Uruguay PEO & Employer of Record

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

The general approach requires establishing a subsidiary in Uruguay.  However our Employer of Record solution gives you a chance to start the operations in Uruguay within days hence save time and money.  WeHG would recruit 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. 

Uruguay fast facts

Population, million: 3,473,730
Land area, sq. km: 176,215  km²
Capital: Montevideo
Local currency: Peso Uruguayo (UYU)

GDP per capita:$ 14100.00
GDP in currency:$ 54.40 billion
Economic growth percentage: 4.1%
Inflation rate (consumer prices): 0.19%
Volume of export: $ 465 million
Import of goods and services: $ 18.99 billion
Total population: 3,473,730
Population of working age (15-64): 54.8%

Uruguay is a small country with approximately 3,500,000 inhabitants. It is a founding member of Mercosur and for the last decade its political and economic stability has attracted the attention of foreign investors seeking to incorporate a company and do business in Uruguay.

Hiring, Negotiating and Doing Business in Uruguay

Necessity of written employment contract

Written employment agreements are not mandatory in Uruguay, although it has become an expanded practice over the last years. Said agreements may be permanent or temporary. There are several wage fixing mechanisms perceived as remuneration: individual negotiation with each worker in his/her employment agreement, bilateral bargaining with the execution of bargaining agreements between company and trade unions or tripartite bargaining where the government takes part together with workers and employers in the fixing of minimum wages by category and biannual readjustments through the Wage Boards (tripartite entities made up of State, workers and employers’ delegates).

Uruguay Employment Contract

Types of employment agreements

There are two types of employment relationships:

1. Indefinite term: in the event that nothing is expressly provided for. 
2. Fixed-term: seasonal duties, substitutions or specific jobs can be performed through fixed-term employment agreements in writing. In any of the previous forms, workers can be hired on a monthly, daily or by the task basis. 

Upon expiry of a definite-term agreement, if services are still being rendered, the relationship could become indefinite. The same happens upon expiry of the term of the agreement, the relationship continues as if it had always been indefinite. The employer’s condition is not of a personal nature, which means that the employer can be replaced by another employer without affecting the contract, for example when the company is sold.

Uruguay working hours

The law establishes a double limit to the workday:

• Weekly limit: effective work will not last more than 48 weekly hours for every 6 days of work.
• Weekly limit: effective work will not last more than 8 daily hours of effective work.

Overtime

Overtime work is generally compensated at twice the normal wage, and work on public holidays is paid at 2.5 times the regular compensation.

Vacation leave in Uruguay

Workers are entitled to paid annual leave. Paid vacations are calculated based on consecutive business days. The minimum is 20 days of leave after a year of work has been completed. The law also provides an increase in leave days based on seniority at the rate of 1 day every 4 years of work, with the peculiarity that the first day shall be granted after five years of work have elapsed. Workers with less than one year in their position are entitled to take a leave proportionally to the time worked. Leaves for every expired year must be fully taken within the following year, counted as of the expiry of the latest work period in which the leave was generated. The 20-day leave should be taken uninterruptedly, without considering public holidays or Sundays in the calculation of the leave period. Through collective agreements, leaves may be divided into two periods of not less than 10 days as an exception to this system (Law No. 13,556, article 1). Workers cannot waive their annual holiday or their compensation in money.

Sick leave

The first 3 days are paid in full by the employer and the fourth day onward is paid 70% by the institute of social security (BPS).

Trade union leave 

Subject to agreement in the collective bargaining of the sector.

Uruguay Maternity Leave

Maternity leave

This financial assistance is provided to the worker during the period in which the worker is on pre and post natal leave, covering 6 weeks before the expected date of delivery (42 days before) up to 8 weeks after childbirth (56 days after). 

Period concerned Starts

6 weeks before the expected date of delivery (42 days prior to childbirth) Until: 8 weeks after the birth of the child (56 days after childbirth) Premature Labor – Postpartum leave is extended until completing 14 weeks. Overdue Labor – Postpartum leave will NOT be reduced.

Parental subsidy for care of the newborn 

THE FATHER as well as THE MOTHER can benefit from this subsidy with the possibility of alternating its use. During the period in which the work schedule is reduced, 50% of the subsidy is paid to the entitled parent; payment is made on a monthly basis. This option begins from the day following completion of the Maternity Subsidy term and until the baby reaches the age of 4 months.

Special leave due to adoption 

Every dependent worker in the private sector who adopts one or more under-aged children shall be entitled to special leave for 6 continuous weeks (42 days). In addition they are entitled to have their work schedule reduced by 50% for a 6 month term (Law No. 17,292). 

Pap test leave 

Female workers are entitled to one day a year of paid special leave in order to facilitate their attendance to Pap tests and/or breast X-rays. Proof of said tests must be reliably provided.

Uruguay Severance Laws

Termination Process

Employees have the right to terminate employees, but must provide a notice period as well as severance pay.

Notice Period

A notice of 1.5 weeks should be given.

Severance Pay

Employees are entitled to severance payments which includes one months salary for every year employed up to 6 months of salary.

Uruguay Tax

Employee Income Tax

0% – 0-379,596

10.0% – 379,596 – 542,280

15% – 542,280 – 813,420

24% – 813,420 – 1,626,840

25% – 1,626,840 – 2,711,400

27% – 2,711,400 – 4,067,100

31% – 4,067,100 – 6,236,220

36% – 6,236,220 +

Employer Payroll Tax

5% – Health Insurance

0.1% – Labor Re-conversion Fund

7.5% – Pension Fund

0.025% – Labour Credit Guarantee Fund

12.625%  Total Employment Cost

Employee Payroll Taxes

15% – Pension Fund

3%-8% – Health Insurance

0.1% – Labor Re-conversion Fund

Health Insurance Benefits in Uruguay

Additional Benefits in Uruguay

Workers in Uruguay are entitled to Aguinaldo, which is an annual bonus payment equal to one month’s salary, commonly known as 13th salary. This bonus is payable in two installments, paid in June and December.

Uruguay Holidays

• New Year’s Day
• Epiphany
• Shrove Tuesday
• Maundy Thursday
• Good Friday
• Labour Day
• Battle of Las Piedras Day
• Constitution Day
• Independence Day (of Uruguay)
• Day of the Races
• 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.