An El Salvador Employer of Record (EOR) plays a crucial role in simplifying hiring in El Salvador and ensures compliance with labor laws. EORs have a deep understanding of the local market and a wide pool of talent, making it efficient for them to find and hire qualified candidates. By teaming up with an EOR, businesses can concentrate on their main operations while delegating HR responsibilities, payroll management, and legal requirements to a dependable service provider.

When foreign employers hire from El Savador, they face two challenges: 1) Starting a local entity 2) Staying compliant with local employment laws. Companies partner with an El Salvador EOR or PEO to overcome these hurdles in a cost-effective manner.

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For instance, starting a local entity in El Salvador  can cost you several thousand dollars. Several processes including hiring a notarian, registering with local authorities, consulting company incorporation specialists, annual tax, etc can set you back by $300 to $10,000 depending upon the type of company you are setting up. 

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Secondly, your hiring should be compliant with El Savador’s local laws. Laws around 13th month pay, health and safety regulations, union rights can surprise even the most experienced employers.

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Partnering with an El Salvador EOR like Gloroots can help you easily hire and expand in the country without a local entity. An Employer of Record will ensure you are compliant with EL Savador’s labor laws and put any hiring risks to rest.

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Generally, El Salvador EOR/PEO services are offered at a monthly fee per employee or as a percentage of their salary. Additional charges might apply for personalized solutions or specialized services tailored to specific business needs. When considering the overall cost and benefits of partnering with an El Salvador EOR/PEO, companies should carefully evaluate these factors to make an informed decision.

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Key Metrics For Foreign Employers 

The table below depicts key indicators from the Global Talent Competitiveness Report for employers wishing to hire from El Savador.

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Source: The Global Talent Competitiveness Index 2023

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Through the Gloroots’ Recrew platform, you can discover amazing talent in El Salvador.

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Incorrectly categorizing employees in El Salvador, known as employee misclassification, can lead to legal and financial repercussions. This occurs when workers are wrongly classified as independent contractors or freelancers instead of full employees. Such misclassification can trigger claims for unpaid wages, benefits, and other entitlements that employees are legally entitled to.

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Collaborating with a PEO/EOR ensures accurate employee classification, meaning that individuals are correctly designated as employees or contractors according to the law. This partnership guarantees compliance with labor regulations, meticulous management of payroll, and the provision of comprehensive benefits. By addressing the issue of misclassification, businesses can minimize potential liabilities and focus their efforts on core operations.

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The Labor Code, 1972, stipulates all laws governing employment relationships - employment agreements, minimum wages, work hours, leaves, benefits, and so on. 

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Employers hiring in El Salvador need to adhere to these laws when employing El Savador. The Ministry of Labor and Social Welfare (Ministerio de Trabajo y Previsión Social) acts as the watchdog, settles disputes, imposes fines on employers when non-complaint with labor laws.

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Employment contract

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In El Salvador, employment agreements should be written in the local language. While contracts can be either written or oral, it's advisable to have a written agreement in place. The compensation should be in USD currency. Having a well-drafted employment contract helps establish a clear understanding between the employer and the employee, ensuring a smooth working relationship and legal compliance

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Here are key elements that should be included in an employment contract:

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1. Identification of Parties: Clearly state the names and details of both the employer and the employee.

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2.Commencement Date: Specify the starting date of employment. For temporary contracts, mention the duration of the employment.

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3. Workplace: Define the location where the employee will be working.

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4. Job Description: Outline the role, duties, and responsibilities of the employee.

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5. Compensation: Clearly state the basic salary and any additional compensation or benefits the employee is entitled to receive.

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6. Working Hours: Specify the regular working hours and any overtime policies.

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7. Holidays: Indicate the total number of holidays or vacation days the employee is entitled to.

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8. Termination Notice: Define the notice period required by both the employer and the employee for terminating the employment.

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9. Probation Period: If applicable, mention the duration of the probationary period.

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10. Health and Safety: Outline any health and safety obligations that the employee and employer need to follow.

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A solution like Gloroots eliminates the barriers for you. With Gloroots' Employer of Record offering, hiring and managing employees globally is a piece of cake.

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Get an overview of what you need to know when hiring in El salvador. Contact us.

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Working Hour

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In El Salvador, the regular workweek comprises 44 hours, usually distributed as 8 hours per day across five and a half days.

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Overtime

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Any work performed beyond the typical weekly working hours is considered overtime and is governed by the terms of the employment agreement or collective bargains. There are no set limits on the quantity of hours except for minors.

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Additional hours worked beyond the 44-hour standard week are typically compensated as overtime at a rate of 200.00% of the employee's regular wage.

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Minimum Wage

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El Salvador does not have a uniform minimum wage across the country. Instead, the minimum wage is established based on the specific industry in which the employee is engaged. Minimum wages differ according to sectors, ranging from 243.46 USD for agricultural workers to 365.00 USD for those in industry and commerce services.

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Sick Pay

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Maternity leave 

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In El Salvador, women workers have the right to avail themselves of a maximum of 16 weeks of fully paid maternity leave. The payment during this period is set at 75.00% of their usual wages. To access this benefit, the employee is required to present a medical certificate confirming the pregnancy status and anticipated delivery date.

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Maternity leave must encompass a minimum of six weeks taken prior to the anticipated delivery date and up to 10 weeks following the birth of the child. In cases of pregnancy-related health issues or complications, the employee may request an extension of the maternity leave.

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To prioritize the health and well-being of the employee, it is prohibited to assign her any physically demanding tasks after the fourth month of pregnancy.

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Annual leave 

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Employees in El Salvador are entitled to a total of 15 days of annual leave.

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Income tax

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Employee Income Tax

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Tax and social security contribution

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Employer payroll contributions

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Employee payroll contributions

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Termination process

The procedure for ending employment differs based on the terms outlined in the employment or collective agreement. It takes into account factors like contract type, duration of service, and the grounds for termination.

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Severance pay

Severance compensation in El Salvador is governed by particular rules and will differ based on the factors behind the termination of employment. For instance, resigning employees or the conclusion of an employment contract's specified duration do not warrant severance payment.

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In instances where severance is applicable, it's typically computed as 30 days of salary for each year of service.

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Notice periods

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In El Salvador, the notice period is determined by the terms of the employee's employment contract or collective agreement, rather than being a legal requirement. Nevertheless, it is customary to ask employees to give at least 7 days' notice after successfully completing their probationary period.

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Probation periods

The length of the probationary period in El Salvador is contingent upon the nature of the position and is specified in the employment contract. Generally, probationary periods are limited to a maximum of 30 days.

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When hiring globally, ensuring compliance comes with its own set of battles. Employers must ensure all hiring and onboarding activities adhere to employment laws, payroll procedures, DE&I compliance, GDPR and similar data protection, etc. If you think it is hard to set up local entities and start hiring, keeping up with a dynamic compliance landscape is far harder. 

Gloroots helps you minimize all these efforts by providing a single window to manage all these tasks. Our in-house experts fully shield you from cross-border employment and payroll compliance risks. We do this by helping you with generating employment contracts, on-time payments, compliant benefits, while you focus only on screening talent. 

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Our promise is a stress-free global employment experience for both you and your employee.

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Contact our experts today to kickstart your global hiring campaign.

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Navigating the complexities of local employment regulations and effectively managing compliance, payroll, tax, and benefits when expanding your team in El Salvador is crucial.

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With Gloroots' comprehensive global Employer of Record (EoR) service, you can confidently entrust the intricacies of payroll, tax, benefits, and compliance to our experienced team. This frees you up to focus on your core business functions, empowering your workforce and driving business growth. Our EoR service in El Salvador ensures strict adherence to all local laws and regulations, providing a seamless and efficient solution for successful team expansion in the country. With access to a diverse pool of outstanding talent and our market expertise, Gloroots' Recrew platform makes recruiting in El Salvador a smooth and rewarding process, contributing to your company's success and growth.

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