How To Hire And Pay Employees In Dominican Republic

Latin America and its fast-growing economies have become an exceptional market for business. The region’s lower cost of production and significantly reduced labour cost compared to other areas makes it an attractive business prospect. The Dominican Republic is amongst the top 10 best economies in Latin America, as well as being the largest economy in the Caribbean. Many companies outsource their IT work to the country to gain competitive cost savings on their workforces.

The main reason for the Dominican Republic’s economic growth is because of the IT and Technology sector. The government is invested in growing this further with initiatives like Republica Digital. The Dominican Republic is also home to some of the biggest telecom companies that have invested in the country’s IT infrastructure.

The Dominican Republic benefits from high English proficiency due to the language being introduced into the early years school curriculum.

However, the Dominican Republic is not the most attractive country for workers if they are looking to make lots of money. Low salaries mean that it can be difficult to earn well here, especially as an expat.

Full-time employees who have been employed for at least one year are entitled to 14 days’ annual leave. After working at a company for five years, this increases to 18 days. Annual leave should not be split into periods of less than one week and can’t be replaced by another form of compensation.

There are 12 public holidays. In addition to annual leave, employees are entitled to five days off for marriage and three days for the death of an immediate family member.

Probation periods are not statutory in Dominican Republic and, where implemented, should not last longer than three months.

The employee may unilaterally terminate the employment contract by providing notice in writing. Notice periods depend on length of service, as follows:

• Less than 3 months: no notice required
• 3-6 months: 7 days’ notice
• 6-12 months: 14 days’ notice
• 12+ months: 28 days’ notice

The same notice periods will apply to employers terminating employment without just cause. Additionally, if an employer terminates without just cause, they must pay the employee severance pay as per the below.

Employees will also be entitled to severance pay if it is found that they have just cause for resigning from their position.

Employers may terminate employment with just cause alleging one or more of the specific causes listed within the labour code, article 88. Employers will need to provide evidence of the grounds for the termination. Employers will also need to provide written notice to the Department of Labour within 48 hours of dismissing the employee. Failure to prove the cause or provide notice within 48 hours will mean the employer is liable to pay severance to the employee.

If an employee is resigning with cause, they must also provide evidence. Employers are not able to terminate employees during pregnancy and for up to three months following the birth. If termination takes place without providing a just cause, the employee will be entitled to 5 months' pay in addition to severance.

There are no specific laws on restrictive covenants after termination of employment, which means an employee can challenge these where implemented. Clauses pertaining to competition and to solicitation of employees or clients/customers are recognised and may be enforceable under law. Restrictive agreements such as the three previously mentioned after termination of employment must meet specific requirements to be applicable. In particular, they need to be reasonable and must be signed after the employment contract has ended.

The Dominican Republic labour law does not require a written contract of employment for permanent employees. However, it is best practice for a written contract to be provided. Any written contract must be provided in Spanish. Fixed term or temporary contracts must be provided in writing and include the length of the contract.

Expectant mothers are entitled to 12 weeks’ maternity leave which is usually taken six weeks before the expected due date and six weeks after. The cost is split between the employer and social security. Fathers are entitled to two days’ paternity leave, to be taken after the birth.

There is no statutory law on sick leave in the Dominican Republic. It is at the employer's discretion whether they choose to pay sick leave to employees.

Social Security in the Dominican Republic is a pay as you go system that covers employees within the private sector. Both the employer and employee contribute, this includes to the state pension fund (AFP) and public health insurance fund (SFS).

The quality of healthcare in the Dominican Republic varies in different parts of the country and between private and public hospitals. There are three tiers to healthcare in the Dominican Republic, as below:

• Subsidised – for unemployed, poor and disabled residents that are eligible for funding from the state.
• Contributive - healthcare that is financed by employer and employee contributions
• Private - Many foreign employees and companies choose international private healthcare policies, so they can access the best quality healthcare.

Requirements for a work visa include, but are not limited to, a valid passport, visa application, medical certificate and police check from the applicant's home country, a job offer letter from a Dominican company, and a letter to the consular section from the employing company in the Dominican Republic.

This visa is known locally as Visa de Negocios con Fines Laborales. This visa is for foreign nationals who will be employed by either public or private companies based in the Dominican Republic. The visa is valid for one year and can be renewed if the applicant will still hold a valid contract of employment. Employees that will be working for a company in the Dominican Republic on a long-term basis will also need to apply for a residence permit.

Requirements for a work visa will include but are not limited to a valid passport, visa application, medical certificate and police check from the applicant's home country, job offer letter from a Dominican company letter to the consular section from the employing company in the Dominican Republic

The national minimum wage in the Dominican Republic is RD$8,310 per month in Free Trade Zones. Outside of Free Trade Zones, it is between RD$9,412 and RD$15,448 per month depending on the size of the company. For public sectors, it is RD$5,884 per month.

The Dominican tax year runs from January to December. It is the employer's responsibility to ensure taxes are paid from salaries before payments are made to employees. The general personal income tax rates are listed below as a guidance and are based on annual income.

Salaries in the Dominican Republic are generally paid on a monthly basis. Employees are also entitled to a Christmas Bonus which is equal to 1/12 of their regular salary and is exempt from income tax.

Social security contributions in Dominican Republic are the responsibility of the employer to deduct from an employee’s salary before payment. Both the employer and employee are subject to social security contributions. Below are approximate contribution rates for employers and employees, please note that these can vary.