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Nicaragua, bordered by Honduras, the Caribbean, and Costa Rica, holds a strategic location for businesses aiming at North and South American markets.
With 90% bilingual population and time zone alignment with key American regions, international business operations have surged by 20% in five years.
The robust tourism industry, contributing 6.4% to GDP, reflects Nicaragua's rich folk heritage blending European, Caribbean, and Iberian cultures in music, cuisine, and architecture.
Employers find Nicaragua attractive due to competitive labor costs, approximately 30-50% lower than neighboring countries, offering significant benefits for hiring.
In Nicaragua, contracts can be verbal for specific jobs or written as per the Labour Code. However, for legal validity in court, the contract must be translated into Spanish, even if originally in another language. Typical documents should include:
In Nicaragua, there's a 30-day probation period during which either party can terminate the employment agreement for any reason.
The regular workweek in Nicaragua consists of 48 hours, with 8 hours per day. However, for night-time work, it is reduced to 45 hours per week, with 7.5 hours per day.
In Nicaragua, overtime is compensated at 200% of the regular salary for work beyond 48 hours a week. Employees are limited to 9 hours of overtime per week and must receive a 24-hour rest period for weekend or holiday work. Overtime should not exceed 3 hours per day or 9 hours per week as per employment contracts or agreements.
The national minimum wage varies by industry. It starts at 5,196.34 NIO per month for agriculture and goes up to 11,628.95 NIO per month for construction, financial institutions, and insurance sectors.
Employers are required to make a 13th-month payment, which involves paying an extra month's salary within the initial 10 days of December.
In Nicaragua, income tax follows a 'Pay As You Earn' system with progressive rates ranging from 0% to 30%, depending on an individual's income.
In Nicaragua, the pension system is managed by the Nicaraguan Social Security Institute (INSS). Employees contribute a percentage of their salary to the INSS, and upon retirement, they receive pension benefits based on their contributions and years of service.The standard retirement age for the INSS pension is 60 for men and 55 for women.
The tax-related information provided in this guide is intended for general guidance and informational purposes only. Reach out to our dedicated team for insights on remote hiring in Nicaragua tailored to your needs.
Terminating an employee in Nicaragua depends on the employment and collective agreements, as well as the contract type and reason for termination. Employers need approval from the labour inspection department to dismiss an employee. After termination, the employee receives any outstanding vacation pay and their annual bonus.
In Nicaragua, employees must provide a 15-day notice to employers before termination, except during the probation period when no notice is required. Contracts of indefinite duration may include a trial period of up to 30 days, during which either party can end the employment without obligations. For indefinite contracts, employees can terminate by giving a written 15-day notice to the employer.
In Nicaragua, unjustly dismissed workers receive severance pay calculated as one month's salary for the initial three years of service, followed by 20 days' wages for each subsequent year. However, according to Nicaraguan law, severance payments cannot exceed five months' wages.
Nicaragua has 10 recognised holiday in a year
Social security contributions in Nicaragua are subject to annual increases. Typical employee benefits include:
Legal and compliance experts are readily available to provide guidance and case-by-case Q&A support.
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