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Puerto Rico

This content is for informational purposes only. We do not guarantee the accuracy or completeness of this content. It is not legal advice and shall not be relied on as such.

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Puerto Rico is officially known as the Commonwealth of Puerto Rico. It is a Caribbean island founded by Spanish colonists. The capital is San Juan. Puerto Rico is an unincorporated U.S. territory. 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. Its economy is based on manufacturing and services, including tourism.

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. A fixed-term contract 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 who work at least 20 hours a week but less than 115 hours per month accrue sick leave in Puerto Rico at a rate of half a day per month. Employees who work at least 115 hours per month accrue sick leave at a rate of one day per month. Puerto Rico allows employees to use up to five days of medical leave in connection with the illness or medical treatment of a child, parent, spouse, person of advanced age or with a disability.

Female employees receive at least eight weeks of paid maternity leave in Puerto Rico, 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 who worked at least 1,350 hours between Oct. 1 of the previous year and Sept. 30 of the current year are entitled to an annual bonus in Puerto Rico, often referred to as the Christmas bonus because it must be paid between Dec. 1 and Dec. 15 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 3% of the salary for each employee up to USD 600. Employers with fewer than 20 employees must pay a bonus of at least 3% of the wages to each employee up to USD 300. Any other bonus paid during the year of work may be used to offset 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 who work at least 20 hours a week but less than 115 hours per month in Puerto Rico accrue annual leave at a rate of half a day per month, or a quarter of a day per month for companies with less than 12 employees. Employees who work at least 115 hours per month accrue vacation leave at a rate of 1.25 days per month, or a half a day per month for companies with less than 12 employees. Vacation leave pay is not less than the regular wage in the month the leave was accrued. Employees must take a minimum of five consecutive vacation days per year.

In Puerto Rico, the public holidays are:

  • New Year's Day

  • Epiphany

  • Good Friday

  • Mothers' Day

  • Fathers' Day

  • Thanksgiving Day

  • Christmas Day

Puerto Rico provides healthcare insurance. Independent private insurance is also available.

An employer in Puerto Rico may terminate a permanent contract unilaterally only for just cause, including:

  • The employee repeatedly engaged in improper or disorderly conduct,

  • The employee's performance is deficient, inefficient, unsatisfactory, inadequate or negligent, and

  • The employee repeatedly violates reasonable rules, regulations and policies of the company.

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.

  • 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.

  • Partner with atlas logo

    Partnering with Atlas when expanding into Puerto Rico 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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