Definitive Guide to Hiring in Honduras

Hiring in Honduras

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

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

Labor Laws in Honduras

Employee Probation Period

• The trial period is of a maximum of 60 days

Annual Leave in Honduras

• The minimum vacation time offered to any employee on a Honduran payroll is as follows:
  • 10 days’ vacation after the 1st year of employment
  • 12 days after the 2nd year
  • 15 days after 3 years.
  • 20 working days for four or more years of service

Holidays in Honduras

Maternity Leave Honduras

• The Labour Code provides 10 weeks/70 days of paid maternity leave, provided that a worker presents a medical certificate to the employer indicating the pregnancy, expected date of delivery and the date of commencement of maternity leave.
• It includes 4 weeks before and 6 weeks after confinement.

Paternity Leave Honduras

• There is no statutory paternity leave in Honduras.

Sick Leave in Honduras

• Workers are entitled to the paid sick leave in case of temporary disability (caused by an occupational accident).
• Paid sick leave is provided at the rate of two paid sick days per month of employment during the first 12 months of employment and at the rate of four paid sick days per month thereafter, up to a maximum of 120 paid sick days.

Working Hours in Honduras

• Working hours generally cannot exceed eight hours per day or a total of 44 hours per week.
• Night shift workers should not work more than a 36-hour week, and workers who perform a mixed day-night shift should not exceed 42 hours per week.

Overtime in Honduras

• Overtime is paid at 125% for overtime hours during the day, and 170% for overtime hours at night.
• The total maximum overtime hours in a week are 16 hours.

Termination of Employment in Honduras

• According to article 116 Labor Code either party can terminate an employment contract of indefinite duration provided that advance notice is given.
• The statutory notice period varies according to the worker's length of service, as follows:
  • 24 hours, if the length of service is less than 3 months;
  • 1 week if the length of service is between 3 and 6 months;
  • 2 weeks if the length of service is between 6 months and 1 year;
  • 1 month if the length of service is between 1 and 2 years;
  • 2 months if the length of service is more than 2 years.
• Article 118 of Labor Code provides that the worker who did not give prior notice, or comply with the legal requirements, will be obliged to pay the employer an amount equivalent to half the salary that corresponds to the end of the notice.
• In the event that the employer does not comply with the law requirements, the worker is entitled to an amount equivalent to the respective salary during the period of notice.
• There is no general right to severance pay for justified dismissals (i.e. those based on the conduct or the capacity of the worker, or on economic reasons).
• However, in the event of unjustified dismissal (dismissal without cause) and indirect dismissal (termination by the employee caused by actions of the employer listed in art. 114 LC, any employee under a contract of indefinite duration is entitled to compensation (Auxilio de cesantía) which varies according to the employee's length of service, as follows (art. 120 LC):
  • the length of service is between 3 and 6 months: 10 days of salary,
  • from six months to one year of service: 20 days of salary,
  • after one year of continuous services: one month's salary for each year of service, up to a maximum of 25 months' salary.
• However, according to article 120A LC, the cap is reduced to 15 months' salary in micro-enterprises, which are defined as enterprises with a maximum of 10 employees.
• Note that according to the LC, in enterprises with more than 10 employees, the severance pay shall be paid as follows:
  • after 15 years of service any employee who voluntarily terminates his employment is entitled to 35% of the respective accrued severance pay;
  • after 6 months of continued service in the event of an employee's death, the heirs are entitled to 70% of the respective accrued severance.

Notice Period in Honduras

• According to article 116 Labor Code either party can terminate an employment contract of indefinite duration provided that advance notice is given.
• The statutory notice period varies according to the worker's length of service, as follows:
  • 24 hours, if the length of service is less than 3 months;
  • 1 week if the length of service is between 3 and 6 months;
  • 2 weeks if the length of service is between 6 months and 1 year;
  • 1 month if the length of service is between 1 and 2 years;
  • 2 months if the length of service is more than 2 years.
• Article 118 of Labor Code provides that the worker who did not give prior notice, or comply with the legal requirements, will be obliged to pay the employer an amount equivalent to half the salary that corresponds to the end of the notice.
• In the event that the employer does not comply with the law requirements, the worker is entitled to an amount equivalent to the respective salary during the period of notice.

Severance in Honduras

• There is no general right to severance pay for justified dismissals (i.e. those based on the conduct or the capacity of the worker, or on economic reasons).
• However, in the event of unjustified dismissal (dismissal without cause) and indirect dismissal (termination by the employee caused by actions of the employer listed in art. 114 LC, any employee under a contract of indefinite duration is entitled to compensation (Auxilio de cesantía) which varies according to the employee's length of service, as follows (art. 120 LC):
  • the length of service is between 3 and 6 months: 10 days of salary,
  • from six months to one year of service: 20 days of salary,
  • after one year of continuous services: one month's salary for each year of service, up to a maximum of 25 months' salary.
• However, according to article 120A LC, the cap is reduced to 15 months' salary in micro-enterprises, which are defined as enterprises with a maximum of 10 employees.
• Note that according to the LC, in enterprises with more than 10 employees, the severance pay shall be paid as follows:
  • after 15 years of service any employee who voluntarily terminates his employment is entitled to 35% of the respective accrued severance pay;
  • after 6 months of continued service in the event of an employee's death, the heirs are entitled to 70% of the respective accrued severance.

Honduras Salary and Wages

13/14th Month Salary in Honduras

• Yes (Mandatory)
• There is a statutory requirement to pay the 13th and 14th month salary.
• The 13th month is an extra month payment in the month of December.
• The 14th month salary is paid by July or the employer and employee could set another day for the bonus.

Sickness and Maternity Contribution

• The contribution rates for the Sickness and Maternity Contribution (Enfermedad y Maternidad) are 5% for the employer and 2.5% for the employee.

Immigration Honduras

Work Permit

• Foreigners must apply for a Special Residence Permit with the immigration authorities.
• The granting of this permit is subject to specific rules applicable to employers and employees that need to be checked on a case-by-case basis because they often vary.
• After the required documents are filed with the immigration authorities, it takes approximately three months to obtain the Special Residence Permit.
• Special Residence Permits are valid for terms ranging from one year to five years and may be renewed for up to five years.
• After five years, a new type of permit request must be filed. In addition, foreign employees must apply for a work permit with the Ministry of Labor

Value Added Tax (VAT) in Honduras

• The standard VAT rate is 15%
• Higher rate of 18% is applicable on certain goods and services such as alcohol, tobacco and fizzy drinks

Mandatory Benefits in Honduras

• 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 Honduras

Country Accruals Additional Information

Description

Employers are expected to contribute 3.5% of their workers’ monthly wages to Social Security and 4% to a fund which provides unemployment benefits.

Payroll Accruals Additional Information

Accrued Benefits in Honduras

Why use Global Expansion to hire in Honduras

Establishing a branch office or subsidiary in Honduras 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 Honduras labor laws are complex.

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

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