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Hiring in Honduras? Read on to find out the employment norms (like taxes, payroll and benefits) and EOR (Employer on Record) norms in Honduras.
Employment Norms in Honduras
Honduras is a Spanish-speaking developing country in North America. The country has several employee-centric laws that help greatly improve the standard of living. Honduran laws are complex to process, especially for new businesses planning to expand there. EOR services assist potential employers in managing employees and ensuring legal compliance.
General Information:
- The currency of Honduras is Honduran Lempira (HNL)
- Tegucigalpa is the capital of Honduras
- Spanish is the official language of Honduras. Documentation can be in Spanish, in which legal documents can be drafted to be considered legally valid.
- As of 2021, the GDP of Honduras was reported to be 28.49 billion USD.
The Labor Code of Honduras dictates all norms related to employment. It has to be mandatorily followed while drafting agreements or contracts.
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
- Even though contracts can either be verbal or in writing in Honduras, a written agreement is always required. Authorization of the oral contract by the Labor Code is required. A verbal contract is only applicable in certain special cases.
- In case of a conflict, the facts given by the employee are given precedence as the employment laws in Honduras are labor-centric.
- The written contract must include the contract duration, salaries, timings, notice period, termination guidelines, etc.
- All the agreements are to be drafted in Spanish for official or legal purposes.
- Contracts can be negotiated by individuals or through labor unions and other such organizations.
- The contracts must follow the norms per the Labor Code of Honduras. Failing this, the employer may be liable for a fine.
Onboarding Process
- Before beginning work, the employer must give the employee a copy of the written contract, which includes all necessary details of pay, overtime, work timing, leaves, notice period, etc.
- The new employee should be enrolled in the social security scheme, and the required information should be filed.
- Employers can conduct a background check on the employees but should have written consent from the new employee.
Visa
Business Visa
The following important documents are required (other than the documents required for application) for a business visa to Honduras.
- Flight itinerary (to and from Honduras)
- Invitation letter from a host or a tourism agency in Honduras
- Proof of visas from other countries that the individual may hold
- Residency status (if residing in a foreign country)
- If applying for a multiple entry business visa, a letter from the employer of the country the individual is from is also additionally required. The letter must also state the intended period of stay.
Work visa (Honduras Consular Visa):
The Honduran laws state that the workforce must comprise 90% of Honduran citizens or locals. Authorization from the Honduran Ministry of Foreign Affairs is required for working in Honduras.
The following important documents are required (other than the documents required for application) for a Honduras Consular Visa.
- Valid passport
- Bank account statements (latest up to three months old)
- Property proofs in the country of residence
- Residency status (if residing in a foreign country)
- Letter from the employer in Honduras or the work contract
- Proof of purpose of visit to Honduras
- Personal letter indicating the period of stay and entry point
- Proof of visas from other countries held (if applicable)
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Minimum Wage
The minimum wage in Honduras varies from industry to industry as well as the number of employees in a company. It ranges from 6,440.66 HNL to 11,549 HNL.
Payroll Cycle
The payroll cycle depends on the agreement. It can be monthly, bi-monthly, weekly, daily, or hourly.
Annual Bonus
- A thirteenth-month bonus is paid to employees at the end of every year by December 20.
- A fourteenth-month pay is given as Social Compensation. This has to be paid by June 20.
Health Benefits
The Social Security scheme in Honduras covers healthcare. It includes -
- Sickness benefit
- Maternity benefit
- Workers' medical benefits
- Dependents' medical benefits
Working Hours and Overtime
- Work hours: Honduras typically has an 8-hour working day with a maximum of 44 hours per week. However, the pay would be calculated for 48 hours. A mandatory day off per week has to be given.
- Break: A break of at least 30 minutes is given per workday. Women employees (between the age of 14 and 18) are granted a leave of 2 hours.
- Overtime:The maximum overtime per week should not exceed 16 hours. The overtime pay granted is as follows-
- Additional 25% of dayshift salary when work is during the day
- Extra 50% of dayshift salary when work is during the night
- Extra 75% of night shift salary when the night shift is extended
Leaves
Sick Leaves
- Employees can take up to 26 weeks of sick leave and claim 66% of their salary for the last three months for the medical leave. A 3-day observation period is required, post which employees can extend the leave up to 26 weeks.
Parental leaves
- 4-week As per Honduran law, a pregnant employee is granted a 4-week leave before birth and another 6-week leave after birth as paid maternity leave. The employer pays for 34% of the leave, while social security pays for 66% of the leave.
- Honduras does not have any mandatory paternity leave.
Annual leaves
- An employee gets 10 consecutive days of annual leave upon working for at least one year. Similarly, the leave is for 12 days for working for 2 years, a 15-day leave for working for 3 years and a 20-day leave for working for 4 years or more.
Other leaves
An employee can take a paid leaves of 2 days per month and a maximum of 15 days per year. The leaves can be for:
- Serious domestic calamity
- Funerals
- Public obligations
Public Holidays (for the Calendar year 2023)
If the public holiday falls on the weekly off, the employees get a holiday on the following day.
- New Year's Day (January 1)
- Maundy Thursday (April 6)
- Good Friday (April 7)
- Holy Saturday (April 8)
- Pan-American Day (October 12)
- International Labor Day (May 1)
- Independence Day (September 15)
- Francisco Morazán's Day (October 3)
- Discovery of America Day (October 11)
- Armed Forces Day (October 21)
- Christmas Day (December 25)
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Taxes for Employers
Employers must contribute approximately 16.6% of the employee's salary towards social security tax. The breakdown is as follows.
- Pension, disability, and survivor fund - 3.5%
- Public Health insurance - 5%
- Retirement pension fund - 1.5%
- Unemployment or severance pay - 4%
- Collective Capitalization Pillar - 2.6%
- Professional Risk - 0.2% (applicable for certain industries)
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Taxes for Employees
Income tax:
The income tax slabs for employees in Honduras are as follows, with the maximum tax at 25% of the employee's salary.
- Up to 172,117.89 - no tax
- 172,117.90 to 262,449.27 - 15%
- 262,449.28 to 610,347.16 - 20%
- Above 610,347.17 - 25%
Social security tax:
Employees are required to pay approximately 8.10% of their salary towards social security. The breakdown is as follows.
- Pension, disability, and survivor fund - 2.5%
- Public Health insurance - 2.5%
- Retirement pension fund - 1.5%
- Collective Capitalization Pillar - 1.6%
Probation
As per Honduran law, the maximum probation period is 2 months (or 60 days).
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Termination
- Employees can be terminated on just causes. An employee has the right to take the matter to labor courts if any discrimination is noted.
- The notice period ranges from 24 hours (if the employee has worked for two months or less) to a two-month notice for a longer duration.
Severance Pay
The severance pay in Honduras is -
- 10 days if the employee has worked for 3 to 6 months.
- 20 days if the employee has worked for 6 months to 1 year.
- 1 month per year worked for employees who have worked for more than 1 year.
Employees or Contractors
- Employees and contractors have different benefits in Honduras. Full-time employees on payroll are enrolled in the social security scheme and enjoy those benefits. The employer must contribute to the scheme along with the employee.
- This is not the case for contractors. Contractors are hired on a project-to-project basis or a short-term contract. They do not enjoy the same benefits as full-time employees.
- The benefits applicable to employees or contractors differ slightly from industry to industry.
- The employer can choose to hire either based on the industry's legal requirements or other business goals.
- If an employer misclassifies an employee as a contractor and vice-versa, they may need to pay a hefty penalty.
Final Words
The location of Honduras makes it an appealing destination for business expansion. In addition to this, the country's steady economic growth and its young population make it a competitive destination for industries. EOR services help potential employers tap into this lucrative market hassle-free.
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