Definitive Guide to Hiring in Dominican Republic

Hiring in Dominican Republic

Hiring employees compliantly in Dominican Republic means doing it yourself or using an Employer of Record like Global Expansion. You should be careful using independent contractor agreements in Dominican Republic so that you don’t run afoul of employment laws. To hire an employee compliantly and offer them mandatory benefits and compliant agreements, you can:

(a) Establish your own new legal entity, banking, accounting and payroll service in Dominican Republic; or

(b) use an Employer of Record like Global Expansion who can handle all of the details for you.

Labor Laws in Dominican Republic

Employment laws in Dominican Republic are uniquely suited to the country’s way of life, and crucial to understand if you want to employ local talent in this country. Get the details on Dominican Republic employment laws and Dominican Republic policies here.

Employee Probation Period

• Probationary periods are allowed, but cannot last longer than three months.

Annual Leave in Dominican Republic

• Employees are entitled to 14 days of vacation after working for a company for more than a year, and the 13 public holidays in the country.
• For workers who have been employed for more than five years, the law requires them to be provided 18 days of such leave.

Holidays in Dominican Republic

Maternity Leave Dominican Republic

• The Labor Code of the Dominican Republic had previously provided in its article 236 that: "The pregnant worker has a right to a mandatory rest during the six weeks that precede the probable date of the childbirth and the six following weeks.
• However, maternity leave was extended by 2 weeks in 2018

Paternity Leave Dominican Republic

• Fathers are entitled to 2 days of paid paternity leave

Sick Leave in Dominican Republic

• Employees are entitled to a maximum of 26 weeks of partly paid sick leave (paid at 60% for ambulance assistance and 40% in case of hospital care).

Working Hours in Dominican Republic

• A regular workweek is 44 hours, with most employees working 8 hours a day.
• Workers in occupations deemed dangerous or unhealthy are limited to working 6 hours per day or 36 hours per week.

Overtime in Dominican Republic

• Work for more than 44 hours a week is considered overtime and must be paid with a 35% premium over regular hours.
• Hours worked in excess of 68 hours a week are paid at a 100% premium.
• Overtime pay does not apply to managers.

Termination of Employment in Dominican Republic

There are 4 ways to terminate an employment contract

1. At Will Termination ("desahucio")
   • Any party to an employment contract has the right to terminate it unilaterally without having to specify a cause.
   • The party that terminates the employment contract must give an advance notice to the other party
2. For Cause Termination by the Employer ("despido")
   • Employers may dismiss their employees alleging one or several of the specific causes listed in the Labor Code.
   • For cause termination by an employer (despido) requires evidence of the commission by the employee of one or several of the listed grounds for termination.
   • It also requires that the employer give notice of the termination and the grounds on which it is based to the Department of Labor within 48 hours of the dismissal.
   • The right of the employer to base the dismissal on a specific cause for termination expires 15 days after the employee has committed the act alleged as grounds for termination.
3. For Cause Termination by the Employee ("dimisión")
   • An employee may resign from his or her job for cause (dimisión).
   • For cause termination by employees also requires evidence of the commission by the employer of one or several of the listed grounds for termination.
4. Termination Due to Incapacity or Death of the Employee

Notice Period in Dominican Republic

• The party that terminates the employment contract must give an advance notice to the other party, the extent of which depends on the length of the employment, as follows:
  • 7 days of notice for 3 to 6 months of employment
  • 14 days of notice for 6 to 12 months of employment
  • 28 days of notice for more than 12 months of employment

Severance in Dominican Republic

• Employers who exercise their right to terminate their employees without cause must make severance payments to the terminated employee as detailed below:
  • 6 days of salary for 3 to 6 months of employment
  • 13 days of salary for 6 to 12 months of employment
  • 21 days' salary per year of employment for 1 to 5 years of employment
  • 23 days' salary per year of employment for more than 5 years of employment

Dominican Republic Salary and Wages

13th / 14th Month Pay in Dominican Republic

• Yes
• There is a statutory requirement to pay the 13th month salary.
• This payment must be completed by the 20th of December.
• The employer is also required to share their profits with the employee for their participation.

• Employers contribute 7.10% of salaries and withhold 2.87% from employees’ salaries for pensions.
• The quotable salaries for contribution are 20 minimum wages.
• This contribution is mandatory.
• Employers contribute 7.09% of salaries and withhold 3.04% from employees’ salaries for family healthcare.
• The quotable salaries for contribution are ten minimum wages.
• This contribution is mandatory and has no exceptions.
• Employers contribute 1.2% of salaries for labor risks insurance.
• The quotable salaries for contribution are four minimum wages.

Immigration Dominican Republic

• Depending on their country of citizenship, individuals may be required to apply for and obtain an entry visa before traveling to the Dominican Republic.
• The government of the Dominican Republic grants a work authorization to foreign employees who have special knowledge or experience in a certain field.
• The granting of a work authorization is subject to certain rules that must be checked on a case-by-case basis because the rules may vary.
• In addition, nonresident employees who intend to work in the Dominican Republic in a dependent employment relationship for a local entity must obtain a work visa.
• The NM1 Visa for work purposes is granted to individuals who, as a result of the nature of their occupation, remain in the country for one year.
• In general, this visa is granted to people who fulfill contracts for a specific time period.
• The visa can be renewed for one-year periods during the term of the contract.

Value Added Tax (VAT) in Dominican Republic

• Tax on the Transfer of Industrialized Goods and Services (ITBIS) is a VAT applied to industrialized goods (movable) and services at a rate of 18%, with exemptions established by law to certain goods and services.
• A reduced rate of 16% applies to certain goods of mass consumption.
• A 0% rate applies to exports, including sales to FTZs.

Mandatory Benefits in Dominican Republic

• These are mandatory benefits as postulated by law
• These include probationary period, annual leave, public holidays, sick leave, maternity leave, paternity leave, overtime pay, notice period, and severance pay
• Statutory benefits also include social security benefits

Payments And Invoicing

• The tax year-end is 31 December.
• Spouses are required to file separate income tax returns covering their respective incomes.
• Income from property held in common is included in the return of the husband, so it should not be included in the spouse’s return.
• Individuals are required to file a personal tax return only when income from sources different from the salaries, wages, and bonuses (in which the employer makes withholdings) is received
• If salaries are paid outside local payroll, individuals shall file a personal tax return.
• The personal tax return is due 31 March of the year after the tax year-end.
• Employers are required to withhold income tax from employees’ remuneration on a monthly basis.
• Tax on income from sources different from the salaries, wages, and bonuses received is due 31 March of the year after the tax year-end.

Payroll Accrual in Dominican Republic

Country Accruals Additional Information

Description

Employers contribute 7.10% of salaries and withhold 2.87% from employees’ salaries for pensions. The quotable salaries for contribution are 20 minimum wages. This contribution is mandatory. In cases where the employee already contributes in their home country, one should obtain a certification of contribution from the Social Security Ministry in their home country in order to avoid double contribution. Such document should be filed by the employer, as the withholding agent of the employee, to the Dominican Social Security Ministry in order to justify the employee’s non-contribution.

Payroll Accruals Additional Information

Accrued Benefits in Dominican Republic

Why use Global Expansion to hire in Dominican Republic

Establishing a branch office or subsidiary in Dominican Republic can be time-consuming, expensive and complex. With such a robust labor market in place, one must pay great attention to detail when structuring employment because Dominican Republic labor laws are complex.

The company also has a responsibility to comply with specific employment practices dictated by Dominican Republic law to maintain its good standing as an equal opportunity employer.

Global Expansion makes it easy for you to expand into Dominican Republic. We'll help you hire your candidate of choice, handle HR matters and payroll, and ensure that you comply with local laws without the burden of setting up a foreign branch office or subsidiary. In addition, you'll have complete control and direction over your employees.

We enable you to stay in control of everything. Our Dominican Republic Global Professional Employer Organization (PEO) and Employer of Record (EOR) solution provides you with peace of mind to focus on running your company and the security to enter new markets.