination shall also not bring along any dismissal compensation.
Work Time Rules
Standard Working Hours
Working hours in Uruguay are subject to a maximum of 8 hours per day and 44 hours per week for employees in the commercial sector.
Break Period
Employees shall not work more than 5 consecutive hours without break. In the commercial sector, the break period must be taken after the first 4 hours of work, and shall last between 30 minutes up to 2.5 hours.
| Duration of break period | |
|---|---|
| Continuous work | 30 minutes, counted as working hours and paid |
| Discontinuous work | 2 or 2.5 hours, not counted as working hours and not paid. This may be reduced to an hour by mutual agreement and by communication to the General Labor Inspection. |
In addition to regular breaks, breastfeeding employees shall be entitled to break for such purpose. This can be taken twice at 30 minutes each or as a single period of an hour, and this break shall be counted as effective work.
Overtime
Overtime work refers to those performed in excess of the legal or conventional limit applicable to the activity and job category. This requires the employee's consent, and it is subject to a maximum of 8 hours per week.
Overtime limit may be exceeded if there is a temporary authorization from the MTSS or permanent exceptions has been established by the Executive Branch, provided that the concerned parties has been consulted and that the work is done for well-founded reasons.
In any case, overtime hours should be paid with a 100% surcharge on the employees regular hourly pay when performed on business days. If the overtime work is carried out on the employee's day off, the employee shall be paid with a 150% surcharge on their regular hourly pay.
Note: For the calculation of overtime, fractions less than 30 minutes shall be counted as half an hour, and longer ones as one hour.
Weekly Rest Days
Employees in the commercial sector are entitled 36 consecutive hours of weekly rest after working for 44 hours, which usually includes a Sunday.
While working on Sundays are generally prohibited, certain exemptions may apply, provided that the employer has requested the authorization from the Ministry of Labor and Social Security.
Holiday and Leave Entitlements
Public Holidays
Employees shall be entitled to continue receiving their remuneration as if they work on public holidays, and be paid double if they actually work on these days. There are 15 days of public holidays in Uruguay for 2024.
| Holiday | Date |
|---|---|
| New Year's Day | January 1 |
| Epiphany | January 6 |
| Carnival | February 12–13 |
| Maundy Thursday | March 28 |
| Good Friday | March 29 |
| Landing of the Patriots | April 22 |
| Labor Day | May 1 |
| Battle of Las Piedras Holiday | May 18 |
| Birth of Artigas | June 19 |
| Constitution Day | July 18 |
| Independence Day | August 25 |
| Day of the Race | October 12 |
| All Souls' Day | November 2 |
| Christmas Day | December 25 |
Annual Leave
Employees with at least a year of service are entitled to at least 20 days of paid annual leave, which must become effective in a single continuous period, within which holidays will not be counted.
Furthermore, in addition to the basic 20-day annual leave, employees may also be entitled to the following additional leave:
| Seniority | Additional annual leave |
|---|---|
| At the 5th year of work | 1 day |
| At the 8th year of work | 2 days |
Employees shall then be entitled to an additional day leave for every 4 years of service, i.e. 3 additional leave days at the 12th year of work and so on.
In any case, annual leave must be taken within the year immediately following the year in which the right was generated.
Note: Employees with less than a year of service shall have their annual leave prorated according to their actual time worked, i.e. 1.66 days of leave per month worked.
Sick Leave
Employees with a proven sickness are entitled to take sick leave, the payment of which shall be covered by the employer for the first 3 days, and then by the BPS for any subsequent days.
Maternity Leave
Pregnant employees are entitled to 6 weeks of pre-natal leave and 8 weeks of post-natal leave, the payment of which shall be covered by BPS. This leave period may be extended depending on the employee's situation.
| Circumstance | Maternity leave extension |
|---|---|
| Childbirth occurs before the expected date | The employee shall begin rest immediately and the post-natal leave period will be extended until completing the 14 weeks' maternity leave |
| Childbirth occurs after the expected date | The leave taken previously shall always be extended until the actual date of childbirth, and the duration of the mandatory post-natal leave must not be reduced |
| Illness as a result of pregnancy or childbirth | The employee shall have the right to an extension of pre-natal or post-natal leave |
Without prejudice to the provisions of the respective applicable regulations regarding coverage of contingency illness, additional breaks may not exceed 6 months.
Paternity Leave
Employees are entitled to 13 days of paternity leave beginning on the day of childbirth. This leave shall be paid as follows:
| Paternity allowance | |
|---|---|
| First 3 days | Covered by the employer |
| Remaining 10 days | Covered by BPS |
Employees intending to take paternity leave are obligated to notify their employers of the probable date of delivery at least 2 weeks in advance.
Parental Leave
Employees who has a child with a disability shall have the right to request up to 10 days of paid leave per year for their child's medical check-ups.
The communication of the employee's circumstance to the employer must be made at least 48 hours in advance. In order to prove the reason that gave rise to the leave request, the employee will have to present the corresponding medical certificate.
Other Leave
| Leave | Paid/Unpaid | Duration | Note |
|---|---|---|---|
| Bereavement Leave | Paid | 3 days |
Can be taken in the event of the death of the employee's parents, children, spouse, siblings and other cohabitants. Employees must show proof of death within 30 days. |
| Blood Donation Leave | Paid | 1 day | For blood donation, duly proven. This can be exercised up to twice per year. |
| Family Care Leave | Both | 96 hours |
For those who have dependent family members with a disability or terminal illness. Up to 64 hours of this leave shall be paid. |
| Gynecological Exam Leave | Paid | 1 day per year | To facilitate the employee's attendance to take the necessary testing. |
| Marriage Leave | Paid | 3 days |
One of the days taken for this leave must coincide with the date on which the marriage is celebrated. Employees shall notify their employers at least 30 days in advance and provide proof of their celebration within 30 days. |
| Union Leave | Paid | - | For the exercise of union activity. |
| Voting Leave | Paid | 2 hours | For employees to vote in their respective circuits. |
| Witness Leave | Paid | - | For the employee to appear in court as a witness. |
In addition to the above, Study Leave is provided for employees with at least 6 months of service, and who study in Basic Secondary Education Institutes, Higher Professional Technical Education, University Education, Normal Institute and others of a similar nature authorized by the Ministry of Education and Culture.
Depending on the employee's normal working hours, the duration of the study leave may range from 6 days to 12 days per year at least. More information on this leave here.
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