Employer of Record in El Salvador

Businesses can only operate smoothly in El Salvador if they comply with local labor laws including drafting compliant employment contract agreements and meeting taxation and payroll obligations. Learn more about the employment laws and regulations in El Salvador below, to avoid any compliance issues.

Employment Contract Requirements

In El Salvador, employment contracts can be either written or verbal, but it is common to use written agreements. A detailed written employment contract typically outlines the following:

• Employee Information
• Compensation
• Job Details
• Working Hours

Onboarding Process

We can help you get a new employee started in El Salvador quickly, with a minimum onboarding time of just 1-2 working days. The timeline starts once the employee submits all required information onto the Playroll platform and completes any necessary local authority registrations. For non-nationals, the Right to Work assessment (if applicable) may add up to three extra days. Additional time may be needed for follow-ups on this assessment. Please note, payroll cut-off dates can impact the actual start date. Playroll's payroll cut-off date is the 10th of each month unless otherwise specified.

Working Hours in El Salvador

The standard working week in El Salvador comprises 44 hours, usually distributed as 8 hours a day over five and a half days.

Overtime in El Salvador

In El Salvador, extra work beyond the regular weekly hours is considered overtime, and its terms are defined in the employment contract or collective agreements. There are no specific limits on hours, except for minors. Overtime, usually exceeding 44 hours per week, is paid at a rate of 200% of the employee's regular salary.

Probation Period in El Salvador

The probationary period varies depending on the type of role and is specified in the employment agreement. Probation periods cannot exceed 30 days.

Fiscal Year in El Salvador

1 January- 31 December is the 12-month accounting period that businesses in El Salvador use for financial and tax reporting purposes.

Payroll Cycle in El Salvador

The payroll cycle in El Salvador is usually monthly, with employees being paid by the last day of the month.

Minimum Wage in El Salvador

The minimum wage for employees in El Salvador is typically 2.07 USD per hour, amounting to ~365 USD per month for a typical 44 hour work week.

Bonus Payments in El Salvador

It's common to give employees a 13th-month salary as a Christmas bonus around December 20th. The amount depends on their years of service: 15 days' salary for 1-3 years, 19 days for 3-10 years, and 21 days for over 10 years.

Employer Tax Contributions

Employer payroll contributions are generally estimated at an additional 15.25% - 16.25% on top of the employee salary in El Salvador.

Employee Payroll Tax Contributions

In El Salvador , the typical estimation for employee payroll contributions cost is around 10.25%.

Individual Income Tax Contributions

Individual income tax in El Salvador varies from 0% to 30%, and the calculation follows a progressive rate structure.

Pension in El Salvador

Employers in El Salvador contribute 8.75% to the pension fund. Employees qualify for a full pension by meeting either age and contribution requirements: 55 for women, 60 for men, with 25 years of contributions, or achieving 30 years of contributions at any age. The pension begins at 30% of the base salary for the initial three years and increases by 1.5% annually thereafter.

Mandatory Leave Entitlement in El Salvador

The annual leave entitlement in El Salvador is 15 days for a full time worker. These can include public holidays on top of that or within those days, which would otherwise be unpaid.

Public Holidays In El Salvador

El Salvador mandates the observance of the following national holidays:

Paid Time Off in El Salvador

Employees who've worked for a year or more (or over 200 days in a year) get 15 days of paid vacation from December 12 to the next December 12. They receive 130% of their regular salary before their leave. But, it's crucial to use all vacation days since they can't be converted to cash.

Maternity Leave In El Salvador

Female employees get up to 16 weeks of paid maternity leave, receiving 75% of their regular wages. They must take at least six weeks before the due date and can take up to 10 weeks after the child is born. If there are pregnancy-related issues, they can ask for an extension of the leave.

Paternity Leave In El Salvador

In El Salvador, fathers get three days of paternity leave to be taken within the first 15 days after the child's birth, and it's paid at their full salary by the employer.

Sick Leave In El Salvador

The amount of paid sick leave an employee can take in El Salvador is based on their years of service:

• For 1-5 months of employment, the employee is entitled to 75% of the basic salary for 20 days.
• With 5 months to 1 year of employment, the entitlement is 75% of the basic pay for 40 days.
• For one year or more of employment, the employee is entitled to 75% of the basic pay for 60 days.

Parental Leave In El Salvador

El Salvador does not offer additional shared parental leave beyond the provisions for maternity and paternity leave.

Bereavement Leave

Employees facing the loss of an immediate family member are granted one day of paid bereavement leave.

Termination Process in El Salvador

The process of termination is subject to the terms outlined in the employment agreement or collective agreement. It varies based on factors such as the type of contract, length of service, and the reason for termination. The employer can legally terminate the contract under the following grounds:

• Deception with false documents
• Repeated negligence
• Serious breaches of contract obligations
• Disclosure of secrets

Notice Period in El Salvador

In El Salvador, the notice period is based on the terms in the employment contract or agreement and is not a legal requirement. However, it is customary for employers to request a minimum of 7 days notice from employees who have completed their probationary period.

Severance in El Salvador

Severance pay follows specific rules and varies based on the reasons for employment termination. No severance is given for voluntary resignations or the natural end of a contract. If required, it's usually calculated as 30 days of salary for each year of service.