Country Information

Ecuador is on the West Coast of South America. It ranks as the 10th most populous country in the Americas, with an estimated population of over 17.3 million people. Quito is the nation’s capital and most populous city with over two million people. Ecuador has used the U.S. dollar as legal tender since 2000, after a financial crisis. Ecuador’s primary exports include petroleum products, aquatic animals such as fish, crustaceans and fruits. Currently, the government of Ecuador is focusing on decreasing the size of the public sector, increasing private sector investment to drive economic growth.

Employment Contracts

Employment contracts in Ecuador can be verbal or written but a written contract that details the terms and conditions of employment is recommended. The written contract should include:

  • Employer and employee
  • Place of employment
  • Duties to be performed
  • Salary and payment interval
  • Vacation and other leave entitlements
  • Probation period (if applicable) and any other terms agreed to by the parties
Working Hours

The standard work week in Ecuador is 40 hours a week. Employees typically work eight hours a day, five days a week. Overtime is limited to four hours a day and 12 hours a week but must be approved by the local labor inspector. Overtime is paid at 150% or 200% of the standard rate, depending on when the work is performed.

Sick Leave

Employees receive unlimited sick leave. Social security pays 75% of sick leave after three days of illness but they must be informed of the leave. The employer pays the remainder.

Maternity/Paternity Leave

Female employees receive 12 weeks of paid maternity leave. Two weeks must be taken before the birth if the employee can present a medical certificate. This leave is paid at 100% of their salary and can be extended by 10 days in the event of multiple births, and they receive up to a year of unpaid leave for a pregnancy-related illness. Male employees receive 10 days of paid paternity leave. This can be extended by five days in the event of multiple births or a cesarean birth or eight days for a premature birth. Employees receive 15 days of paid adoption leave once the adoption begins.

Compensation

A mandatory 13th- and 14th-month bonus is paid to employees. The bonuses are paid in December and generally in either March or April. Employers also pay 15% of their net profits up to a maximum amount as a bonus.

Vacation Leave

Employees receive 15 days of paid annual leave, and those with at least five years of service receive either an extra day of leave or cash payment. Some collective bargaining agreements allow for more paid annual leave. Employees can carry over their annual leave up to a maximum of three years.

Public Holidays

The following public holidays are observed in Ecuador:

  • New Year’s Day
  • Carnival
  • Good Friday
  • Labor Day
  • The Battle of Pichincha
  • Independence Day
  • Independence of Guayaquil
  • All Souls’ Day
  • Independence of Cuenca
  • Christmas Day
Health Insurance Benefits

There is universal healthcare which is free at the point of access. It is operated by the Ministry of Public Health and IESS (Ecuadorian Institute of Social Security). This includes pregnancy care, both before and after the birth.

Employment / Termination / Severance

Employment contracts can be terminated by the employer for just cause or breach of contract with the permission of the labor inspector or for economic reasons. There are specific rules and procedures that the employer must follow, notice may be required depending on the reason for termination and the employer may be required to pay severance.

Local Laws & Regulations

We understand that local laws and regulations change and sourcing an accurate reference guide is not easy. Our data is researched and verified by our team of local international Employment Attorneys, HR and Benefit Professionals and Tax Accountants through our Atlas team and consultants, to ensure information up-to-date and accurate.

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Partnering with Atlas when expanding into Ecuador, can dramatically reduce the standard brick and mortar processes of doing business in foreign markets and allow you to focus on what you do best, growing your company! To discover more about how Atlas can simplify your ability to expand globally, please feel free to contact us.
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