Hire in Uruguay

EOR in Uruguay

If a lack of speed or local expertise are among your top concerns when expanding to or employing workers in Uruguay, an employer of record may be the best option for achieving your global growth objectives.

An employer of record, sometimes known as an international PEO, enables you to quickly hire and onboard workers in Uruguay ―often in as little as two weeks―without having to take on the cost and risk of establishing a local entity.

Learn about the hiring, employment, payroll and benefits requirements for workers in Uruguay and how our employer of record service, EOR, and local HR experts can help you manage your international employment needs.

Hiring in Uruguay

In Uruguay, there is no single employment law or code. The rules governing employment are found in various legislative and regulatory instruments, including the constitution, international treaties and conventions, and statutes and regulations. Judicial opinions are very important in the development of Uruguayan employment law.

Employment contracts in Uruguay

As you look to hire employees in Uruguay, here are some standard regulations you’ll need to know to create a compliant contract, as well as how an employer of record and PEO can provide support for your unique HR needs.

Working hours

Employees working in the commercial sector, or the commercial areas of the industrial sector, are limited to working 44 hours per week. Employees in the industrial sector may work 48 hours per week.

The working day of both industrial and commercial workers is limited to eight hours with a daily rest period that ensures that industrial workers do not work more than five consecutive hours and commercial workers no more than four consecutive hours.

The rest period for industrial workers varies between 30 minutes and two hours, and the rest period for commercial workers is between 30 minutes and two and a half hours depending on whether the break is compensated. In both cases, when the break is uncompensated the two or two and a half hours rest period may be reduced to one hour with the written agreement of the employer and the employee.

A weekly rest period of 36 hours is mandatory in the commercial sector. This is taken from 1:00 p.m. on Saturday through all day Sunday. An employer and an employee can agree to other days of rest, provided their duration is still 36 consecutive hours.

A weekly rest period of 24 consecutive hours is mandatory in the industrial sector and is generally taken on Sundays after six days of work.

Overtime hours are those that exceed the statutory or contractually agreed limit for the activity or employment category. Employees must agree to overtime and can generally work no more than eight hours of overtime during a single week.

Compensation

As you consider the appropriate salary to offer new employees, keep in mind:

• Effective January 1, 2024, the standard national minimum wage is 22,628 pesos up from 21,106 pesos.
• Overtime hours on normal working days are paid at double the hourly rate usually paid to the employee.
• Overtime worked on days that—according to statute, convention, agreement, or custom—constitute bank holidays or weekly rest days are paid at two and a half times the normal hourly rate.

As your employer of record in Uruguay, we can provide you with resources and insights about employee compensation, so you are better equipped to make a competitive employment offer.

Bonuses

Employees are entitled to a statutory annual bonus equal to one-twelfth of the total compensation paid during the 12 months ending December 1. Payment of the bonus must be made in two installments, one covering the six months from December to June and paid before June 30, the other the six months from July to November and paid within 10 days before December 24.

Probationary period

The trial period must not exceed three months and should be agreed to in writing.

Termination and severance

Employers are not required to specify a reason for an individual dismissal provided the employee is paid all severance owed. Employers also are not obliged to give notice before dismissal.

When the employment relationship is terminated by dismissal, an employee has the right to receive compensation unless the dismissal was for cause. If severance is withheld, the employer must provide a written explanation to the employee, who may challenge the termination in court.

Severance is equivalent to one month for every year or a portion of a year worked up to a maximum of six months’ pay. Employees who leave an employer are also generally entitled to be compensated for accrued but unused vacation leave and annual bonuses.

Terminated employees are generally entitled to a pro-rata share of their bonus based on time worked, although dismissal for misconduct may result in the loss of the entire bonus.

During the trial period, the employment relationship may be terminated by either party without cause or liability for severance pay.

Employee benefits and paid leave in Uruguay

When negotiating terms of an employment contract with a candidate in Uruguay, here are some of the statutory benefits and paid leave requirements to keep in mind, as well as how an employer of record can support your company’s benefits strategy.

Maternity leave

Pregnant workers have the right not to work during the six weeks preceding and the eight weeks following childbirth and to receive medical assistance and a stipend representing wages, yearend bonuses, and vacation pay plus vacation bonus. In the event of birth before the expected date, postpartum leave is extended to reach the full leave entitlement of 14 weeks. If birth is later than expected, the full eight weeks of postnatal leave is still available to the mother. If the mother suffers a pregnancy- or childbirth-related illness, leave can also be extended. The mother can also choose to take the entire 14 weeks of leave after the child is born.

Payments to the employee during maternity leave are made by the social security institute—Banco de Previsión Social (BPS) —not the employer.

Vacation

Employees are entitled to a minimum annual paid vacation of 20 consecutive days, although under a collective bargaining agreement, the annual leave may be divided into two periods of not less than 10 days. Employees with more than five years of service are entitled to one additional vacation day for every five full years of service. Payment for annual leave must be made before the leave begins.

If an employee works for part of the year only, vacation entitlement is calculated pro rata for the months worked. Public holidays or Sundays cannot be considered in the calculation of the leave period.

The right to vacation may not be waived and employees may not be given additional wages instead of vacation except where specifically provided by law (e.g., technicians may in exceptional cases accept three times their salaries instead of vacation leave).

Holidays

The following paid public holidays are observed in Uruguay:

• New Year’s Day
• Labor Day
• Constitution Day
• Independence Day
• Christmas Day

Work performed on mandatory public holidays must be compensated at two and a half times normal wages.

According to Uruguayan Law, public holidays are observed under the following scheme:

• If the public holiday falls on a Saturday, Sunday, or Monday it will be observed on those days.
• If it occurs on Tuesday or Wednesday, it is observed on the Monday immediately preceding.
• If it occurs on Thursday or Friday, it will be observed on the Monday immediately following.

Sick leave

From the fourth day of absence for illness (or from the date of hospitalization), employees may claim a social security benefit of 70% of their salary for a period of up to one year, which may be extended for an additional year. To be eligible for salary replacement, an employee must have made social security contributions for at least 75 days or three months within the 12 months before the date of illness, although employees are entitled to medical, surgical, and pharmaceutical benefits from the first day of work.

Health coverage

The legal retirement age is 60 with at least 30 years of contributions to the social security system. Women are credited with one year of contributions for each biological or adopted child up to five years. Additional years of contributions are credited to workers in hazardous occupations. The pension may be deferred if the insured has at least 35 years of contributions.

Affiliation with the social security system is mandatory except for foreign workers rendering services in the Free Zones. Certain foreign workers may opt out of the Uruguay social security system by way of international treaties. The Social Security Administration (BPS) is responsible for the social security system, collects all contributions from companies and their employees, and maintains an up-to-date employment history for each worker. The social security system provides pension, unemployment, sickness, and maternity/paternity benefits.

Additional benefits

In addition to healthcare benefits, employees in Uruguay are entitled to pension, which is funded by government tax revenues, as well as workers compensation, which is covered through mandated employer insurance.

Employer social costs will cover a large portion of employee benefits in Uruguay, but we can consult with you about supplemental coverage options, such as additional pension contributions or life insurance if needed.

Updated: June 28, 2024

Employee onboarding with an employer of record in Uruguay

We write and validate all local employment contracts, streamlining the onboarding process for you and your Uruguayan employees—all you have to do is provide relevant information and review and approve the employment agreement. As your employer of record in Uruguay, we will:

• Schedule a welcome call to discuss HR and employment information for Uruguay, as well as answer any questions
• Prepare a customized employment contract in English or other local language
• Share the employment contract and benefits information with the new employee for signature and review
• Gather tax and banking information from the employee to set up payroll
• Provide a local point of contact to the employee to answer any questions regarding their employment, local HR or payroll

The entire onboarding process for the employee is often completed in as little as two weeks.

Partner with Safeguard Global as your Uruguay employer of record and PEO

With over a decade of service, we are the longest-serving employer of record and PEO provider in the international market. Organizations around the world rely on EOR, our employer of record solution, to expand and hire in 170+ countries around the world, quickly and compliantly.

We’ve seen just about every global employment circumstance imaginable—and with our extensive knowledge of local law and culture, we know what it takes to get employment right in Uruguay. We provide written contracts in the local language, salaries in the local currency and HR support in your employees’ time zone.

Additionally, as a global payroll provider we support payroll administration—including payments, filings and other calculations— all around the world and can accommodate the payroll outsourcing needs of any size organization.

Whether you’re looking to hire as part of a strategic expansion or to meet specific talent needs, our global solutions advisors can walk you through your international hiring options so you can make the right choice for your organization. Contact us today.

Disclaimer

The information provided on or through this website is for informational purposes only and does not constitute legal advice. Safeguard Global expressly disclaims any liability with respect to warranty or representation concerning the information contained herein, including the lost essence, interpretation, accuracy and/or completeness of the information in transit and language translation.