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Employment Norms in El Salvador
El Salvador is a Central American country located on the Pacific coast. With a population of over 6 million people, El Salvador is known for its rich culture, stunning natural scenery, and bustling economy. The country has complex employment norms that may seem challenging to navigate for new employers. EOR services work to bridge this gap while ensuring legal compliance and assisting in employee management.
General Information:
- The currency of El Salvador is the United States Dollar (USD).
- San Salvador is the capital of El Salvador.
- Spanish is the official language of El Salvador. Documentation can be in Spanish to be considered legally valid.
- As of 2021, the GDP of El Salvador was reported to be USD 29.3 billion.
Labor Code of El Salvador (Código de Trabajo de El Salvador), Social Security Law (Ley de Seguridad Social), Migration and Foreigners Law (Ley de Migración y Extranjería), Occupational Health and Safety Law (Ley de Salud y Seguridad Ocupacional), Minimum Wage Law (Ley de Salarios Mínimos), and Tax Code (Código Tributario) are some laws that govern employment norms in El Salvador.
Table of Contents
- Agreements
- Onboarding Process
- Visa
- Minimum Wage
- Payroll Cycle
- Annual Bonus
- Health Benefits
- Working Hours and Overtime
- Leaves
- Social Security
- Taxes for Employers
- Taxes for Employees
- Probation
- Termination
- Severance Pay
- Employees or Contractors
- Final Words
AgreementsOnboarding ProcessVisaMinimum WagePayroll CycleAnnual BonusHealth BenefitsWorking Hours and OvertimeLeavesSocial SecurityTaxes for EmployersTaxes for EmployeesProbationTerminationSeverance PayEmployees or ContractorsFinal Words
Agreements in El Salvador
- Employment agreements in El Salvador must be in writing and include the terms and conditions of employment, including the job description, salary, working hours, and benefits.
- Collective bargaining agreements between employers and unions are common in El Salvador and must be registered with the Ministry of Labor.
- Fixed-term employment contracts are allowed in El Salvador, but they must not exceed two years and cannot be renewed repeatedly to circumvent permanent employment.
- Internship agreements must be in writing and specify the duration, tasks, and compensation for the internship period.
- Non-compete clauses in employment agreements are allowed in El Salvador but must be reasonable in scope and duration.
- Employers must provide employees with a copy of the employment agreement and maintain a copy in the employee's file.
- The contracts and agreements must be in Spanish for legal reasons.
Onboarding Process in El Salvador
- Begins with the signing of the employment agreement.
- Employers must register new hires with the Social Security Institute (Instituto Salvadoreño del Seguro Social) within three days of their start date.
- Mandatory documents for onboarding include a copy of the employee's ID, a signed employment agreement, and proof of address.
- Best practices for onboarding in El Salvador include orienting employees to the company culture and policies, providing training on job-specific tasks, and assigning a mentor or supervisor to guide the new hire through their first few weeks.
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Visa in El Salvador
Business visa:
- A business visa can be single-entry (valid for 90 days) or multiple-entry (up to 2 years).
- A frequent travel card may also be issued for those who frequently travel to El Salvador for business purposes allowing multiple entries. A single visit can be up to 90 days.
Work visa:
For working in El Salvador, a work permit, as well as a residence permit, is required. The following are some of the requirements in addition to application documents.
- Letter from the employer
- Certificate of residence/ residency request form/ a letter requesting residency
- Work contract
- Good conduct certificate
- Police clearance certificates from El Salvador, the individual's place of residence, and home country
- Medical certificate
- Academic qualifications and work experience
Minimum Wage in El Salvador
The minimum wage in El Salvador is different for different industries. The lowest is for the agriculture sector, and the highest is for the trade and services sector. The minimum wage is updated in around three years.
Payroll Cycle in El Salvador
The payroll cycle in El Salvador is usually monthly. It can be weekly or bi-weekly as well, depending on the industry.
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Annual Bonus in El Salvador
Although not mandatory, it is common to pay a Christmas bonus in El Salvador as follows-
- 1 to 3 years - 15-day wage
- 3 to 10 years - 19-day wage
- More than 10 years - 21-day wage
Health Benefits in El Salvador
Health benefits are covered by social security (ISSS) in El Salvador. Employers can also choose to provide private health insurance additionally. The following benefits are covered by social security -
- Maternity
- Sick leave (if sick for more than 3 days, 75% of the salary is covered by social security)
- Disability
Working Hours and Overtime in El Salvador
- Work hours: Employees are allowed to work for a maximum of 44 hours per week with a typical work day of not more than 8 hours.
- Break: At least a half-hour break must be provided on a work day.
- Overtime: Employees are paid 200% of their wages when the work time exceeds the 44-hour mark. Only in cases of force majeure is there no overtime pay.
Leaves in El Salvador
Sick Leaves
Employees receive paid wages by the employer for up to 3 days of sick leave. Social security pays 75% of the salary for sick leave exceeding 3 days and up to 26 weeks. The payment is also based on the duration of the job before taking the leave.
Parental leaves
- Maternity leave: A female employee is entitled to 16 weeks of maternity leave, with six weeks taken before the birth of the child and 10 weeks after. 75% of the wages are paid during this period.
- Paternity leave: Male employees can avail of up to 2 days of paid paternity leave within 15 days of the child's birth. It is also known as emergency family leave and can be taken for the same.
Annual leaves
Employees who have worked for at least one year receive up to 15 days of paid annual leave and receive 130% of their wage during this period. There is no compensation for unused vacation days.
Public Holidays (for the Calendar year 2024)
These dates may change as per official government announcements.
- New Year's Day: 1st January
- Holy Thursday: 28th March
- Good Friday: 29th March
- Easter Day: 31st March
- Labor Day: 1st May
- Feast of San Salvador: 6th August
- Independence Day: 15th September
- All Saints' Day: 1st November
- All Souls' Day: 2nd November
- Christmas Day: 25th December
- New Year's Eve: 31st December
Public Holidays (for the Calendar year 2025)
These dates may change as per official government announcements.
- New Year's Day: 1st January
- Holy Thursday: 17th April
- Good Friday: 18th April
- Easter Day: 20th April
- Labor Day: 1st May
- Feast of San Salvador: 6th August
- Independence Day: 15th September
- All Saints' Day: 1st November
- All Souls' Day: 2nd November
- Christmas Day: 25th December
- New Year's Eve: 31st December
Taxes for Employers in El Salvador
Employers are required to contribute around 16% of the employee's salary towards various funds. The following is the breakdown of taxes -
- Social security - 7.5%
- AEP Pension Fund - 7.75%
- INESAFORP (for companies with more than 10 employees with salaries less than USD 1000 per month. - 1%
Employers are required to withhold and pay taxes on the employee's behalf.
Taxes for Employees in El Salvador
Income tax:
The following are the income tax brackets of various amounts of income.
- Up to USD 4,064 - 0%
- 4,064 to 9,142.86 - 10% + 212.12 USD
- 9,142.86 - 22,857.14 USD - 20% + 720 USD
- Above 22,857.12 USD - 30% + 3,462.86 USD
Other contributions:
- Social security - 3%
- AEP Pension Fund - 7.25%
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Probation in El Salvador
The probation period in El Salvador cannot be more than 30 days. The employee can be fired during this period.
Termination in El Salvador
An employee can be terminated under several conditions, including poor performance, violation of company policies, misconduct, and redundancy. The specifics of termination, including notice periods, are regulated by the Salvadoran Labor Code and the individual contracts between the employer and employee.
Severance Pay in El Salvador
Severance pay is governed by the Labor Code and is calculated based on the length of an employee's service. An employee who has worked for more than one year is entitled to receive a severance payment equal to one month's salary for each year of service. Employees are only entitled to receive severance pay wherein the employee is dismissed without a just cause. Proportional vacation and year-end payments must also be paid.
Employees or Contractors in El Salvador
- El Salvador has different classifications for full-time employees and contractors that work on a fixed-term contract.
- Employees are those who are on a payroll and receive benefits. The employer is required to withhold and pay their taxes on their behalf.
- Contractors are hired on a project-to-project basis and are paid for a fixed term. In El Salvador, they may receive certain benefits as per their sector and the nature of their work. El Salvador has a high number of contractual workers.
- Misclassification of the two may lead to legal repercussions.
Final Words
The employment norms in El Salvador are governed by various laws, regulations, and agreements aimed at protecting the rights of employees and ensuring a fair and safe work environment. With its growing economy, El Salvador provides ample opportunities for employment and growth. Understanding the laws and regulations related to employment is crucial to ensuring a smooth and successful experience for both employers and employees. EOR services help employers with employee management and other business-related legalities letting employers focus on their business goals.
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Social Security in El Salvador