Hire in Ecuador

An employment agreement does not need to be in Spanish but must define at least the following matters:

• The type of work.
• The manner in which the work is to be executed.
• The amount and method of payment of the remuneration.
• Duration of the contract (duration of the contract can be tied to the conclusion of the task but not to a specific term).
• The place where the work is to be executed.
• Whether or not sanctions are established for poor or non-performance of the work.

In Ecuador, there are no legal restrictions on performing background checks regarding an applicant’s history, health or criminal record, including those conducted by third parties. Employers must provide cost-free entry, annual and exit medical exams to employees related to job-specific risks. Employment cannot be conditional upon passing a medical exam. Although employers cannot discriminate based on an applicant’s criminal record, such records are publicly available through the Ministry of Government. Reference and education verification are permitted. Employees can be terminated if they present false certificates to obtain employment.

In Ecuador, the duration of the probationary period depends on the nature of the job and is outlined in the employment contract. The common duration for this period is up to three months.

The standard workweek in Ecuador is 40 hours, typically distributed as eight-hour days over a five-day workweek.

Overtime work, which exceeds the standard 40-hour workweek, is governed by the terms set in the employment contract or collective agreements. Employees are permitted to work a maximum of four overtime hours per day and up to 12 hours per week. Overtime pay is calculated at either 150% or 200% of the employee’s normal salary, depending on the specifics of the overtime. Approval from the local labor inspector is required for all overtime hours.

13th Salary: This is a compulsory payment often referred to as the Christmas Bonus, and it is generally paid in December. The amount is calculated for the period from December 1 to November 30 of the subsequent year.

14th Salary: This mandatory payment was initially introduced to assist with school-related expenses for children. It is now provided to all employees whether they have children or not. The timing of this payment varies based on the employee’s location:

• Coastal or Insular Areas: The 14th salary is issued by March 15 and covers the period from March 1 to February 28 of the following year.
• Sierra or Amazonian Areas: The payment is made by August 15, covering the period from August 1 to July 31 of the following year.

The process of termination in Ecuador is influenced by the employment contract and collective agreements. The required process depends on the contract type and reason for ending employment. According to the Ecuadorian Labor Code, if a business is acquired or transferred, the new owner must uphold all existing labor contract obligations from the previous employer. Contracts automatically transfer to the new owner by law.

Individual employment contracts may be terminated for various reasons, including:

• The end of the contract term or completion of the specific task
• Mutual agreement between the employer and employee
• A unilateral decision by either party (“Visto Bueno”)
• Circumstances beyond control, such as force majeure or death
• The employer’s decision based on just cause, such as approved redundancy or dismissal
• The employee’s resignation with written notice

For open-ended contracts, termination can occur due to:

• Justified dismissal (“Visto Bueno”)
• Unjustified dismissal (“Despido Intempestivo”)

In Ecuador, the notice period for termination is defined by the employee’s contract or collective agreement rather than by statutory requirements. Employers can terminate employment immediately without notice if there is no cause. However, for dismissals with cause, an administrative process must be followed. This includes depositing one month’s salary to end the employment relationship. Although there is no legal requirement for advance notice of termination, employers must provide severance pay in cases of unjustified dismissal.

If financial compensation is required for an employment termination without cause, the Ecuadorian Labor Code specifies how it should be calculated. Severance pay amounts to one month’s salary for each year of service, with pro-rated adjustments for any partial years worked. The minimum severance compensation is three months’ salary, while the maximum is 25 months’ salary.

Additionally, employers may provide a sudden dismissal bonus. This amounts to 25% of the employee’s monthly wage for each full year of service.

During employment in Ecuador, contracts usually include restrictions on:

• Employees are prohibited from sharing sensitive business information obtained through their work.
• Employees must avoid activities that create conflicts of interest or compete with their employer’s business.

After employment ends, contracts typically continue to prohibit the use or disclosure of confidential information acquired during employment. This includes client portfolios, business operations, invoicing, strategies and other proprietary knowledge.

Ecuadorian law does not ban post-employment restrictive covenants nor does it regulate their specific conditions. Although there are legal avenues for enforcing these covenants, the lack of established precedents can make enforcement difficult.

Fixed-term contracts in Ecuador include:

• Eventual Contract: For short-term, unforeseen needs, up to six months total (three months initially, renewable once).
• Occasional Contract: For sporadic tasks, up to 24 days within six months.
• Seasonal Contract: For positions with seasonal fluctuations, up to six months in a 12-month period, renewable once.
• Specific Work Contract: For clearly defined projects with a fixed end date.
• Task Contract: For specific tasks with a set scope and completion date.
• Piecework Contract: Pay is based on the amount of work done, not time spent.

Ecuador’s approach to personal data protection was notably advanced with the introduction of the Organic Law on Personal Data Protection on May 26, 2021. This legislation imposes extensive requirements on both public and private entities to safeguard personal data and uphold individuals’ rights. Although there were previous related laws, this new law marks a significant step forward in aligning Ecuador with global standards.

Payment frequency can be specified in the employment contract, but it is customary for white-collar workers to be paid monthly. Payments must be made in US dollars through Ecuadorian banks and deposited into the employee’s account.

The minimum wage, known as the Unified Basic Salary (“SBU”), is set at 460 USD per month for various sectors.

Payslips can be provided either electronically or in hard copy.

To qualify for a pension in Ecuador, the person must meet one of the requirements of the following table:

After completing one year of employment, an employee is entitled to 15 calendar days of vacation. For each year beyond five years with the same company, the employee earns an additional vacation day per year starting from the sixth year.

Employees with 180 days of IESS contributions in the six months before illness are eligible for coverage. Alternatively, 189 days within the eight months prior also qualifies. For the initial three days of illness, the employer is responsible for payment. After this period, IESS takes over the payments. A professional medical certificate must be provided to the employer within 48 hours of the start of the sick leave.

New mothers in Ecuador are entitled to 12 weeks of maternity leave. This includes two weeks before the birth and ten weeks following it. Maternity payments are shared between Social Security and the employer, with Social Security covering 75% and the employer covering 25%. An additional ten days are granted for multiple births. Additionally, new mothers are entitled to nine months of reduced working hours, working six hours a day instead of eight.

Ecuador does not have a statutory entitlement for parental leave.

In Ecuador, fathers are entitled to ten days of paid paternity leave. This extends to 15 days in cases of multiple or complicated births. If the birth is premature, fathers are entitled to 18 days of paid paternity leave.

Adoptive parents in Ecuador are entitled to 15 days of paid leave starting from the date of legal adoption.

Depending on the terms outlined in the collective agreement or employment contract, employees may be eligible for additional leave types. This is subject to mutual approval between the employer and the employee. These leave types include:

Bereavement Leave: Employees who lose an immediate family member are granted one day of paid leave for bereavement.

Childcare Leave: Employees are entitled to 25 days of leave if their child is hospitalized.