Employer of Record in Cuba

An Employer of Record (EOR) is a company that legally hires employees on your behalf in another country. If you want to hire someone in Cuba, but you don’t have a legal entity there, an EOR is a straightforward solution. The EOR handles all the local HR tasks like payroll, taxes, benefits, and compliance with Cuban labor laws. You manage your employee's day to day work, while the EOR takes care of the administrative burdens. For a simple way to expand your team in Cuba, you can use an EOR provider like Rivermate.

How an Employer of Record (EOR) Works in Cuba

Using an EOR to hire in Cuba simplifies your expansion. Here is how it typically works:

1. You Find the Candidate. You interview and select the person you want to hire in Cuba.
2. The EOR Drafts a Local Contract. The EOR creates an employment agreement that complies with Cuban laws.
3. The EOR Onboards Your New Hire. They handle all the paperwork and legal formalities to officially employ your new team member.
4. They Manage HR and Payroll. The EOR processes salary payments, handles taxes, and provides required benefits.
5. You Manage Your Employee. You direct their daily tasks and integrate them into your team, while the EOR remains the legal employer.

Benefits of Using an EOR for Hiring in Cuba

Using an EOR in Cuba helps you enter a new market quickly and efficiently. It allows you to focus on your main business operations while the EOR manages the complexities of local employment.

• Stay Compliant. An EOR ensures you follow all Cuban labor laws, which cover everything from working hours to employee rights. This helps you avoid fines and legal issues.
• Handle Payroll and Taxes. The EOR manages payroll, social security contributions, and all other mandatory deductions required by Cuban law.
• Faster Market Entry. You can have your team working in Cuba much faster and more affordably than by setting up your own legal entity.
• Local Expertise. You gain access to local knowledge on everything from standard benefits to bureaucratic procedures.

Rivermate's transparent pricing model eliminates complexity with a single, competitive monthly fee per employee. Unlike traditional PEO providers, our pricing in Cuba includes comprehensive HR support, benefits administration, compliance management, and access to our proprietary dashboard for real-time workforce analytics. No hidden costs, no setup fees—just straightforward pricing that scales with your business needs while ensuring full legal compliance in Cuba.

Hiring in Cuba is different from many other countries. The Cuban government plays a significant role in the labor market. For foreign companies, this often means navigating a unique set of rules. You'll likely work with state-run employment agencies to hire Cuban nationals. This process is more centralized than you might be used to. However, the workforce is highly educated and skilled, offering great potential for businesses looking to expand.

Employment contracts & must-have clauses

Every employee in Cuba must have a written employment contract. This is a legal requirement. The contract forms the foundation of your working relationship and must comply with Cuban labor law.

There are two main types of employment contracts:

• Indefinite-term contracts: These are the most common and are for permanent positions without a set end date.
• Fixed-term contracts: You can use these for specific projects or temporary work.

Your employment contracts must include several key clauses to be valid:

• Identification of both parties: Full legal names of the employer and employee.
• Job title and description: A clear outline of the employee's role and responsibilities.
• Workplace: The primary location where the employee will work.
• Working hours: Details on daily and weekly work schedules.
• Compensation: The agreed-upon salary and how often it will be paid.
• Start date: The official first day of employment.
• Contract duration: State whether the contract is for an indefinite or fixed term.
• Vacation entitlement: Information on paid annual leave.
• Termination conditions: The process for ending the contract by either party.

Probation periods

In Cuba, probation periods are mandatory for indefinite-term contracts. They are not allowed for fixed-term or project-based roles. This initial period allows both you and the new employee to see if the fit is right.

Here are the key points about probation periods:

• Duration: A probation period can last from 30 to 180 days. The length is often determined by a collective bargaining agreement and the complexity of the job.
• Termination: During the probation period, either you or the employee can end the employment relationship. You must provide at least seven days' written notice to the employee.

Working hours & overtime

The standard workweek in Cuba is 44 hours. This is typically structured as an eight-hour day from Monday to Friday, with a four-hour day on Saturday.

Work performed beyond the standard 44-hour week is considered overtime. Here’s what you need to know:

Public & regional holidays

Your employees in Cuba are entitled to paid time off for public holidays. Here are the official public holidays for 2024:

Hiring contractors in Cuba

You can also hire independent contractors, known as "cuentapropistas," in Cuba. This offers flexibility, but you need to be careful about worker classification.

An independent contractor sets their own hours, uses their own tools, and can work for multiple clients. They are responsible for their own taxes and social security contributions. The relationship is governed by a service agreement, not an employment contract.

A major risk is misclassifying an employee as a contractor. If the authorities determine that a contractor is treated like an employee (for example, you control their work hours and they are economically dependent on you), they can be reclassified. This can lead to penalties, including back payments for social security, benefits, and taxes.

Using an Employer of Record (EOR) can help you avoid these risks. An EOR can help you correctly classify workers and ensure you comply with all local laws when hiring both employees and contractors. This allows you to focus on your business while the EOR handles the legal and administrative complexities of hiring in Cuba.

Navigating compensation and payroll in Cuba requires a clear understanding of its unique economic landscape. The state plays a significant role in setting wage structures and regulations. As the private sector grows and foreign investment increases, it's important to stay current with the latest rules to attract and retain talent while remaining compliant.

Payroll cycles & wage structure

In Cuba, the standard payroll cycle is monthly. You typically pay employees once a month, often near the end of the month. The most common payment method is a direct bank transfer to the employee's account.

Beyond the base salary, compensation packages in Cuba can include various bonuses and allowances. These can be a significant part of an employee's total earnings, especially in companies with foreign affiliations. Common additions to base pay include:

• Performance Bonuses: Awarded for meeting individual or team goals.
• Seniority Pay: Pay increases based on an employee's years of service with your company.

Overtime & minimums

The national minimum wage in Cuba is 2,100 Cuban Pesos (CUP) per month. You must ensure that an employee's total monthly compensation does not fall below this amount for a standard work month.

Overtime is any work done beyond the standard 8-hour workday or 44-hour work week. You must pay employees for overtime at 1.5 times their regular hourly rate. All overtime must be authorized in advance.

Employer taxes and contributions

As an employer in Cuba, you are responsible for several contributions and taxes on behalf of your employees.

Employee taxes and deductions

You must withhold taxes and social security contributions from your employees' wages.

In Cuba, benefits and leave are straightforward and centered on employee well-being. The system ensures you can provide your team with essential time off and protections. This approach supports a healthy work-life balance and gives your employees peace of mind.

Statutory leave

Cuban law provides several types of paid leave for employees.

• Annual Leave: Employees are entitled to a minimum of 30 calendar days of paid vacation each year after completing one year of service.
• Sick Leave: If an employee gets sick, they can take up to six months of paid sick leave. After that, they may receive 60% of their salary. A medical certificate is required to claim sick leave.
• Maternity and Parental Leave: Female employees receive 18 weeks of paid maternity leave. This is typically taken as six weeks before and 12 weeks after birth. They can also take an additional 40 weeks of leave at 60% of their normal pay. Cuba also allows for shared parental leave.
• Bereavement Leave: Employees can take a short period of paid leave if a close family member passes away.

Public holidays & regional holidays

Your team in Cuba is entitled to paid time off for national public holidays. If an employee works on a public holiday, they are typically owed premium pay.

Typical supplemental benefits

While Cuban labor law mandates a solid set of benefits, some employers offer more to attract and retain talent.

How an EOR can help with setting up benefits

Setting up a benefits plan in a new country can be complex. An Employer of Record (EOR) simplifies this process for you. We handle the administration of all statutory benefits, ensuring you are fully compliant with Cuban labor laws. An EOR can also help you offer competitive supplemental benefits to attract top talent. We manage everything from payroll contributions to leave tracking, so you can focus on growing your business.

When you part ways with an employee in Cuba, you need to follow a specific process. Cuban labor law protects employees, so you can't just terminate a contract without a valid reason. The process involves clear steps, from providing notice to calculating final pay. Understanding these rules is key to a smooth and compliant offboarding experience.

Notice periods

When you decide to terminate an employee, you generally need to provide them with advance notice. The length of this notice period depends on how long the employee has worked for you.

• Less than two years of service: 15 days' notice.
• More than two years of service: 30 days' notice.
• Positions requiring higher education: 4 months' notice.

If an employee resigns, they are also required to give you notice. For indefinite contracts, an employee must provide 30 days' notice. For temporary contracts, the notice period is 15 days.

In cases of serious misconduct, you can terminate an employee without a notice period.

Severance pay

Whether or not you owe severance pay depends on the reason for termination.

• Termination with cause: If you terminate an employee for a valid reason like serious misconduct or repeated failure to perform their duties, you do not have to pay severance.
• Termination without cause: If you terminate an employee for reasons like restructuring or redundancy, they are entitled to severance pay.

The amount of severance pay is typically calculated based on the employee's length of service and their average salary. While there isn't a universal statutory right to severance pay in all dismissal cases, it is common practice in no-fault terminations.

Upon termination, you must pay out any unused vacation days.

How Rivermate handles compliant exits

Navigating the details of Cuban labor law can be complex. We make sure every termination is handled correctly and respectfully.

Here’s how we manage the process for you:

• Compliance check: We review the reasons for termination to ensure they are legally sound under Cuban law.
• Documentation: We prepare all necessary documents, including the written termination notice, and ensure they are delivered correctly.
• Final pay calculation: We calculate the final payment, including any outstanding salary, accrued vacation, and severance pay if applicable.
• Clear communication: We facilitate clear communication between you and the departing employee to ensure a professional and smooth process.

By handling these steps, we help you avoid legal issues and ensure a fair and compliant exit for your employees.

Navigating Cuba's visa and work permit system requires a clear understanding of the local regulations. The process is distinct and has specific requirements that you must follow. Any foreign national who plans to work in Cuba needs to get a work permit. This is a mandatory step before you can even apply for a work visa. The entire process, from getting the permit to the visa itself, can take anywhere from 6 to 10 weeks. It's a system that demands careful planning.

Employment visas & sponsorship realities

To hire a foreign worker, you first need to secure a work permit for them. After the work permit is approved, the employee can apply for a work visa, known as the D-2 visa, at a Cuban embassy or consulate in their home country.

A key reality of this process is the need for a local entity. The application for a work permit must be submitted by a legally registered Cuban company or an authorized foreign company operating in Cuba. This is where the role of an Employer of Record (EOR) becomes critical. An EOR with an established entity in Cuba can legally sponsor foreign workers, handling the necessary applications with the Ministry of Labor and Social Security.

Without a local entity, your company cannot directly sponsor a work permit. This makes partnering with an EOR the most practical route for employing workers in Cuba.

Here’s a breakdown of the typical requirements for a work permit application:

• A valid passport
• The employment contract
• Proof of the employer's legal registration in Cuba
• The employee's qualifications, like diplomas or certificates
• A medical certificate

Work permits are generally issued for one year and can be renewed. It's best to start the renewal process at least 60 days before the current permit expires.

Business travel compliance

For short-term business trips, such as meetings or conferences, a specific business visa is necessary. You cannot conduct business activities on a tourist visa. Using the wrong visa can lead to issues with customs or even denial of entry.

A crucial requirement for the business visa is an invitation letter from a Cuban company or your business partner in the country. This letter confirms the purpose of your trip.

Here are the usual documents needed for a business visa application:

• A valid passport with at least six months of validity
• A completed visa application form
• An invitation letter from the Cuban company
• Proof that you have sufficient funds for your stay
• Your travel itinerary, including flight and accommodation details

The business visa is typically granted for a 30-day stay and can be extended for another 30 days while in Cuba. Also, all travelers must complete the D'Viajeros online customs and health form within seven days of their arrival and present the generated QR code upon entry.