Definitive Guide to Hiring in Guatemala

Hiring in Guatemala

Hiring employees compliantly in Guatemala means doing it yourself or using an Employer of Record like Global Expansion. You should be careful using independent contractor agreements in Guatemala 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 Guatemala; or

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

Labor Laws in Guatemala

Employee Probation Period

• The first two months of an indefinite contract are considered probationary.

Annual Leave in Guatemala

• Employees are generally entitled to 15 days of paid annual leave after working for at least 150 days.
• Vacations should be paid in advance

Holidays in Guatemala

Maternity Leave Guatemala

• The law postulates that female workers are entitled to 12 weeks (84 days) for maternity leave.
• This includes 30 days prior to birth and 54 days afterward.
• The leave is paid 100% by both the employer and government social security

Paternity Leave Guatemala

• Fathers are entitled to 2 days of paid paternity leave.

Sick Leave in Guatemala

• Maximum 6 months of sick leave (compensated at around 66% of pay)

Working Hours in Guatemala

• For daytime work, the ordinary working hours are 44 hours a week (any time worked over 44 hours is classed as extraordinary work (or overtime) and is paid as such accordingly).
• For night work, or mixed night work and daytime work, the ordinary working hours per week can vary.

Overtime in Guatemala

• Any work carried out beyond the standard working time restrictions is considered extraordinary hours (overtime), and is subject to an additional payment of 50% of the employee's contracted salary.
• In any event, both standard working time and overtime cannot exceed a total of 12 hours a day.

Termination of Employment in Guatemala

• Each individual employment contract will govern the notice period to be given by employees who wish to terminate their indefinite period contract.
• If the contract has no provisions to this effect, the law provides statutory notice periods depending on the duration that the employee has been providing their services:
  • Before six months of continuous service, the notice period is at least one week.
  • Between six months and one year of continuous service, the notice period is at least ten days.
  • Between one year and five years of continuous service, the notice period is at least two weeks.
  • After five years of continuous service, the notice period is at least one month.
• These statutory notice periods are not binding on the employer, and the employer must only provide a notice period where the employment contract stipulates that this applies.
• If the dismissal occurs without a just cause, the law requires the payment of a severance amount for damages, equivalent to one month's salary for each year of continuous service (or in proportion to the period of continuous service where this is less than one year).
• The monthly salary is not limited to basic or nominal salary alone, and is calculated on the basis of the employee's last six months of salary, including all payments received (for example, bonuses and other applicable employee benefits).
• In addition, Guatemalan labour law also has a specific legal concept known as "economic advantages" (ventajas económicas), which comprises all non-cash benefits granted by the employer to the employee (such as health or life insurance, company vehicles and mobile phones, cafeteria or other food services, and so on).
• These benefits are calculated as comprising 30% of the total salary for the purposes of calculating the severance payment, and so where these non-cash benefits have been provided by the employer, this additional payment of 30% of salary will be added to the total amount payable as part of the severance payment.

Notice Period in Guatemala

• Each individual employment contract will govern the notice period to be given by employees who wish to terminate their indefinite period contract.
• If the contract has no provisions to this effect, the law provides statutory notice periods depending on the duration that the employee has been providing their services:
  • Before six months of continuous service, the notice period is at least one week.
  • Between six months and one year of continuous service, the notice period is at least ten days.
  • Between one year and five years of continuous service, the notice period is at least two weeks.
  • After five years of continuous service, the notice period is at least one month.
• These statutory notice periods are not binding on the employer, and the employer must only provide a notice period where the employment contract stipulates that this applies.

Severance in Guatemala

• If the dismissal occurs without a just cause, the law requires the payment of a severance amount for damages, equivalent to one month's salary for each year of continuous service (or in proportion to the period of continuous service where this is less than one year).
• The monthly salary is not limited to basic or nominal salary alone, and is calculated on the basis of the employee's last six months of salary, including all payments received (for example, bonuses and other applicable employee benefits).
• In addition, Guatemalan labour law also has a specific legal concept known as "economic advantages" (ventajas económicas), which comprises all non-cash benefits granted by the employer to the employee (such as health or life insurance, company vehicles and mobile phones, cafeteria or other food services, and so on).
• These benefits are calculated as comprising 30% of the total salary for the purposes of calculating the severance payment, and so where these non-cash benefits have been provided by the employer, this additional payment of 30% of salary will be added to the total amount payable as part of the severance payment.

Guatemala Salary and Wages

13 / 14th Month Salary in Guatemala

• Yes
• There is a statutory requirement to pay the 13th and 14th month salary.
• Employees receive a Christmas bonus equivalent to one month rent.
• Employers also have to pay a last quarter productivity bonus.

• Social security contributions are levied on salaries, which includes wages and all types of remuneration or payments, regardless of the denomination.
• The contribution rates are 12.67% for employer contributions and 4.83% for employee contributions.
• No limits are imposed on the amount of earnings subject to social security contributions.

Immigration Guatemala

Work Permit

• Before obtaining a work permit in Guatemala, an applicant must request a temporary residence permit
• An application for a work permit is filed by the employer with the General Direction of Employment of the Labor Ministry and must include the following documents:
  • A certified copy of the employee’s passport (all pages including the blank ones)
  • Proof that a temporary residence permit has been applied for or granted
  • A certified copy of the applicant’s appointment, registered with the corresponding authorities
  • A sworn statement given by the employer that assumes full responsibility for the employee’s conduct
  • Accounting certification stating the number of Guatemalan and foreign employees employed by the entity
  • A certified copy of the designation of the foreigner by the employer to execute the job in Guatemala
  • A certified copy of the company’s tax identification
  • A certified copy of the nomination of the legal representative of the company
  • A certified copy of the identification of the legal representative of the company
  • A certified copy of the business license of the company issued by the Registry of General Commercial Affairs
  • A certified copy of the incorporation license of the company issued by the Registry of General Commercial Affairs
  • A certified copy of the form for the temporary residence filing application
  • For an employee who comes from a non-Spanish-speaking country, a sworn statement indicating that he or she is fluent in Spanish
• For each work permit requested, the employer must pay a fee to the Guatemalan Learning and Training Department.
• This payment serves as evidence of the employer’s commitment to the training policies for Guatemalan employees.
• The work permit is valid for renewable periods of one year. A request for an extension must be filed 15 days before the expiration of the period for which the work permit is issued.

Value Added Tax (VAT) in Guatemala

• The standard VAT rate in Guatemala is 12%.
• There are no reduced VAT rates.
• Exports are VAT exempt with the right to recover input VAT.

Mandatory Benefits in Guatemala

• 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, severance pay and 13th month pay
• Mandatory benefits also include social security benefits.

Payroll Accrual in Guatemala

Country Accruals Additional Information

Description

Employees are generally eligible for the following bonuses: Annual bonus that is equal to one month of regular salary for Christmas and New Year’s Annual bonus of one month of regular salary paid in July

Payroll Accruals Additional Information

Accrued Benefits in Guatemala

Why use Global Expansion to hire in Guatemala

Establishing a branch office or subsidiary in Guatemala 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 Guatemalalabor laws are complex.

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

Global Expansion makes it easy for you to expand into Guatemala. 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 Guatemala 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.