How To Hire And Pay Employees In Uruguay

In recent years, Latin America has become an exceptional market for business, boasting fast-growing economies, lower production costs and significantly reduced labour costs compared to other regions. Uruguay in particular is recognised as a stable country due to its highly capitalised and safe banking. For example, Uruguay benefited from economic gain in the 2009 global recession.

However, hiring in Uruguay poses some barriers regarding language and culture. Spanish is the official language of Uruguay (and indeed, most of Latin America) and the school standards do not match up to other countries like the UK or US. Uruguay has only recently introduced English as part of its school curriculum, so speaking fluent Spanish is important for doing business there.

Full-time employees are entitled to 20 days’ annual leave. For every five years of service, this increases by an additional day. It is common practice that many companies offer their employees more than the legal minimum annual leave. When an employee gets married, they are entitled to an additional three days’ paid leave. There are five paid public holidays.

Employees are also entitled to study leave; this varies depending on the number of hours worked per week:

• Under 36 hours: 6 days per year
• 36-48 hours: 9 days per year
• 48+ hours: 12 days per year

It is common practice for a probation period to be three months.

The employee may unilaterally terminate their employment by providing notice in writing. The required notice period will depend upon what has been agreed in the contract of employment. If there is a breach by the employer, or conduct that is proven to have forced an employee to resign, it is classed as indirect dismissal.

Terminations in Uruguay with a just cause do not require any severance payment and notice periods will depend upon what has been agreed in the contract of employment. Examples of a just cause are disciplinary dismissal, failure of probation period, objective grounds, performance due to unsuitability of the job role, by mutual agreement, and expiration of a contract.

Terminations without a just cause will involve severance payments to the employee, which are usually three months’ salary for each year worked. There may be additional compensation payments if an employee is dismissed whilst pregnant or on maternity leave, due to illness or within 30 days of returning after an illness, after a work-related accident, or due to union activity.

There is no legal requirement to produce a written contract of employment in Uruguay. However, it is strongly recommended that a written copy is produced. This should include employee personal details, employer details, salary, work location, working hours, probation period, benefits, termination terms, and any other collective agreements. Indefinite employment contracts are most commonly used in Uruguay. Fixed term contracts may also be used, these should generally not exceed one year.

Expectant mothers are entitled to 12 weeks of maternity leave, 6 weeks to be taken before the expected due date and 6 weeks after the birth. This is paid by the Banco de Previsión Social (BPS). Fathers are entitled to up to 10 days paternity leave.

An employee is entitled to up to one year of sick leave. The first 2 days sick leave is at full pay which will be paid by their employer. After 2 days this is then paid by the Banco de Previsión Social (BPS) at an average of 70% of earnings. Any sickness leave must be supported by a medical certificate to be entitled for any payments.

Social security contributions in Uruguay are compulsory, are based on employee earnings including any bonuses and commission. When an employee starts it is the employer’s responsibility to register them with the social security, Banco de Previsión Social (BPS). Both the employer and employee have mandatory contributions. The contributions cover items such as health insurance, sick pay, unemployment insurance, and maternity leave.

Uruguay offers both public and private healthcare. The public healthcare system is known as Administration of State Health Services (Administración de Los Servicios de Salud del Estado, or ASSE). Larger ASSE hospitals are located in most cities within Uruguay, and most towns have smaller clinics and hospital auxiliaries. The ASSE system runs based on small monthly contributions and also serves residents on low incomes who cannot afford monthly payments. Those who can afford monthly payments will find the process of enrolling much more straightforward than private healthcare, due to the lack of restrictions based on age or pre-existing conditions.

There are further options for private healthcare; the most common being the Mutualista healthcare option. To be able to use this, an application must be made to become a member and a monthly fee paid. This provides free primary healthcare but typically, emergency dental work, optometry, and psychologist appointments are not included, and an additional payment will need to be made for these services.

The other option would be a private insurer, which most foreign employees choose.

Required documents include completed visa application form, passport photo, passport with at least 6 months validity, visa fee, and an offer of employment in writing from a company registered in Uruguay which will need to include information about the position and a signature from the company’s legal representative. Most applicants will be required to attend the consulate or embassy for an interview. Following the interview, it can take 14-20 working days for the visa to be processed. Once the applicant has the visa, they may travel to Uruguay. The work visa is only valid for 30 days, so if the applicant wishes to remain in Uruguay for a longer period of time, they will need to apply for residence as soon as they arrive in the country.

The minimum wage in Uruguay is 17,930 Uruguayan Pesos UYU per month.

The Uruguayan 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 guidance.

Salaries in Uruguay are generally paid on a monthly basis, employees must have received their salary by the 5^th day of the following month. A 13^th month salary payment (Aguinaldo) is mandatory. This payment is split into two, the first half paid in June and the second half in December.

Social security contributions 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 is a guide on approximate contribution rates for employers and employers. However, these can vary.