Dominican Republic

Overview

Dominican Republic, an upper middle-income country is primarily dependent on agriculture, mining, trade, and services. Major exports are sugar, ferronickel, gold, coffee, silver, tobacco, cocoa, consumer goods, and meats. The country’s economic growth has been one of the strongest in the Latin American region over the past 25 years. In recent years, the services sector has surpassed agriculture as the economy's largest employer due to growth in tourism, construction, and free trade zones. Sustained by robust domestic demand, GDP is expected to grow at around 5% in the next few years.

Currency: Dominican Republic Peso

Principal Language: Spanish

Government: Republic, Democracy, Representative Democracy, Presidential System, Unitary State

Capital City: Santo Domingo

Other Major Cities: Santiago, La Romana, San Pedro de Macoris, San Francisco de Macoris, San Cristobal, Puerto Plata, La Vega.

Employment Contracts

The Labor Code doesn’t require the parties to enforce a formal employment contract, but an employment contract is presumed to exist in any work relationship unless proved contrary. Written employment contracts are not mandatory but a party to a verbal employment agreement is entitled to ask that the contract be formalized in writing. A written employment contract must include:

  • the employee's name, age, nationality, gender, marital status, domicile and place of hiring;
  • the service the employee agrees to provide;
  • legal notice of the employee's identity card;
  • the hours and place of employment;
  • the employee's rate of pay (including an indication of an employee’s wages per unit of time, unit of work or otherwise);
  • whether the contract is for a fixed or indefinite period of time;
  • the form, time and place of payment; and
  • 2 copies of written employment contract must be forwarded within 3 days to the Ministry of Labor or appropriate local authority for registration and filing.

Rights granted to employees by law may not be limited or waived by any contract or agreement. Fixed-term contracts are allowed in the following situations:

  • to provide a service or perform work which is of limited duration;
  • if the fixed-term contract furthers the interests of the employee;
  • to substitute for an employee on leave or vacation or absent due to temporary impairment.

The Labor Code does not explicitly state a probationary period, but does mention that employees are not entitled to prior notice or severance unless they have worked for at least 3 months. Inability or inefficiency as just cause for dismissal expires after 3 months’ employment.

Work/Time Regulations

Regular working hours may not exceed 8 per day and 44 per week. Employees are entitled to a 1-hour break after 4 continuous hours of work and a 1.5-hour break after 5 continuous hours of work. The weekly work shifts generally end on Saturdays at noon, providing employees 36 hours of uninterrupted rest. Any other arrangement should give the same rest period of 36 hours.

The daytime work schedule ranges from 7 am to 9 pm. A work shift is considered a daytime shift if no more than 3 hours exceed the 9 pm limit. Otherwise, it is treated as a night shift, which entails an increased remuneration. Working schedule for hazardous or dangerous jobs (as defined by the Secretary of Labor) may not exceed 6 hours per day or 36 hours per week. This reduced workweek does not entail a reduction in wages.

Overtime

Work performed beyond the normal workweek and up to 68 hours a week are compensated at 135% of the regular hourly pay. Work done in excess of 68 hours a week is compensated at 200% of the regular hourly pay. Overtime work cannot be more than 80 hours in a calendar quarter.

Employees who work on a holiday are entitled to 200% of the normal hourly pay. Employees who work during the weekly rest period may choose to be compensated at 200% of the regular hourly pay or to take a compensatory period off in the following week equal to the weekly rest period.

Night-shift employees qualify for a 15% premium. Work performed between 9 pm and 7 am, and during the entirety of any mixed shift that includes 3 or more hours of night shift work is considered night-shift work.

Leave

Holidays

Employees are entitled to the following public holidays:

  • January 1: New Year's Day
  • March 4 & 5: Carnival Monday & Tuesday
  • April 19: Good Friday
  • April 22: Easter Monday
  • May 6: Labour Day
  • June 10: Whit Monday
  • August 5: Emancipation Day
  • November 4: Independence Day (Date of Observance)
  • November 5: National Day of Community Service (to be Observed)
  • December 25: Christmas Day
  • December 26: Boxing Day

All holidays except national or religious holidays are celebrated on the previous Monday if they fall on a Tuesday or a Wednesday, and are celebrated on the following Monday in all other cases. Work done on paid public holidays should be compensated at 100% above regular pay.

Annual Leave
Employees are entitled to annual leave after 1 year of employment with an employer. Employees with:

  • 5 years of continuous service are entitled to 14 days’ annual leave;
  • After 5 years: 18 days’ annual leave.

Annual leave may be taken as agreed by the parties, but the employee must be allowed to take at least 1 continuous week of vacation.

Vacation pay should be paid before the employee avails the leave. The employer is not allowed to provide compensation instead of annual leave. All accrued but unused annual leave should be paid when the employee leaves the employer’s service. During vacation, the employee may not provide services to the employer.

Sick Leave
The Labor Code does not contain any limit on the number of days of sick leave that can be taken. After a 3-day waiting period, social security pays 60% of the employee’s wages in the last 6 months (40% in case of hospitalization) for up to 26 weeks provided the employee has made at least 12 months of social security contributions. Employers contribute 7.09% of covered payroll while employees contribute 3.04% of covered earnings to fund social security, sick leave, maternity leave, and employee medical benefits.

In case of accident or illness, employees receive medical care and compensation stated in the laws on social security and workers’ compensation. If an employee is not covered under social security due to the employer’s fault, the employers should pay the employee’s medical expenses and the appropriate compensation.

Maternity Leave
A pregnant employee has the right to a mandatory rest during the 6 weeks that precede the probable date of the childbirth and the 6 following weeks. The addition of another 2 weeks takes the total duration of leave from 12 to 14 weeks. Maternity leave is remunerated, and an employee taking leave can take the additional weeks after the birth of her baby if it is not taken during the pre-natal period. Maternity leave pay is paid in half by the employer and the rest by social security.

An allowance is paid for up to 12 months post-childbirth if the insured’s salary is less than 3 times the national minimum wage. If employees wish to avail annual leave immediately after the maternity leave ends, the employer must allow them to do so. Employees are entitled to three 20-minute breaks each day for nursing the infant. Employees are entitled to one half-day each month during the first year post-birth to take the child to pediatric care.

If an employee fails to return to work after exhausting the maternity leave, the employer and the Ministry of Labor must be notified and be provided a medical certificate. Employees are then allowed to take additional leave without pay for the period that medical treatment is necessary. Employers may not dismiss an employee during pregnancy or within 3 months after childbirth without just cause.

Paternity Leave
Fathers are entitled to 2 days’ paid paternity leave in case of a childbirth.

Other Leaves:

Bereavement Leave
Employees are entitled to 3 days’ paid leave for the death of a child, parent, grandparent, or spouse.

Marriage Leave
Employees are entitled to 5 days’ paid leave for marriage.

Benefits

Pension and Social Security

Employees who have made a minimum of 30 years of contributions to social security and have stopped working may retire at the age of 60. The pension amount is based on the amount of funds in the individual account, which can be used to make scheduled withdrawals or purchase a price-indexed annuity. Old-age, disability, and survivors’ pensions are paid through individual social security accounts funded by employer and employee contributions. Employees contribute 2.87% of covered earnings while employers contribute 7.1% of covered payroll.

Maximum wage used for the purpose of calculating social security contribution is 20 times the legal monthly minimum wage while the maximum wage used to calculate health contributions is 10 times the minimum wage.

Employees can claim early old age pension at:

  • Age 55 if their individual account balance is sufficient to fund pension at least equal to 150% of the minimum old age pension, or
  • Ages 57 or 59 if they are unemployed and have a minimum of 25 years of social security contributions.

A guaranteed minimum pension is available if employees:

  • Are 65 years old;
  • Have a low income;
  • Have at least 25 years of contributions, and
  • Have an account balance insufficient to fund the legal minimum old pension.

The minimum old age pension is equal to the lowest monthly minimum wage established by law for private sector workers.

Employees are entitled to disability pension based on degree of disability incurred as result of a work or non-work related injury if they have exhausted workers’ compensation benefits and sick leave. A regional medical committee evaluates the degree of disability and the national medical committee can reconsider, approve or reject the decision.

Workers' Compensation
Occupational Hazard Insurance is funded by employer contributions equal to 1.2% of applicable wages, up to 4 times the minimum wage. No qualifying period applies to workers’ compensation benefits. Benefits are paid based on 4 levels of assessed disability, and on a percentage of the base salary, which is the employee’s average covered earnings in the 6 months before the employee suffered a work-related illness or injury.

Employees with:

  • 100% permanent disability are entitled to 100% of the base salary;
  • At least 67% permanent disability are entitled to 70% of the base salary;
  • 50 to 66% permanent disability are entitled to 50% of the base salary;
  • 15 to 49% permanent disability are entitled to 10% of the base salary.

How GPS can Help

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

  • Your candidate is hired via our Dominican Republic 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 the Dominican Republic laws
  • Global PEO Services experts manage all day-to-day operational issues, such as employee expenses, and severance/termination if required.
  • 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 our proprietary Mihi 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 here.

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