Nicaragua PEO & Employer of Record

WeHG provides an International PEO and vglobal Employer of Record service in Nicaragua to companies willing to enter the Nicaragua market or hire local/expat employees in this country.

Traditional approach requires establishing a subsidiary in Nicaragua.  However our solution allows you to start the operations in Nicaragua 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. 

Nicaragua fast facts

Population, million: 6,624,554
Land area, sq. km: 130.373 billion m²
Capital: Managua
Local currency: Nicaraguan córdoba (NIO)

GDP per capita:$ 1610.00
GDP in currency:$ 11.40 billion
Economic growth percentage: 1.1%
Inflation rate (consumer prices): 4.05%
Volume of export: $ 479 million
Import of goods and services: $ 843 million
Total population: 6,624,554
Population of working age (15-64): 43.68%

Hiring, Negotiating and Doing Business in Nicaragua

Necessity of written employment contract

In accordance with the Nicaraguan Labour Code, an individual employment contract is the written or verbal agreement between an employee and employer whereby a labour relation is established in order for the employee to execute a function or render a service. Employment contracts can be both written and oral. Verbal contracts are allowed only in agricultural work; housekeeping work; and temporary work that do not exceed 10 days. In the case of oral contract, an employee must be provided with a record of employment containing date of commencement of employment relationship, service to be provided and agreed wage rate. Contract of employment may be concluded for a fixed term or for an indefinite term. A written employment contract must be written in Spanish, drawn up in duplicate and signed by both parties. These copies are then submitted to the Ministry of Labour for certification. It must contain the following information: identity of the parties; job description and workplace; daily and weekly hours of work; duration of contract (contract type); amount of remuneration and payment intervals; and place and date of signing the contract.

Nicaragua Employment Contract

Types of employment agreements

Nicaraguan labour Law allows hiring fixed term contract workers for tasks of permanent nature. Labour Code does not mention the maximum term of a fixed term contract however these fixed-term contracts may be extended twice in succession. After the second extension, the contract is considered indefinite, regardless of the duration of each extension.

Nicaragua working hours

Nicaragua’s employment compliance laws stipulate a cap of 48 working hours per week. Night shifts have a maximum of 42 hours a week, and mixed shifts can’t exceed 45 hours a week. If employees work any overtime hours, they can’t work more than nine a week.

Overtime

Overtime should get paid at double the employee’s usual rate.

Vacation leave in Nicaragua

According to the Labor Code of Nicaragua, the employee is entitled to 15 paid days of vacation for each 6 months of continuous work for the same employer. The current criteria of the Labor Authorities considers that the vacation time must be used by the employee and can only be paid to the employee if/when the labor relationship ends and the employee has unused vacation days accrued to the date of termination, in which case, the Labor Code stipulates that the this payment must be made according to the employees last salary, but in the case of a variable salary, it shall be calculated according to the average of the last 6 months of salary received by the employee.

Sick leave: 

If an employee becomes ill or injured at work, s/he has up to one year to recover, with a pension from the Social Security Institute.

If the employee has a non-work related illness or injury, s/he is generally entitled to 26 weeks of leave, but this is often increased to one year. The first three days are unpaid, unless the company has established a practice of paying for those days.

Nicaragua Maternity Leave

Female employees are entitled to a maximum of twelve weeks of maternity leave with full pay on provision of medical certificate indicating the expected date of confinement. The Ministry of Health enacts this certificate without any charges. Maternity leave includes compulsory 04 weeks of pre-natal and 08 weeks of post-natal leave. Maternity Leave is extended up to 14 weeks (02 additional weeks) in the case of multiple births. In the case of miscarriage, stillbirth or other abnormal confinement, the woman worker shall be entitled to paid leave in accordance with the requirements of the medical certificate.

Nicaragua Severance Laws

An employment contract can be terminated on expiry of the agreed terms, by the mutual agreement, death or incapacity, convicting sentence or employee’s imprisonment, court order, act of God, or force majeure that brings the shutting down of the company as a consequence, and retirement. Labour law requires an employee to tender a resignation notice 15 days before submitting his resignation. However, there is no clear indication whether the same condition applies on an employer wishing to terminate an employee. Agricultural workers may verbally notify the employer in the presence of two witnesses. In case of wrongful termination, the worker can request reinstatement before the Labour Ministry. Upon order of reinstatement, the employer not only has to allow it but also he/she has to pay the wages that were not received while the employee was not working. In case of non-compliance, the employer has to pay 200% of the indemnification for seniority. Dismissed workers who are qualified as “trusted employees” are not reintegrated into their jobs.

Severance Pay 

The Labour Code provides severance pay regardless of the cause for termination, whether by mutual consent or resignation. At the end of a service, an employer is obliged to pay following to the worker: – Vacations: the vacations are paid in conformity with the last salary earned by the worker. In case of variable salary, it will be necessary to pay in conformity to the average of the ordinary salary of last six months. – Thirteenth month salary, usually paid at the end of every one year of service. If an employer terminates the employment contract for an indefinite period without any just cause, he/she has to pay the worker compensation equivalent to: (i) One month’s salary for each of the first three years of work; (ii) Twenty days’ wages for each year of work from the fourth year. This compensation cannot be less than 01 month or more than five months.

Nicaragua Tax

Employers contribute 18.5% of wages to social security, subject to an income cap. Employees contribute 6.35%, also subject to an income cap.

Health Insurance Benefits in Nicaragua

Nicaragua has a public/private healthcare system. Most routine visits are covered by the government. And while there is no private insurance like in the U.S., the major hospitals offer a program that works a lot like insurance.

Additional Benefits in Nicaragua

Employers are expected to pay one month’s salary as a Christmas bonus.

Nicaragua Holidays

• New Year’s Day
• Holy Thursday
• Good Friday
• Liberation Day
• Battle of San Jacinto
• Independence Day
• Indigenous Resistance Day
• Immaculate Conception
• 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 run your foreign teams efficiently while minimizing cost and risk.