Definitive Guide to Hiring in Nicaragua

Hiring in Nicaragua

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

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

Labor Laws in Nicaragua

Employment laws in Nicaragua 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 Nicaragua employment laws and Nicaragua policies here.

Employee Probation Period

• Trial period cannot exceed 30 days

Annual Leave in Nicaragua

• Employees are generally entitled to 15 calendar days of paid leave every six months.
• Such leave should be taken all at once, but alternate arrangements may be made.

Holidays in Nicaragua

Workers are entitled to paid holidays during Festival (public and religious) holidays. These include memorial holidays and religious holidays (Christian origin).

Here is the full list of public holidays in Nicaragua:

Maternity Leave Nicaragua

• Female employees are generally entitled to 12 weeks (4 weeks prenatal leave and 8 weeks post natal leave) of maternity leave
• This increases to 14 weeks in case of multiple births

Paternity Leave Nicaragua

• Male employees are entitled to 5 days of paternity leave

Sick Leave in Nicaragua

• Paid sick leave is not clearly provided under the Labour Code.
• However, the Social Security Law allows payment of sickness benefits to the insured worker at a rate of 60% of the average earning in the last eight weeks for a period of 52 weeks.
• An insured person is entitled to sickness benefit after at least eight weeks of contributions in the last 22 weeks.

Working Hours in Nicaragua

• The work week should not exceed 48 hours or eight hours per day.

Overtime in Nicaragua

• Overtime hours may not exceed nine per week and are compensated at a rate of 200% of the standard wage.
• The total amount of overtime hours cannot exceed 3 hours a day.

Termination of Employment in Nicaragua

• Employees may be terminated for just cause, but the employer must request authorization for termination from the Labor Inspection Department ahead of time.
• If the employer terminates without authorization, the employee can sue.
• Proportional vacation pay and annual bonus pay are due to the employee on termination.
• The employee is entitled to indemnification for years of service if it is an indefinite term contract and either the employee resigned with 15 days’ notice or the employee is dismissed with just cause.
• In general, the employee is entitled to pay as follows:
• 1 months salary after 3 years of service
• 20 days wages for each year of work from the fourth year
• Severance pay can not exceed 5 months pay.

Notice Period in Nicaragua

• Employees must provide 15 days’ notice

Severance in Nicaragua

• In general, the employee is entitled to pay as follows:
  • 1 months salary after 3 years of service
  • 20 days wages for each year of work from the fourth year
  • Severance pay can not exceed 5 months pay.

Nicaragua Salary and Wages

13 / 14th Month Salary in Nicaragua

• Yes (Mandatory)
• There is a statutory requirement to pay the 13th month salary 'Aguinaldo'.
• This is an extra month salary that must be paid in the first 10 days on December.

• Social security contributions are levied on salaries at a rate of 21.5% for employers with 50 or less employees and 22.5 if greater than 50 and are determined on the gross salaries and wages.
• Social security contributions are levied on salaries at a rate of 7% for employees.
• These rates are increased annually.

Immigration Nicaragua

• Visa-exempt nationals (also referred to as Category A nationals) can travel to Nicaragua without an entry visa and stay for a period of up to 90 days, extendable in country for an additional 90 days at the discretion of immigration authorities.
• Category B visa nationals can opt to secure a visa at a Nicaraguan consular post or on arrival at the Nicaraguan port of entry.
• Category C visa nationals must obtain a Consulted Visa from a Nicaraguan consular post with prior authorization from the Immigration Department of Nicaragua.
• As such, these visas usually involve an extended processing time.
• Under Nicaraguan law, travelers seeking to enter the country to perform professional activities or undertake employment must obtain a work permit following admission into the country.
• However, according to the Visa and Residence Permits subdivision of the General Directorate of Migrations and Foreign Citizens, travelers seeking to enter Nicaragua to exercise professional activities for short time periods (up to 90 days) are not normally issued any type of special permit.
• The issuance of work visas requires the submission of extensive documentation.
• The validity of the Work Permit usually corresponds to the length of time the foreign national will be performing work activities in Nicaragua (up to one year) and may be extended for up to one year.

Value Added Tax (VAT) in Nicaragua

• VAT is imposed at a 15% rate on the sale of goods, rendering of services, grant of use of assets, and import of goods.
• Export of goods and services are subject to a 0% rate.
• VAT exemptions are available for certain items, including medicine, real estate transfer, sale of used goods, basic food products, credit instruments, tuition, and textbooks and educational supplies.

Mandatory Benefits in Nicaragua

• 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 Nicaragua

Country Accruals Additional Information

Payroll Accruals Additional Information

Accrued Benefits in Nicaragua

Why use Global Expansion to hire in Nicaragua

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

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

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