For anyone looking to register a business in El Salvador or already active in this Central American market, understanding and implementing employment law is crucial for maintaining good standing and maximizing success. Employment law in El Salvador is overseen by the Ministry of Labor and Social Welfare, and while many regulations are similar to those in other countries, there are unique aspects to be aware of.
When dealing with employment law in El Salvador, it may be best to hire through an employer of record (EOR), especially for limited-scale engagements or short-term operations. This allows you to avoid establishing a local entity and ensures compliance with local norms through the EOR provider.
To understand labor law in El Salvador, it is important to familiarize yourself with the local code. A basic guide to employment law in El Salvador is provided below, covering working hours, types of contracts, termination and severance, leave allowances, and salary-related contributions and deductions.
Employment law in El Salvador provides a balanced and business-friendly framework that promotes growth. In addition, the country’s strategic location, skilled workforce, and efforts to attract foreign investment make it an attractive choice for entrepreneurs.
Under employment law in El Salvador, the standard working week consists of 44 hours, with a maximum of 8 hours per shift. Night shifts have a maximum work week of 39 hours based on 7-hour shifts. The country also observes 10-11 national holidays and 2-3 regional holidays each year.
The two most common types of employment contracts in El Salvador are indefinite-term contracts and fixed-term contracts. Indefinite-term contracts can only be terminated by mutual agreement or for specific reasons outlined in the contract. Fixed-term contracts have a specified duration and outline the tasks to be completed.
Termination and severance in El Salvador depend on the probation period and the reasons for dismissal. Employees can be terminated without notice during the probation period, which typically lasts for 30 days. After this period, just cause is required for dismissal. In the case of termination without cause, employees are entitled to a liquidation payment.
Employees who have worked for at least one year are entitled to 15 days of paid vacation leave. Maternity leave lasts for 12 weeks, with at least 6 weeks taken after the birth, and is paid by the state social security fund. Paternity leave lasts for 3 days in the case of birth or adoption.
Sick leave entitlement varies based on length of service, ranging from 20 days for employees with one to five months of service to 60 days for those with more than one year.
These are just some of the key provisions of employment law in El Salvador. If you need assistance with negotiating employment law or other related matters, feel free to contact us. El Salvador’s favorable business climate, supported by sound employment law, makes it an attractive choice for growth and success in Central America.
