If you are interested in starting a business in Guatemala, or are already active in Central America’s largest economy, adherence to local employment law will be essential to the smooth running of your company and the maintenance of your good standing with local authorities. Employment law in Guatemala may slightly differ based on the city. Employment law in Guatemala is overseen by the Ministry of Labor and Social Welfare, and although Guatemalan employment regulations share many similarities with those found in other jurisdictions, there are also considerable particularities to take into account.
For anyone looking to hire a small team on a temporary basis or who needs a local executive, such as a regional representative or sales manager, a popular alternative to actually starting a business is to hire staff through an employer of record (EOR) in Guatemala. Because an EOR will hire staff on your behalf and manage their payroll, it allows you to avoid going through company formation and get to work in the market as soon as the right team members are found. It also comes with the guarantee of compliance with the local employment law in Guatemala.
Below, an overview of employment law in Guatemala is provided, covering standard working hours, common contract types, terminations and severance, leave and other absences, and the salary-based contributions that employers must oversee. At the end of the guide, a free-to-download infographic covering these key aspects of employment law in Guatemala is also included. If you need assistance with market entry or are doing business in Guatemala and could use some back-office support, contact us today to find out more about how we can assist you.
*Employment law in Guatemala: working hours*
Statutory working hours under employment law in Guatemala differ based on whether an employee is a daytime, nighttime, or mixed-shift worker. For daytime workers, who are defined as those whose regular working hours fall between 06:00 and 18:00 on a given day, the working week is a maximum of 44 hours long, based on eight-hour working days, meaning that a standard working week consists of five and a half working days. For nighttime workers, who are defined as those whose regular working hours fall between 18:00 and 06:00 the next day, the working week is a maximum of 36 hours long, based on 6-hour working days, meaning that a standard working week consists of five working days. Mixed-shift workers have a regular schedule that involves both daytime and nighttime working hours as earlier defined. Usually, a given shift should include no more than three hours of nighttime hours and should be a maximum of seven hours long. A mixed-shift worker should work no more than 42 hours per week, meaning that a standard working week consists of a maximum of six working days. Note that, there are generally between eight and ten public holidays that fall on weekdays each year, as well as an additional public holiday observed in capital Guatemala City which can fall on a weekday.
*Common contracts under employment law in Guatemala*
There are three types of individual labor contracts used under employment law in Guatemala, consisting of:
1. Indefinite-term contracts: These contracts have no definite termination date and only end based on the mutual agreement of the employer and employee or under circumstances when one party can act unilaterally.
2. Fixed-term contracts: These contracts run for a set period specified within the contract itself.
3. Specific work contracts: These contracts are used for the completion of a particular task or project, for which parameters and benchmarks must be clearly stated within the contract.
*Labor Law: Termination & severance*
Under employment law in Guatemala, employees are obliged to provide notice of their decision to terminate a contract based on their length of service with the employer. The notice periods vary depending on the length of service.
*Vacations, leave, & other absences under Guatemalan law*
Employment law in Guatemala establishes that employees who have served at least one year with the same employer are entitled to a vacation period that must last at least 15 working days. Maternity and paternity leave, sick leave, bereavement leave, marriage leave, court summons leave, and union duties leave are also covered under Guatemalan employment law.
*Employment law in Guatemala: statutory contributions*
Employee deductions and employer contributions are required by employment law in Guatemala. These contributions go to various organizations such as the IGSS, IRTRA, and INTECAP, and are based on a percentage of the employee’s salary.
*Frequently Asked Questions about Labor Laws in Guatemala*
In our experience, these are the common questions and doubtful points of our Clients. The FAQ section covers various aspects of labor laws in Guatemala, including working hours, working conditions, notice periods, bonuses, and more.
