Understanding Employment Norms in Uruguay: A Comprehensive Guide
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Hiring in Uruguay? Read on to find out the employment norms (like taxes, payroll and benefits) and EOR (Employer on Record) norms in Uruguay.

Employment Norms in Uruguay

Uruguay is known for its strong labor laws and progressive employment norms. This South American country has a robust social security system, fair minimum wage, and strict regulations to protect workers' rights. Understanding the employment norms in Uruguay is essential for anyone considering working or hiring employees in the country.

General Information:

  • The Uruguay currency is Uruguayan peso (UYU).
  • Montevideo is the capital of Uruguay.
  • Spanish is the official language of Uruguay. Documentation can be in Spanish/English to be considered legally valid.
  • As of 2021, the GDP of Uruguay was reported to be USD 4.4 billion.
Uruguay has strong labor laws protecting workers' rights, including minimum wage, working hours, and vacation time.
Uruguay map

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


Uruguay has a legal framework that governs the relationships between employers and employees. The following are some of the agreements that can exist between them:
  • Employment contracts
  • Collective bargaining agreements
  • Bonus agreements
  • Non-compete agreements
  • Confidentiality agreements
  • These agreements are to be drafted in English/Spanish.
Onboarding Process

Onboarding Process

While there are no specific laws governing the onboarding process in Uruguay, best practices include:
  • Employment contract: Employers are required to provide a written employment contract to the employees.
  • Mandatory training: Employers must provide certain mandatory training to new employees, such as health and safety training.
  • Required documents: Employees must provide a valid ID, taxpayer identification number (Cédula de Identidad), and proof of address.
  • Providing a welcoming and informative orientation for new employees.
  • Assigning a mentor or buddy to help new employees navigate the workplace.
  • Ensuring that new employees have the necessary tools and resources to perform their job duties.


Uruguay has various types of visas including:
  • Tourist Visa: For individuals visiting Uruguay for tourism or business purposes for up to 90 days.
  • Temporary Residence Visa: For individuals planning to stay in Uruguay for more than 90 days but less than two years, for reasons such as work, study, or family reunification.
  • Permanent Residence Visa: For individuals planning to live in Uruguay permanently.
  • Work Permit: For individuals seeking to work in Uruguay, the employer must apply for a work permit on their behalf

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Minimum Wage

Minimum Wage

As of January 2023, the minimum wage in Uruguay is UYU 21,106.00 per month
Payroll Cycle

Payroll Cycle

The payroll cycle in Uruguay is typically monthly.
Annual Bonus

Annual Bonus

Employees in Uruguay are entitled to receive a 13th-month bonus which is paid in 2 installments, in June and December.
Health Benefits

Health Benefits

Health Benefits provided by employers to employees in Uruguay:
  • Comprehensive health insurance coverage, including medical, dental, and vision.
  • Paid sick leave, vacation time, and maternity/paternity leave
  • Retirement benefits, including pension plans and 401(k) contributions.
  • Wellness programs, such as gym memberships, wellness coaching, and health screenings.
  • Flexible spending accounts, allowing employees to set aside pre-tax dollars for health-related expenses.
  • Mental health support, including access to counseling services and employee assistance programs.
Working Hours and Overtime

Working Hours and Overtime

  • Work hours: 8 hours per day and 44 hours per week
  • Break: Employees are entitled to a break of at least 1 hour for every 6 hours of work
  • Overtime: The time spent working more than the standard working hours which is 44 hours a week is termed overtime. A maximum of 8 hours per week of overtime is allowed, which is paid as 200% of the employee's standard salary.


Sick Leaves

  • The employee can take sick leave for up to one year.
  • Employees will receive compensation at 100% of their salary for the first 3 days of sickness.
  • After that, Social security will pay 70% of the employee's salary.
  • Proof of medical certificate is mandatory.

Maternity Leaves

  • Paid maternity leave of 14 weeks is provided. 6 weeks before birth and 8 weeks after. These leaves are paid by the social security system of Uruguay.

Paternity Leaves

  • New fathers are entitled to 13 days of paid paternity leave.

Parental leaves

  • There isn't a provision of parental leaves in Uruguay.

Annual leaves

  • Employees are entitled to a minimum of 20 days of paid leave per year.
  • One day is added for every 4 years of service with a maximum of 25 holidays.

Public Holidays (for the Calendar year 2023)

  • New Year's Day - January 1st
  • Epiphany - January 6th)
  • Carnival - February 20th, 21st
  • Maundry Thursday - April 6th
  • Good Friday - April 7th
  • Landing of the Patriots - April 17th
  • Labor Day - May 1st
  • Battle of Las Piedras - May 22nd
  • Birthday of Artigas - June 19th
  • Constitution Day - July 18th
  • Independence Day - August 25th
  • Day of the Race - October 16th
  • All Souls' Day - November 2nd
  • Christmas Day - December 25th

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Social Security

Social Security

In Uruguay, the social security system is managed by the Banco de Previsión Social (BPS). Social security paid by employers and employees consists of Health insurance, pension, Labor Re-conversion Fund, and Labor Credit Guarantee Fund. The employer contribution is 12.6% (Labor Re-conversion Fund, Health Insurance, Pension Fund) while the employee contribution is around 18-23% (Pension Fund, Health Insurance).
Taxes for Employers

Taxes for Employers

Employers in Uruguay are required to pay several taxes, including social security contributions and payroll taxes. The specific taxes and their corresponding rates are as follows:
  • Labor Re-conversion Fund: Employers contribute 0.1% towards this fund for the employees.
  • Pension Fund: Employers are required to make pension contributions at a rate of 7.5%.
  • Health Insurance: Employers are required to contribute 5% towards the National Integrated Health System (Sistema Nacional Integrado de Salud or SNIS).
  • Labor Credit Guarantee Fund: Employers' contribution is 0.025%

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Taxes for Employees

Taxes for Employees

Employees in Uruguay are required to pay several taxes, including income tax and social security contributions. The specific taxes and their corresponding rates are as follows:
  • Income Tax: Employees are subject to income tax on their salaries, with progressive tax rates ranging from 0% to 36%. The tax rate is determined based on the employee's income level
    • 0 - 433,776: 0%
    • 433,776 - 619,680: 10%
    • 619,680 - 929,520: 15%
    • 929,520 - 1,859,040: 24%
    • 1,859,040 - 3,098,400: 25%
    • 3,098,400 - 4,647,600: 27%
    • 4,647,600 - 7,126,320: 31%
    • More than 7,126,320: 36%
  • Pension fund: Employees are required to contribute 15% of their salary to this fund.
  • Labor Re-conversion Fund: 0.1%
  • Health Insurance: Employees are required to contribute 3%-8% of their salary to the National Integrated Health System.


The probationary period in Uruguay is defined to be of 1 month.

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In Uruguay, an employment relationship can be terminated under several conditions and scenarios, including:
  • Resignation by the employee with notice.
  • Termination by the employer for just cause, which includes serious misconduct, violation of labor laws, and economic reasons such as redundancy or restructuring.
  • Termination by mutual agreement between the employer and the employee.
  • Termination by the employer without just cause, in which case the employee is entitled to severance pay and other benefits as per labor laws.
  • Termination due to the employee's retirement, disability, or death.
Severance Pay

Severance Pay

Employees who are terminated without just cause are entitled to receive severance pay in Uruguay. The severance pay is equal to one month's salary for each year of service, with a maximum of 6 monthly salaries.
Employees or Contractors

Employees or Contractors

  • Employers who misclassify employees as independent contractors may be required to pay unpaid taxes, social security contributions, and other benefits, such as severance pay, that the employee would have been entitled to.
  • Misclassifying an independent contractor as an employee can result in employers being required to pay social security contributions and other benefits retroactively, along with potential fines and penalties.
  • Employers should consult with a legal expert or labor consultant to ensure compliance with the relevant laws and regulations to avoid these penalties.
Final Words

Final Words

Uruguay has a well-established legal framework that provides protection to employees and ensures their rights are respected. The country has a diverse and growing economy that offers various employment opportunities in sectors such as agriculture, manufacturing, and services. Employers should ensure compliance with labor laws and regulations to avoid penalties and maintain a healthy and productive work environment.

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