Hiring Talent And Managing Payroll In Guatemala

Agreements

Onboarding Process

• Providing a detailed job description and employment agreement to new hires, outlining job expectations and benefits.
• Verifying the new employee's identity and obtaining a copy of their identification card or passport.
• Providing new employees with the necessary forms and paperwork to enroll in social security and other benefits.
• Conducting orientation and training sessions to familiarize new hires with company policies, procedures, and expectations.
• Assigning a mentor or supervisor to provide guidance and support during the new employee's probationary period.

Minimum Wage

• The monthly minimum wage in the Guatemala Department of Agriculture is GTQ 3,323.60.
• GTQ 3,416.38 monthly is paid to the employees working in the Guatemala department of non-agricultural activities.
• GTQ3,143.54 per month is paid to the ones engaged in the Guatemala Department of Export activity and maquiladora.
• Those working in all other departments of agriculture are paid GTQ 3,237.53 on a monthly basis.
• Employees engaged in all other departments of non-agricultural activities get GTQ 3,327.56 monthly.
• Employees in all other departments of export activity and maquiladora earn GTQ 3,062.63 per month.

Payroll Cycle

Annual Bonus

Health Benefits

• Private health insurance
• Social security benefits
• Access to on-site or off-site medical clinics or healthcare providers
• Wellness programs

Working Hours and Overtime

• Work hours: Work hours in Guatemala are typically 8 hours per day and 40 hours per week. People work from Monday to Friday and it is a common thing to have a 44 hours work week.
• Break: Employees are entitled to a 30-minute break for every 6 hours of work.
• Overtime: Overtime work is compensated at a premium rate of 150% of the regular hourly rate. 200% of the hourly wage is paid, if the employee works on regular leaves, annual leaves, and official holidays.of daytime work and 2 hours of night work in 2 consecutive working days.

Social Security

Taxes for Employees

• Income tax: Employees are subject to a progressive tax rate of 5% the employees whose income ranges between 0 to 300,000 GTQ. 7% of tax is levied on individuals who earn more than 300,000 GTQ.
• Social security: Employees are required to contribute to the Guatemalan Social Security Institute (IGSS) at a rate of 4.83% of their monthly salary, with a cap of GTQ 20,000 per month.

Termination

• Termination by mutual agreement between the employer and employee
• Termination due to the end of a fixed-term contract
• Termination due to the completion of a specific task or project
• Termination for disciplinary reasons, such as misconduct or poor performance
• Termination due to a reduction in workforce or restructuring
• Termination due to a force majeure event or circumstances beyond the control of the employer

Severance Pay

• In Guatemala, an employee is eligible for severance pay if they have worked with the employer for at least one year.
• The severance pay is calculated based on the employee's monthly salary, the duration of their employment, and the reason for the termination. The amount of severance pay can range from 15 to 45 days of salary per year worked.
• If the employer terminates the employee without cause, they must pay the full severance amount. However, if the employee resigns or is terminated for cause, they may receive a reduced amount of severance pay.

Employees or Contractors

• In Guatemala, the legal definition of an employee is a person who works for an employer and receives compensation for their work.
• The legal definition of a contractor is a person or company that performs a service for an employer under a contract that defines the service to be performed, the compensation for the service, and the period during which the service will be performed.
• Misclassifying an employee as a contractor can result in fines and penalties for the employer. The employer may be required to provide back pay and benefits to the misclassified employee.
• Misclassifying a contractor as an employee can also result in penalties and fines, as well as the potential for legal action by the contractor seeking employee benefits and protections.

Final Words