Global PEO Services (GPS) helps companies hire employees in Ecuador without establishing a legal entity. All human resources, benefits, payroll, and tax needs for the employees are managed by the Global PEO, while the new hires and headquarter teams focus on your business goals.
When hiring employees in Ecuador, establishing a subsidiary or branch office is not always the best route, as it’s often a lengthy and expensive process. Hiring via a Professional Employer Organization (PEO), or Employer of Record (EOR), is a faster and often more effective option – especially when starting up in a new country.
Global PEO Services hires the employees on your behalf, legally contracting them through our subsidiary in accordance with Ecuador labor laws. As a result, the burden of compliance is on us and the employees can begin work for your company in a matter of days. PEOs/EORs provide you with a streamlined option for hiring employees, testing markets, and responding to growing business needs in Ecuador. With Global PEO Services, you get control without taking on legal entity liabilities, contractor risks, or sacrificing on talent or speed to market.
Ecuador - Country 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 the last decade that has helped the country achieve financial stability and sustained growth. The country’s economy is expected to grow from 104.00 USD Billion in 2019 to 115.00 USD Billion in 2020.
United States Dollar ($)
Unicameral Representative Democracy
Guayaquil, Cuenca, Santo Domingo de Los Colorados, Machala
Employment Contracts in Ecuador
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.
Working Hours in Ecuador
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.
Employee Leave in Ecuador
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
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.
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.
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.
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.
Parents who adopt a child are entitled to 15 days’ leave.
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.
Employee Benefits in Ecuador
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
- 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
- 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