Bolivia PEO & Employer of Record
Companies looking to enter the Bolivian market or engage local or expat workers in this country may take advantage of WeHG’s international PEO and global Employer of Record services in Bolivia. A Bolivian subsidiary must be established according to the traditional approach. While everything is going on, our technology enables you to begin business activities in Bolivia within days, saving you both time and money. On your behalf, WeHG would appoint people, but you would retain complete operational control over their work. They would therefore be our local payroll staff, 100% compliant, and working on your behalf.
Bolivia fast facts
Population: 12.08million (2021)
Land area: 1.099 million km²
Capital: La Paz (Executive and Legislative) and Sucre (Constitutional and Judicial)
Local Currency: Bolivian Boliviano (BOB)
GDP per capita:$9,933
GDP in currency:$118.8billion
Bolivia is a country in west-central South America. Bolivia, which extends 950 miles (1,500 km) north-south and 800 miles (1,300 km) east-west, is surrounded by Brazil to the north and east, Paraguay to the southeast, Argentina to the south, Chile to the southwest and west, and Peru to the northwest. Lake Titicaca, the second-largest lake in South America (after Lake Maracaibo), is shared by Bolivia and Peru. Since Chile won the War of the Pacific (1879–1844), the nation has remained a landlocked one, but agreements with its neighboring countries have given it indirect access to the Pacific and Atlantic oceans. The Supreme Court is established in the ancient city of Sucre, which serves as the country’s administrative capital, while the executive and legislative arms of government are housed in La Paz.
Hiring, Negotiating and Doing Business in Bolivia
Necessity of written employment contract
In Bolivia, employment contracts must be in writing and registered with the labour ministry. (They can be for a specified or an indefinite term.) While foreign employees do not need work permits, they must register their employment contracts with the Bolivian labor authorities within 90 days of signing them. To sign the contract and carry it out, the workers require a special purpose visa and a one-year resident visa.
Different forms of engagement: employment, contracting, work with private entrepreneur
“Workers” and “employees” are distinct in accordance with the General Labour Law. While employees often work in an office on a set schedule and special circumstances and primarily perform intellectual work, workers provide material or manual services. Although each category is covered in detail by the General Labour Law and other labor rules, they have evolved over time to become more standard, mostly to prevent imbalances. As a result, the terms “employees” and “workers” are used interchangeably throughout this Q&A.
Independent contractors and self-employed people are not considered to be workers or employees for labor law purposes. However, it is normal practice to exploit these ideas to cover up a working relationship and avoid some responsibilities (such as taxes, social security affiliation, and entitlement to labor rights). The misclassification of a worker as an independent contractor is punishable under the principle of material reality.
Bolivia Employment Contract
Types of employment agreements
In Bolivia, indefinite contracts are the most common and effective way to control working conditions. Any labor agreement, whether in writing or verbally, shall be regarded as endless. The only agreement that may give the employee a trial term of 90 days is this one. Employees can utilize this time to get used to the workplace and the employer has the right to end the relationship at any time during this time without having to pay a termination fee.
A fixed-period contract is 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 under 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 work 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 an 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 indefinite.
In both types of contracts, employees have rights and obligations of the employment relationship, including the contributions to social security made by the employer.
Bolivia working hours
Starting with male workers, are not to work more than 48 hours per week, and women have a 40-hour cap. Working hours during the daytime start at 6 am and end at 8 pm. and the working time per day is limited to eight hours. Employees can only work eight hours each day. Working hours for shift workers can be longer, so long as the average doesn’t exceed the maximum over a three-week period.
Hours worked between 8 PM and 6 AM qualify as night work. Employees may only work seven hours per night, and they must receive a 25 percent to 50 percent salary increase for hours worked during the night period. The scale of the salary increase should reflect the nature of work and the employee’s circumstances. If a day shift is over five hours, workers must receive a break every two hours. Night workers may take a break after three and a half hours.
Work done in emergencies or to meet the employer’s needs is referred to as overtime. Overtime is treated as extraordinary working hours which must be compensated accordingly. They must be compensated with 100% extra pay, and must not exceed a total of two hours per day. Extra payment of 100% also applies to work done during public holidays.
For working on Sundays, workers must be compensated by three times the daily salary, or, in some situations, by granting a leave of one working day to the employee (to be determined by management).
Vacation leave in Bolivia
- An employee is entitled to 15 days of paid annual leave after one year of service.
- A worker who has been with the company for at least five years is entitled to 20 days of paid yearly leave.
- An employee who has worked for the company for at least ten years is entitled to 30 days of paid yearly leave.
Bolivia Maternity Leave
Mothers are to be granted a total of 90 days, which are divided into 45 days prior to the anticipated due date and 45 days following the baby’s delivery. A mother on maternity leave receives compensation equal to 100% of the federal minimum wage. Yet, the employer is entitled to a 90% social security refund.
The mother is eligible for a prenatal subsidy starting in the fifth month of pregnancy and a nursing subsidy up until the kid turns one. Each of the subsidies equals one month’s salary per month of pay.
Mothers are given a year for job protection starting on the day the kid is born.
Bolivia Paternity Leave
For the birth of a child, fathers are entitled to 3 days’ pay. From the date that the child is born, fathers receive job protection for 1 year.
Bolivia Severance Laws
- Termination Process
Justified dismissal: Under Article 16 of the General Labor Code, an employer has the right to terminate an employee for one of the reasons on the list of grounds that are regarded to be just.
Unjustified dismissal: An employer has the right to fire a worker at any time for unjustified reasons. Yet, if this is the case, the employee may claim severance pay or a job reinstatement from the ministry of labor.
- Notice Period
The notice periods for blue-collar employees are 7 days for one month of service, 15 days for six months of service, and 30 days for one year of service; for white-collar employees, the notice time is 90 days for employment of more than three months.
- Severance Pay
Severance for unjustified dismissal is equal to one month’s pay for each year of service.
Employees also receive their Christmas bonus, holiday pay, and bonus.
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 employee’s 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, and 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. The employer’s contribution is 10% of the employee’s gross salary.
The social fund covers the construction, enlargement, and repair of schools and hospitals. The employer’s contribution is 2% of the employee’s gross salary.
The labor 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% transaction 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 entitled to sick leave starting on the fifth day of their illness for a total of 26 weeks over the course of a year. The employee must present a medical document attesting to their illness. The sick leave may be extended for an additional 26 weeks if medical treatment can be shown to avoid permanent disability.
Every employee is entitled to 100% pay for common illnesses. Yet, the employer is allowed to get a 75% social security reimbursement.
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 unique 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.
Listed here are the 2023 public holidays in Bolivia;
- New Year’s Day January, 1
- Plurinational State Foundation Day January, 23
- Candlemas February, 2
- Carnival February, 20 – 21
- Good Friday, April, 7
- Labor Day May, 1
- Corpus Christi June, 8
- Willkakuti June 21
- Agrarian Reform Day August 2
- Independence Day August 6
- National Dignity Day October, 17
- All Souls Day November 2
- Day of the Dead November 2
- Christmas Day December 25
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.
A full workday is 8 hours. In addition, the maximum number of workdays in a week is 6 days.
- 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
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%.