Puerto Rico is officially known as the Commonwealth of Puerto Rico. It is a Caribbean island and unincorporated U.S. territory, with the capital being San Juan, founded by Spanish colonists. Spanish is spoken by the majority of the population and is the leading language of business, education and everyday life on the island. English is also an official language in the country, but only 10% of the population speaks English. Puerto Rico has been classified as a developed territory with an improved high-income economy, according to the International Monetary Fund.
Employment contracts in Puerto Rico can be either verbal or written and, in any language, understood by both parties. The employee is presumed to understand the provisions within an agreement if it is signed.Contracts can be for either a fixed or indefinite duration. If the contract does not stipulate the termination date, the agreement will be considered for an indefinite term. Fixed-term contracts cannot exceed three years in its initial term or the total of its renewals.
The standard workweek in Puerto Rico is 40 hours, with eight-hour days. Overtime must be paid to employees who work more than 40 hours. The employee must receive 1.5 times their regular hourly wage for each hour worked beyond the standard 40-hour workweek. An employer and employee can agree on an alternative work schedule where the employee works 10 hours a day and no more than 40 hours per week. In this case, overtime is only paid for work beyond 10 hours a day. The agreement must be in writing. Employees between 14 and 18 years old may be employed only with a special permit for a 40-hour limited workweek. If the worker attends school, then the cumulative school and work hours cannot exceed eight hours daily. Workers between 14 to 16 years of age can work between 8 a.m. and 6 p.m., while workers between 16 to 18 years can work between 6 a.m. and 10 p.m.
Employees receive 12 days of paid sick leave per year accrued at the rate of one day per month if the employee has worked for at least 130 hours in that month. Employees also receive six days of paid leave for severe diseases after service of at least 12 months. Employers with at least 50 employees shall provide their employees with at least 12 weeks of unpaid leave under the US Federal Family and Medical Leave Act (FMLA) as follows:
Female employees receive at least eight weeks of paid maternity leave, with four weeks generally taken before the birth and four weeks taken after the birth. Employees can continue working up to one week before the estimated date of birth and return to work as early as two weeks after the delivery if they have a medical certificate. Maternity leave may be extended by an additional 12 weeks due to pregnancy related complications but will be unpaid. The contracts of employees on maternity leave are protected before and after childbirth. Employees adopting pre-school minors or minors below six years of age not attending school receive the same maternity benefits as a mother who gives birth.
Employees who worked at least 1,350 hours within Oct. 1 of the previous year and Sept. 30 of each year are entitled to an annual bonus, often referred to as the Christmas bonus because it must be paid between Dec. 1 and Dec. 15 of each year. The amount of the bonus is dependent upon the number of employees and their hire dates.
Employers with more than 20 employees must pay a bonus of at least 2% of the salary for each employee up to USD 600. Employers with fewer than 20 employees must pay a bonus of at least 2% of the wages to each employee up to USD 300. In the first year of work, the employee is only entitled to 50% of the bonus. Any other bonus paid during the year of work may be used to compensate for the annual bonus if notice is provided to the employee and the change in payment date is provided to the Department of Labor and Human Resources prior to Nov. 30.
Employees are entitled to receive vacation leave after accruing at least 130 hours of work in a month. Vacation is accrued at a rate of one-half of a day during the first year of service and three-quarters of a day after the first year of service until completing five years of service; one day after five years of service until 15 years of service, when it becomes one and one-quarter (1-1/4) days. Vacation leave shall be paid based on an amount not less than the regular wage in the month the leave was accrued. It is mandatory for employees to take a minimum of five consecutive vacation days per year.
Puerto Rico observes the following holidays:
Puerto Rico provides healthcare insurance. Independent private insurance is also available.
The employer may terminate a permanent contract unilaterally only for just cause, including, but not limited to:
An employee terminated or made redundant for any reason other than just cause must be paid severance, which is three month’s salary and an additional two weeks of salary for each year worked with the same employer. The total compensation is limited to nine months or 36 weeks of salary. Severance payments are not subject to Puerto Rican income tax.
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