Employer of Record in Uruguay

Businesses can only operate smoothly in Uruguay 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 Uruguay below, to avoid any compliance issues.

Employment Contract Requirements

In Uruguay, written employment contracts aren't legally required. However, it's common to use them, with fixed-term contracts typically lasting up to one year. Though not obligatory, it's recommended to provide a written record detailing basic employment details, including:

• Identification of both parties
• Basic wage
• Workplace and working hours
• Probation period
• Benefits
• Termination terms
• Reference to other collective agreements

Onboarding Process

We can help you get a new employee started in Uruguay 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 Uruguay

In Uruguay, the standard working hours amount to 44 per week, distributed over 8 hours each day. However, individuals in the industrial sector may be required to work 48 hours, with an 8-hour daily schedule, spread across a six-day week.

Overtime in Uruguay

In Uruguay, employees in both agricultural and non-agricultural sectors are entitled to a minimum rest period of 36 hours per week. Overtime worked on a regular working day must be compensated at 200% of the hourly wage. For overtime on public holidays or non-working days, the compensation increases to 250% of the hourly wage‹.

Probation Period in Uruguay

In Uruguay, the standard probation period is generally limited to three months.

Fiscal Year in Uruguay

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

Payroll Cycle in Uruguay

The payroll cycle in Uruguay is usually monthly, with employees being paid by the 5th day of the following month.

Minimum Wage in Uruguay

The minimum wage for employees in Uruguay is typically 136.42 UYU per hour, amounting to ~26,000 UYU per month for a typical 44 hour work week.

Bonus Payments in Uruguay

Employees in Uruguay receive a 13th-month salary (known as Aguinaldo) which are distributed in two halves: one in June and the other in December.

Employer Tax Contributions

Employer payroll contributions are generally estimated at an additional 12.63% on top of the employee salary in Uruguay.

Employee Payroll Tax Contributions

In Uruguay , the typical estimation for employee payroll contributions cost is around 18.10% - 23.1%.

Individual Income Tax Contributions

Income tax in Uruguay follows a progressive rate structure. The overall rates can be influenced by additional factors such as household status and the number of children.

Pension in Uruguay

Uruguay adopts a mixed pension system, consisting of the solidarity regime provided by the Social Security Bank and the individual savings regime managed by the Administrators of Social Security Savings Fund (AFAP). Eligibility for pension benefits typically starts at the age of 63-65 for employees.

Mandatory Leave Entitlement in Uruguay

The annual leave entitlement in Uruguay is 20 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 Uruguay

Uruguay observes 15 holidays in a calendar year, with some (*) included in mandatory paid leave and eligible for holiday pay at double the salary.

Paid Time Off in Uruguay

In Uruguay, employees who have completed one year of service are entitled to 20 working days of annual leave. This entitlement may increase by one day for every four years of service, with a maximum limit of 25 days.

Maternity Leave In Uruguay

Pregnant employees in Uruguay are entitled to 14 weeks of maternity leave, with 6 weeks taken before the due date and the remaining 8 weeks after childbirth. The Banco de Previsión Social (BPS) provides compensation for this maternity leave.

Paternity Leave In Uruguay

Fathers or parents in Uruguay are entitled to 13 days of paid paternity leave.

Sick Leave In Uruguay

Employees in Uruguay are entitled to a year of sick leave, during which they receive compensation at 100% of their regular salary. The employer covers the first 3 days of sickness, and the Banco de Previsión Social (BPS) compensates 70% of the employee's average earnings. Qualification for this leave requires the presentation of a medical certificate.

Parental Leave In Uruguay

After the conclusion of maternity leave, parents are entitled to a Parental Care Allowance. This benefit allows either parent to work part-time while receiving a subsidy equivalent to 50% of their salary, enabling them to dedicate time to childcare. The leave can be utilized interchangeably and alternately by both parents until the child reaches six months of age.

Termination Process in Uruguay

In Uruguay, employers cannot terminate employment at will outside of the probation period; terminations must be based on just cause. Compliant terminations include:

• Voluntary employee resignation
• Mutual agreement
• Unilateral decision by the employer (based on probation period, objective reasons, disciplinary dismissal, unsuitability for the job)
• Contract expiration

Notice Period in Uruguay

In Uruguay, the standard notice period is typically 1.5 weeks for both employees and employers.

Severance in Uruguay

Terminated employees in Uruguay are entitled to severance pay at the rate of one month's salary for each year of service, capped at a maximum of six months.