Global PEO Services (GPS) helps companies hire employees in Guatemala 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 Guatemala, 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 Guatemala 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 Guatemala. With Global PEO Services, you get control without taking on legal entity liabilities, contractor risks, or sacrificing on talent or speed to market.
Guatemala - Country Overview
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. Since the Central American Free Trade Agreement (CAFTA) between Guatemala and the US an inflow of investments into the country’s export sector boosted its economy. The country’s economy is expected to grow from 79.00 USD Billion in 2019 to 96.20 USD Billion in 2020.
Spanish, more than 20 indigenous languages
Presidential Representative Democratic Republic
Mixco, Villa Nueva, Petapa, San Juan Sacatepéquez
Employment Contracts in Guatemala
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.
Working Hours in Guatemala
The regular work schedule comprises 44 hours in a week. Overtime is paid at 150% of the regular pay.
Employee Leave in Guatemala
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.
Employee Benefits in Guatemala
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)