Expanding your business and hiring foreign workers in Guatemala can be complicated. But with an Employer of Record (EOR), it gets easier. EORs specialize in managing the hiring of international employees, making sure everything is legal, handling payments, and providing benefits, even if your company isn't registered in Guatemala.

Choose Gloroots as your EOR in Guatemala, and you can speed up your hiring process, no matter how big or small your company is. We take care of all the details, so you can focus on your main business tasks. This means you can find talented people in Guatemala and explore business opportunities without getting bogged down by confusing rules and paperwork.

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When enterprises aim to expand their operations in Guatemala, the conventional approach often involves establishing a local subsidiary. This process involves a comprehensive set of legal and administrative requirements, which can span several months to complete. Additionally, Guatemala's labor laws, notably the Employment Act of 1995, provide essential protections and entitlements to employees.

Through Gloroots’ Guatemala EOR and PEO corporations can hire talent without the need to establish a local corporate entity. This approach lifts the hard part such as incorporating the local entity, hiring payroll and legal experts for compliant hiring and payments. 

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EOR/PEO services in Guatemala offer two ways to charge for their services: a fixed yearly fee for each employee or a fee based on the company's annual payroll. The first option usually has a set price, while the second one is a percentage of the total payroll.

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With Gloroots, you get competitive pricing that's fair and attractive. Our pricing ensures your company and your employees get the HR support they need to perform at their best.

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Key Metrics For Foreign Employers 

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Guatemala 34th spot for labor employee cooperation indicates that it has one of the friendliest and dependable workforce in the world. Most of the workforce is bilingual (fluent in Spanish and an indigenous language). Now thanks to progressive educational policies, more than half of Guatemala's population is proficient in English. 

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The table below depicts key indicators from the INSEAD’s Global Talent Competitiveness Report for employers wishing to hire from Guatemala.

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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 Guatemala.

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Employers in Guatemala often grapple with a common challenge: accurately distinguishing between their workforce, classifying them as either employees or freelancers, which is often referred to as "misclassification." This misjudgment can result in several complications, including inadequate benefits and legal repercussions.

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However, a strategic solution exists: partnering with a Professional Employer Organization (PEO) or Employer of Record (EOR) in Guatemala. These specialized partners excel in ensuring adherence to local regulations, precise worker classification, equitable compensation, and the provision of appropriate benefits. By leveraging their expertise, employers can confidently delegate employment matters to seasoned professionals, allowing them to focus on their core business activities.

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The primary source of Guatemala's employment laws is the "Código de Trabajo" (Labor Code) of Guatemala. Besides the Labor Code, Guatemala’s employment laws are also influenced by international treaties the country signs with the International Labor Organization. 

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Employment Contract

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Under Guatemalan employment regulations, the prevailing norm is that employment contracts typically have an indefinite duration, with fixed-term employment agreements being the exception to this rule.

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When your employee starts a new job with an open-ended contract, the first two months are like a trial period. During this time, employers can end the contract without giving a specific reason.

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All employment contracts in Guatemala must be in Spanish, and they need to include certain information, such as:

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• How long the contract lasts
• Work hours
• Roles and responsibilities
• Terms of termination
• Wages and compensation and other benefits
• Salary payment date
• The names and signatures of the employee and employer

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In the case of remote work arrangements, the employment contract must additionally encompass:

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• A precise definition of the work to be undertaken.
• The modality and methodology for executing the assigned tasks.
• The established means of communication between the employer and the remote employee.

Furthermore, it is incumbent upon employers, as per Guatemalan employment law, to register the written contract with the Ministry of Labor within a period of 15 days from its execution.

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Working Hour 

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In Guatemala, a regular workday is typically 8 hours, adding up to 44 hours a week. Total work hours shouldn't extend beyond 12 hours in one day. However, these rules about working hours don't apply to top-level managers or people who work in households.

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For night time work, the limit is 36 hours a week, with a maximum of 6 hours a day between 6 p.m. and 6 a.m. If someone's work shift includes both daytime and nighttime hours, they can work up to 42 hours a week.

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Overtime

Any hours worked beyond 44 hours in a single workweek are categorised as overtime and are compensated at a rate of 150% of the regular pay.

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Public Holidays

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In Guatemala, the total number of public holidays, as mandated by labor law, is 10 days per year. 

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Minimum Wage

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Guatemalan employment law mandates that employers establish wages based on two distinct categories of work:

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1. General or non-agricultural tasks.

2. Agricultural activities.

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In the year 2022, the minimum wage in Guatemala stands at:

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GTQ2,959.24 monthly for general or non-agricultural tasks.

GTQ2,872.55 monthly for agricultural activities.

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Visit this link for more info Minimum wage - Guatemala - WageIndicator.org

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Annual Leave 

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After working continuously for 12 months with the employer, employees are entitled to 15 days of holiday leave. Any remaining unused days will expire and will not be carried forward.

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The holiday is compensated at a rate of 130% of the employee's salary, and the payment is made to the employee prior to their leave.

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Sick Leave

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Compensation for employees on sick leave is provided either by the Guatemalan Institute of Social Security (Instituto Guatemalteco de Seguridad Social) (IGSS) or by the employer if the IGSS benefits don't cover the employee’s illness or injury. 

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The duration and calculation of sick pay depend on the employee's tenure.

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Additionally, the employer has the option to temporarily replace the employee's duties, but this arrangement can be terminated when the employee returns to work.

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Maternity Leave and Paternity Leave

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Female employees in Guatemala typically receive a 12-week maternity leave, beginning 30 days before the expected delivery date. 

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In case of a miscarriage or stillbirth, mothers are eligible for 42 days of paid leave.

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Offering paternity leave is not mandatory by law.

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Income tax

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‍Other Taxes and Social Security contribution

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Employer Payroll Contributions:

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‍Employee Payroll Contributions

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Employment Termination and Severance

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Termination process

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The termination procedure can differ based on the specific terms of the employment contract and any collective agreements in effect.

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Notice period

When it comes to determining the notice periods under the Employment Contracts Act, both the employer and employee can agree on these notice periods, but they cannot exceed six months.  The length of notice required depends on how long the employee has been in service and the reason for termination.

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If the employer initiates the termination, the notice periods are as follows:

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Collective agreements might also outline specific notice periods. If the notice periods mentioned in the collective agreement differ from the legally required ones, the employer and employee must adhere to the notice period mentioned in the collective agreement.

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Severance Pay

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Guatemalan labor law mandates severance pay for damages upon unjust dismissal. This payment equals one month's salary for each year of continuous service, calculated based on the employee's earnings from the last six months. Additionally, this law introduces the concept of "economic advantages" (ventajas económicas) for severance payments, encompassing non-cash employer benefits estimated at 30% of the total salary. These benefits may include health or life insurance, company vehicles, mobile phones, cafeteria services, and similar perks. Consequently, upon termination, employers are obligated to provide an extra payment equivalent to 30% of the salary as part of the severance package.

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Probation Periods

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Typically, in Guatemala, the probationary period lasts for a duration of two months.

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Hiring employees in Guatemala can seem complex due to various rules and regulations to remember. You need to understand employment laws, ensure accurate payments to employees, and follow fairness and data protection rules, among other things. All these factors can make the hiring process appear intricate.

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But here's the good news – Gloroots can simplify everything for you. Our comprehensive solutions offer a convenient way to manage all aspects of hiring in Guatemala. Our experts assist with international hiring and complying with payment and work regulations. We handle employment agreements, on-time payments, and benefits, allowing you to concentrate on choosing the best candidates.

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You can rely on Gloroots to make hiring in Guatemala straightforward and hassle-free.

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Expanding your team in Guatemala involves the crucial task of sourcing the right talent at the right time and for the right roles. However, navigating the intricacies of compliance, payroll, taxes, and benefits can pose significant challenges due to the complex employment regulations in the country.

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Enter Gloroots's global Employer of Record (EoR) service, which offers an invaluable solution. With Gloroots, you can alleviate the burdens associated with payroll, taxes, benefits, and compliance in Guatemala. This allows you to redirect your focus towards what truly matters – nurturing your workforce and fostering your company's growth.

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