Guatemala has the biggest economy in Central America with the services sector contributing nearly 63% to the country’s GDP while the industry sector contributes 24%, along with the agriculture sector contributing 13%. Major exports include fruits, flowers, vegetables, clothes, handicrafts, organic coffee, textiles, and sugar. Guatemala also exports raw materials such as palm oil and sugar cane which are used for biofuel production. Tourism has emerged as one the major contributors to Guatemala’s economy. The Central American Free Trade Agreement (CAFTA) between Guatemala and the US on July 1, 2006 has spurred an inflow of investments into the country’s export sector.
Currency: Guatemalan Quetzal
Principal Languages: Spanish, more than 20 indigenous languages
Government: Presidential Representative Democratic Republic
Capital City: Guatemala City
Major Cities: Mixco, Villa Nueva, Petapa, San Juan Sacatepéquez
Employment contracts in Guatemala can be for fixed or indefinite terms. It is mandatory to enter into written employment contracts and have 3 copies. Employers and employees get 1 copy each and 1 copy is provided to the Directorate General of Labor in no more than 15 days. Contracts must be in the local language and contain details including compensation, benefits, termination requirements, and personal details. Salary and compensation amounts must be stated in quetzals and not in a foreign currency.
The regular work schedule comprises 44 hours in a week. Overtime is paid at 150% of the regular pay.
The following national holidays are observed in Guatemala:
- New Year’s Day
- Maundy Thursday
- Good Friday
- Holy Saturday
- Labor Day
- Army Day
- Independence Day
- Revolution Day
- All Saints’ Day
- New Year’s Eve
Employees are entitled to 15 days’ annual leave after completing 150 days of employment. Annual leave must be paid in advance.
Employees are entitled to 5 days’ sick leave in a year.
Women employees are entitled to 12 weeks’ maternity leave.
Fathers of new born child/children are entitled to 2 days’ paternity leave.
Pension and Social Security
Social Security Insurance
Social security contributions are withheld by the employer from monthly payrolls. Employers with 3 or more employees are required to make contributions toward social security insurance system. The system is designed to include workers engaged in commerce, industry, and agriculture and covers work injuries/accidents, maternity, occupational illness, disability, widowhood, orphanage, old age, death, and burial expenses.
Maternity and Sickness Benefits
Maternity and sickness benefits are paid for by employees, employers, and the government. The contribution rates which are based on an employee’s wages are as follows:
- Employers - 12.67%
- Employees - 4.83%
The contribution of 12.67% made by employers includes 1% that is used to fund Worker’s Recreational Institute’s activities and another 1% toward the Professional Training Institute (INTECAP)
How GPS can Help
With our Global PEO/Employer of Record services, companies can expand into Guatemala and hire their employees without having to establish a branch office or subsidiary in Guatemala.
- Your candidate is hired via our Guatemala 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 Guatemala 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.