Bolivia

Bolivia PEO & Employer of Record

WeHG gives an International PEO and global Employer of Record service in Bolivia to companies willing to go in for the Bolivian market or hire local/expat employees in this area.

Traditional approach requires establishing a subsidiary in Bolivia.  Meanwhile, our solution allows you to start the operations in Bolivia within days hence save time and money.  WeHG would hire candidates on your behalf while you maintain full operational control of their work. So legally they would be our employees, on our local payroll, 100% compliant but will work on your behalf.

Bolivia fast facts

Population, million: 11
Land area:  1,098,581 km²
Capital: Sucre
Local currency: Boliviano (BOB)

GDP per capita:$ 7,790
GDP in currency:$ 89.018 billion

Bolivia, country of west-central South America. Extending some 950 miles (1,500 km) north-south and 800 miles (1,300 km) east-west, Bolivia is bordered to the north and east by Brazil, to the southeast by Paraguay, to the south by Argentina, to the southwest and west by Chile, and to the northwest by Peru. Bolivia shares Lake Titicaca, the second largest lake in South America (after Lake Maracaibo), with Peru. The country has been landlocked since it lost its Pacific coast territory to Chile in the War of the Pacific (1879–84), but agreements with neighbouring countries have granted it indirect access to the Pacific and Atlantic oceans. The constitutional capital is the historic city of Sucre, where the Supreme Court is established, but the administrative capital is La Paz, where the executive and legislative branches of government function.

Hiring, Negotiating and Doing Business in Bolivia

Necessity of written employment contract

Written employment contracts are required in Bolivia and must be registered with the Labour Ministry. (They can be for a specified or an indefinite term.) Foreign employees do not require work permits but their work agreements must be registered with the Bolivian labor authorities within 90 days of signing. Workers need a special purpose visa to sign the agreement and a one-year residence visa to carry it out.

Different forms of engagement: employment, contracting, work with private entrepreneur

The General Labour Law distinguishes “workers” from “employees”. Workers render material or manual services, while employees generally work in an office under a schedule and special conditions, and mainly provide intellectual work. Although the General Labour Law and other labour regulations contain specific provisions on each category, these have become more uniform over time, mostly to avoid imbalances. Therefore, this Q&A uses the terms employees and workers interchangeably.Self-employed and independent contractors do not fall under the categories of employee or worker for labour law purposes. However, it is common to use these concepts to disguise a labour relationship and avoid certain obligations (such as taxes, social security affiliation and entitlement to labour rights). Under the principle of material reality, misclassifying a worker as an independent contractor is subject to sanctions.

Bolivia Employment Contract

Types of employment agreements

Indefinite contract is the most used and appropriate to regulate labor relationships in Bolivia. Each written and oral labor contract will be considered indefinite. This is the only contract that can establish a trial period of 90 days for the employee.  During this period, the employer may terminate the relationship without obligation to compensate for the termination and employees can use this period to settle in to the company.

A fixed period contract is the one that due to its conditions establishes a determined period of validity. The fixed period contract must be written and must state the duration period of employment. According to Bolivia’s labor laws, this type of contract can apply in the following conditions:

  • Workers with a fixed period contract cannot perform direct company activities. This type of contract can be used only for persons who support activities not related to the main activity of the company
  • If a regular employee of the company is temporarily unable to work, companies can hire a temporary worker with this type of contract until the employee can return to their contracted activities. The employer cannot hire the same worker more than once using this mechanism
  • If a company needs extra support and resources during a certain period of the year, it may hire fixed-term workers for that surge period to cover all company needs. If the company requires additional human resources in the long term following this period, they must hire through an indefinite labor contract
  • An employee can only be hired with this type of contract two times. Otherwise, a third fixed period contract will be automatically considered as indefinite
  • Each fixed period contract has a maximum length of one year
  • According to Bolivia’s labor laws, a fixed period contract requires the approval of the Ministry of Labor to be validated; if this requirement is not fulfilled by the employer, the contract will be considered as indefinite.

In both types of contract, employees have rights and obligations of the employment relationship, including the contributions to social security made by the employer.

Bolivia working hours

A full workday is 8 hours. In addition, the maximum number of workdays in a week is 6 days.

Overtime

For both work during a non-working day and overtime hours, overtime is compensated at a rate of 200%.

Vacation leave in Bolivia

  • If an employee has completed one year of employment, they are entitled to 15 days of paid annual leave.   
  • For an employee who has been employed for at least 5 years, they are entitled to 20 days of paid annual leave.  
  • For an employee who has been employed for at least 10 years, they are entitled to 30 days of paid annual leave.

Bolivia Maternity Leave

Mothers are entitled to a total of 90 days, broken down into 45 days before the expected due date and 45 after the birth of the child. Pay given to a mother on maternity leave is 100% of the national minimum wage.  However, the employer is entitled to receive a 90% reimbursement from social security.   

From the 5th month of pregnancy, the mother is entitled to a prenatal subsidy and a nursing subsidy until the child is 1 year old. Both subsidies are the equivalent of one month’s salary per month.  

From the date that the child is born, mothers receive job protection for 1 year

Bolivia Severance Laws

  • Termination Process

Justified dismissal- An employer can terminate an employee based a prescribed list of reasons considered to be just cause on Article 16 of the General Labor Law.   

Unjustified dismissal- An employer can terminate an employer at any time for unjustified reasons. However, if this is the case, the employee can request to receive severance or demand his/her job back with the ministry of labor.  

  • Notice Period

According to Bolivian labor law, there is no mandatory notice period. 

  • Severance Pay

Severance for unjustified dismissal is equal to one month pay for each year of service.  

Employees also receive their Christmas bonus, holiday pay and bonus. 

Bolivia Tax

An individual resident in Bolivia is liable to pay income tax at the rate of 13% of his salary. Employers must deduct income tax from their employees’ wages and submit them to the National Service of Internal Revenue. To maintain ongoing compliance, employers must make compulsory social security contributions of 3% of the employee’s gross salary, pay a ‘joint risk’ prime of 1.7%.

To varying degrees, employers also contribute to several other national funds:

The health fund covers illness, maternity and short-term occupational hazards. Employer’s contribution is 10% of employee’s gross salary.
The social fund covers the construction, enlargement and repair of schools and hospitals. Employer’s contribution is 2% of employee’s gross salary.
The labour formation and training fund is optional and covers staff education and training. Employer’s contribution is usually 1% of gross salary.
Foreign employees are subject to the same taxes as local employees but are exempt from social security contributions. For businesses, company profit tax is chargeable at 25% on the company’s net profits and a 12.5% withholding tax is payable when Bolivian source income is paid to foreign beneficiaries. A 3% transactions tax 3% and applies to the transfer of ownership of movable assets, property, or the rights resulting from the exercise of a trade, industry, profession or business, among other things.

Health Insurance Benefits in Bolivia

Employees are paid for sick leave starting from the 5th day of illness for a period of 26 weeks within a one-year time period. The employee must produce a medical certificate proving illness. If medical care can be proven to prevent permanent disability, the sick leave may be extended for another 26 weeks.   

For common illnesses, an employee is entitled to100% pay. However, the employer is entitled to be reimbursed for 75% from social security.

Additional Benefits in Bolivia

The following bonuses must be paid to employees:

  • Profit bonus (Prima). When a company makes annual profits, all workers must receive one additional monthly salary, subject to a cap of 25% of the company’s profits (if this is not sufficient to pay all workers, they will receive a pro-rated payment).
  • Seniority bonus (Bono de Antigüedad). This is a monthly payment made to employees who have completed two or more years of continuous work. The base of the bonus is three times the national minimum wage, and is calculated as follows:
    • two to four years of continuous service: 5%;
    • five to seven years of continuous service: 11%;
    • eight to ten years of continuous service: 18%;
    • 11 to 14 years of continuous service: 26%;
    • 15 to 19 years of continuous service: 34%;
    • 20 to 24 years of continuous service: 42%;
    • 25 or more years of continuous service: 50%.
  • Christmas bonus (Aguinaldo). Employees are entitled to an additional monthly salary at the end of each year (or to a pro-rated payment if they have worked for less than a year). The Christmas bonus is not subject to tax and social security contributions. A special payroll must be prepared and filed to record payments of Christmas bonuses.

General market practice benefits/additional allowances

Bolivia is willing to increase its attractiveness as a country full of new opportunities for doing business, as it is showing interest in foreign investments and partnerships in strategic sectors such as hydrocarbons, mining, natural resources exploitation, transport, and communication. Lately, the acting president of Bolivia, Jeanine Añez, announced the initiation of removing Bolivian agro-industrial exportation restrictions set up by Morales.

Bolivia currently lags behind some neighboring countries in terms of development and entrepreneurship. However, Bolivia is bouncing back on the World Bank Doing Business 2020 ranking, sitting at 150 (improving 6 places from 2019).

There is great potential for foreign entrepreneurs to step into the gaps in this developing country’s unsaturated market.

Bolivia is rich in non-renewable natural resources. Bolivia’s largest export sectors are mining and hydrocarbons. There is still a lot of potential in this market to grow. Next to the already mined minerals such as silver, lead, zinc, natural gas, and tin, Bolivia possesses the largest lithium reserve in the world, which is not currently being used to its maximum benefit.

Doing business in Bolivia is made easier for Northern American companies as Bolivian consumer perceptions of North American products are generally high-quality and innovative. The American brand therefore carries a lot of influence in the Bolivian market.

Local governments use products and services from the United States because they are viewed as reliable due to warranties, high customer service standards, and maintenance plans.

Bolivia provides low cost labor for foreign companies doing business in the country. Bolivia’s workforce maintains an average salary of BS 2,122 (around US$310). Bolivia’s main labor cost advantages can be found in sectors such as manufacturing and customer service.

Bolivia Holidays

There are twelve recognized national holidays, though some cities observe local holidays that are formally recognized as well (such as La Paz Day, celebrated only in La Paz):

  • New Years Day
  • Plurinational State Foundation Day
  • Plurinational State Foundation Holiday
  • Carnival Monday
  • Carnival Tuesday
  • Good Friday
  • Labor Day
  • Corpus Christi
  • Andean New Year
  • All Souls Day
  • Christmas Day

Why Choose WeHireGlobally

WeHG takes care of all the onboarding hurdles, payroll, compensation and benefits, tax filing, and termination of employment. Our Employer of Record solution allows you to manage your overseas teams efficiently while minimizing cost and risk.

FAQ Bolivia

  • Working hours in Bolivia

    A full workday is 8 hours. In addition, the maximum number of workdays in a week is 6 days.

  • What are the main holidays in Bolivia?

    • New Years Day
    • Plurinational State Foundation Day
    • Plurinational State Foundation Holiday
    • Carnival Monday
    • Carnival Tuesday
    • Good Friday
    • Labor Day
    • Corpus Christi
    • Andean New Year
    • All Souls Day
    • Christmas Day
  • What are payroll taxes in Bolivia?

    An individual resident in Bolivia is liable to pay income tax at the rate of 13% of his salary. Employers must deduct income tax from their employees’ wages and submit them to the National Service of Internal Revenue. To maintain ongoing compliance, employers must make compulsory social security contributions of 3% of the employee’s gross salary, pay a ‘joint risk’ prime of 1.7%.

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