Ecuador

Overview

Ecuador, a developing economy, is majorly driven by agricultural and petroleum products. The country is the world’s largest producer and exporter of bananas and the 7th largest producer of cocoa. Other commodities and products of Ecuador include rice, coffee, cassava, sugarcane, pork, fish, dairy products, and balsa wood. Ecuador is part of the World Trade Organization, (WTO), World Bank, Inter-American Development Bank (IDB), and International Monetary Fund (IMF). A slew of economic policy reforms was undertaken by the government in 2007 that has helped the country achieve financial stability and sustained growth.

Currency: United States Dollar ($)

Principal language: Spanish

Government: Unicameral Representative Democracy

Capital City: Quito

Major Cities: Guayaquil, Cuenca, Santo Domingo de Los Colorados, Machala

Employment Contracts

Employment contracts in Ecuador vary based on an employee’s duties, the premises, and wages agreed. Usually, contracts commence with a trial period of 3 months. Employers and employees can agree to enter into a contract based on their requirements or terminate the contract, within the trial period. The finalized contract is incorporated for a minimum of 1 year. Fixed-term employment contracts may not exceed 2 years. If these contracts go beyond 2 years, they are considered to have an indefinite term and can be terminated according to the provisions specified in the Employment Code.

Work/Time Regulations

Normal work schedule has 40 hours a week and 8 hours per day. Occupations that involve working underground cannot be more than 6 hours in a day. Employees who work regularly from 7 p.m. to 6 a.m. are entitled to their regular remuneration plus a 25% premium over their regular wages.

Leave

Holidays
The following national holidays are observed in Ecuador:

  • Jan. 1: New Year’s Day
  • Feb. 27: Carnival
  • April 14: Good Friday
  • May 1: Labor Day
  • May 24: Battle of Pichincha Day
  • August 10: Independence Day
  • Oct 9.: Independence of Guayaquil
  • Nov. 2: All Souls’ Day
  • Nov. 3: Independence of Cuenca
  • Dec. 25: Christmas Day

Annual Leave
Employees in Ecuador are entitled to 15 days of paid annual leave for each year of employment. An additional day of annual leave is provided after completing 5 years of continuous employment with the same employer.

Maternity Leave
Women employees are entitled to 12 weeks of maternity leave for the childbirth and are provided 10 extra days in case of multiple births. They must submit a medical certificate issued by the Social Security Institute’s hospital or a medical institution that indicates the expected date of delivery.

Paternity Leave
Fathers can take 10 days of paternity leave for the childbirth. The leave increases to 15 days in the case of cesarean surgery or multiple births. In rare cases, fathers can take additional 8 days to care for the child who was born prematurely or requires special care. If the child is born with a degenerative or irreversible disease or physical disability, leave can be taken for 25 days. In case the mother dies during labor, the spouse can take 12 weeks’ leave that the mother would have used.

Medical Leave
Employees who suffer a non-occupational illness can take a maximum of 12 months’ medical leave. Women can take medical leave for a maximum of 1 year if they are unable to work due to complications resulting from delivery or pregnancy. The remuneration is paid for only 12 weeks. Employers are required to pay 50% of regular remuneration to employees who do not contribute to the Social Security Institute for no more than 2 months in a year.

Adoption Leave
Parents who adopt a child are entitled to 15 days’ leave.

Hospitalization
Parents are entitled to 25 days’ leave in case their child is admitted to a hospital provided they submit a medical and hospitalization certificate to the employer.

Benefits

Pension and Social Security
The social security coverage is provided by 3 institutions: the Ecuadorian Social Security Institute (IESS), the National Police Social Security Institute (ISSPOL), and the Armed Forces Social Security Institute (ISSFA). The IESS covers programs such as the Individual and Family Health Insurance, the Farmers’ Social Insurance, work injury, cash benefits, and general insurance for old-age, disability, and death.

Health Insurance Benefits

  • Medical care: Hospitalization, outpatient and specialist, drugs, surgery, diagnostic laboratory tests, emergency, and imaging, prosthetics, and orthotics
  • Preventive dental care
  • Maternity care
  • Monetary sickness and maternity allowances
  • Programs for elderly people

Pension Insurance Benefits

  • Old-age retirement
  • Retirement disability including temporary disability allowance
  • Pension pawnshop
  • Funeral
  • Special retirement plans for the arts and printing industry, telecommunications workers, and the harvest workers
  • Additional revenue for railways, tax and graphics teaching

Work Risk Insurance

  • Medical, pharmacological, surgical, hospital and rehabilitation through the Health Insurance
  • Provides and renews prosthetic and orthotic devices
  • Outplacement
  • Payments of compensation, subsidies or pension in cases of partial, temporary, and total disability
  • Prevention Services including studying, analyzing, evaluating and controlling risks in places where work is underway

Benefits of the Seguro Social Campesino

  • Promotion, prevention, health, sanitation and community development
  • Preventive dental care and recovery
  • Care during pregnancy, childbirth and postpartum
  • Retirement pensions for disability and old age
  • Funeral

How GPS can Help

With our Global PEO/Employer of Record services, companies can expand into Ecuador and hire their employees without having to establish a branch office or subsidiary in Ecuador.

  • Your candidate is hired via our Ecuador PEO. If needed, we can also help you find the right talent in any country with our comprehensive global staffing services.
  • Your new employee begins work quickly as we take care of employment contracts, statutory and non-statutory benefits, and running their payroll - all in full compliance with Ecuador laws.
  • Global PEO Services experts manage all day-to-day operational issues such as employee expenses, and severance/termination if required.
  • With no contractor risks, pass on the compliance burden to Global PEO Services.

Spin Off/M&A Support

  • Ensure continuity of payroll, benefits and HR support when acquiring or spinning off a business with employees overseas.

24/7 Support in 100+ Countries

  • Empower your teams with 24/7 support and a single point-of-contact model in which experienced client services directors are in continuous communication with information and advice.
  • We are backed by a mix of 300+ multidisciplinary experts from HR, Payroll, Finance, Tax, and Legal domains who are ready to respond to the expected and unexpected needs of your business on the shortest notice.

Easy Visibility into Your Employee Time & Attendance and Benefits Data
With our Global PEO, you get access to Mihi, our proprietary SaaS solution for time and attendance, vacation, leave management and benefits enrollment and management. Mihi enables clients to have easy access to employee data in real time. It is designed specifically for companies with a global workforce, especially when working in multiple countries with low headcount.

Ready for Growth When You Are
When ready, we can seamlessly transition you from the PEO/EOR model to your own legal entity and provide ongoing international HR, finance, legal, compliance and staffing support. Learn more about our end-to-end international expansion services.

Contact Us