Employer of Record in Ecuador

An Employer of Record (EOR) in Ecuador is a company that legally hires employees on your behalf. This means you can build a team in Ecuador without setting up a local entity. The EOR handles all the legal and HR responsibilities, like payroll, taxes, and benefits. You manage your team's day-to-day work, while the EOR takes care of the rest. For a simple solution, you can use an EOR provider like Rivermate.

How an Employer of Record (EOR) Works in Ecuador

Using an EOR in Ecuador simplifies hiring. Here is how it usually works:

• You Find the Talent: You find the perfect person for your team in Ecuador.
• The EOR Hires Them: The EOR legally hires the employee through a local, compliant employment contract.
• Onboarding Starts: The EOR manages the entire onboarding process. This includes collecting necessary documents and setting up payroll.
• Payroll and Benefits are Managed: The EOR handles salary payments, taxes, and social security contributions. They also manage legally required benefits.
• You Manage Your Team: You direct your employee's daily tasks and responsibilities. The EOR is the legal employer, but you are in charge of their work.
• Ongoing HR Support: The EOR provides continuous support for any HR-related questions or issues that come up.

Why use an Employer of Record in Ecuador

An EOR helps you expand your team into Ecuador quickly and without the usual headaches. It saves you time and money. You avoid the complex process of setting up a legal entity in a new country.

Here are some key benefits:

• Enter the Market Faster: You can hire employees in days, not months. This speed lets you seize business opportunities without delay.
• Ensure Compliance: Employment laws in Ecuador can be tricky. An EOR understands local labor laws and ensures you follow all legal requirements.
• Reduce Costs: Setting up a legal entity is expensive. An EOR is a more cost-effective way to hire internationally.
• Simplify HR: You don't have to worry about payroll, tax withholding, or benefits administration. The EOR handles all of it.
• Attract Top Talent: Offering competitive, compliant benefits is crucial. An EOR helps you provide the right benefits to attract the best employees in Ecuador.

Rivermate's transparent pricing model eliminates complexity with a single, competitive monthly fee per employee. Unlike traditional PEO providers, our pricing in Ecuador 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 Ecuador.

Hiring in Ecuador is straightforward when you understand the local labor laws. The legal framework favors employees, so it is important to get the details right. This guide will walk you through the key aspects of hiring in Ecuador, from employment contracts to working with contractors.

Employment contracts & must-have clauses

It is best practice to have a written employment contract in Spanish. While verbal agreements are recognized, a written contract provides clarity and protection for both you and your employee. All employment contracts must be registered with the Ministry of Labor.

Here are the essential clauses to include in an employment contract:

• Parties' Information: Full names and identification details of both the employer and employee.
• Job Title and Description: A clear outline of the employee's role and responsibilities.
• Workplace Location: The address where the employee will work.
• Start Date: The official start date of employment.
• Contract Duration: Specify if the contract is for an indefinite term or a fixed term.
• Working Hours: The daily and weekly work schedule.
• Salary and Payment: The agreed-upon salary, payment frequency, and method.
• Probation Period: If applicable, the duration of the probation period.
• Termination Clauses: Conditions for ending the employment relationship.

Probation periods

In Ecuador, you can include a probation period of up to 90 days in an employment contract. During this time, either you or the employee can terminate the contract without cause or severance pay. This gives both parties a chance to ensure the role is a good fit. If the employment continues after the 90-day period, the contract automatically becomes a standard, indefinite-term agreement.

Working hours & overtime

The standard workweek in Ecuador is 40 hours, typically eight hours per day, five days a week. Any hours worked beyond this are considered overtime and must be compensated at a higher rate.

Here is a breakdown of overtime pay rates:

Public & regional holidays

Ecuador has a number of national and regional public holidays. In 2025, the national public holidays are:

• New Year's Day: January 1
• Carnival: March 3 and 4
• Good Friday: April 18
• Labor Day: May 1
• Battle of Pichincha: May 24 (observed May 23)
• First Cry of Independence: August 10 (observed August 11)
• Guayaquil's Independence Day: October 9 (observed October 10)
• All Souls' Day: November 2
• Independence of Cuenca: November 3
• Christmas Day: December 25

Keep in mind that some holidays may be observed on a different day to create a long weekend.

Hiring contractors in Ecuador

Hiring independent contractors in Ecuador can be a flexible option, but it comes with risks. The main challenge is worker misclassification. If a contractor is deemed to be an employee in all but name, you could be liable for backdated social security contributions, severance pay, and other penalties.

The key difference between an employee and an independent contractor lies in the level of control and economic dependence. An independent contractor:

• Controls their own working hours.
• Uses their own tools and equipment.
• Is not economically dependent on a single client.
• Can work for multiple clients at the same time.

An Employer of Record (EOR) can help you mitigate the risks of misclassification. An EOR acts as the legal employer for your workers in Ecuador, ensuring compliance with all local labor laws. This includes handling contracts, payroll, taxes, and benefits. By partnering with an EOR, you can hire talent in Ecuador without the need to establish a local legal entity, saving you time and reducing your risk.

In Ecuador, your payroll needs to be straightforward and compliant. The country uses the US dollar, which simplifies currency matters. You are responsible for withholding taxes, making social security contributions, and paying mandatory benefits. These benefits include a thirteenth-month and fourteenth-month salary, which are unique features of Ecuadorian payroll.

Payroll cycles & wage structure

You should pay your employees monthly. Some companies choose to pay in two installments: 40% in the middle of the month and the remaining 60% at the end. You must provide payslips to your employees, either electronically or on paper.

An employee's salary has two main parts: the basic salary and additional benefits. The basic salary is the foundation for calculating other payments like allowances and bonuses.

Ecuador also has mandatory 13th and 14th salaries.

• 13th Salary (Décimo Tercero): This is a Christmas bonus equal to one-twelfth of the employee's total annual earnings. You must pay this by December 24th.
• 14th Salary (Décimo Cuarto): This bonus is equivalent to one basic unified salary. You pay this in either March or August, depending on the region.

Overtime & minimums

The standard work week in Ecuador is 40 hours, typically eight hours a day, five days a week. Any work beyond this is overtime. Overtime is limited to four hours per day and twelve hours per week.

The pay rate for overtime depends on when the hours are worked:

• Daytime overtime: 150% of the regular rate.
• Nighttime, weekend, or holiday overtime: 200% of the regular rate.

As of 2024, the national minimum wage is $460 per month.

Employer taxes and contributions

As an employer, you contribute to social security on behalf of your employees. These contributions are a percentage of the employee's salary.

Employee taxes and deductions

Employees also contribute to social security from their wages. You are responsible for withholding these amounts.

In Ecuador, providing strong employee benefits and leave is a key part of managing your team. The law requires certain benefits. But many companies offer more to attract and keep the best talent. Understanding these benefits helps you stay compliant and competitive.

Statutory leave

Ecuadorian law provides several types of paid leave for employees.

• Annual Leave: You get 15 days of paid vacation after your first year with a company. After five years, you get an extra day of paid leave for each year you stay, up to a maximum of 30 days.
• Maternity Leave: Mothers receive 12 weeks of paid maternity leave. This is typically two weeks before the birth and ten weeks after. Social security pays 75% of the salary, and the employer pays the remaining 25%.
• Paternity Leave: Fathers get ten days of paid leave.
• Sick Leave: If you are sick, you can get up to two months of paid sick leave. Your employer pays for the first three days. After that, the social security system (IESS) covers it.
• Bereavement Leave: You can take three days of paid leave if an immediate family member passes away.

Public holidays & regional holidays

Ecuador has national public holidays that everyone observes. Some cities and regions also have their own local holidays.

Typical supplemental benefits

Companies in Ecuador must provide certain benefits by law. They often offer extra benefits to stay competitive.

How an EOR can help with setting up benefits

Setting up employee benefits in a new country can be tricky. An Employer of Record (EOR) makes it simple.

An EOR already understands Ecuador's labor laws and benefit requirements. We handle everything for you. This includes enrolling your employees in social security and managing all required payments.

We can also help you create a competitive benefits package. We know what local talent expects. This helps you attract and retain the best people without the guesswork. Using an EOR saves you time and ensures you are always compliant.

Letting an employee go is tough, no matter the circumstances. In Ecuador, the process has specific legal requirements. You need to handle termination and offboarding carefully to comply with the law and treat your former employee with respect. This means understanding the rules around notice periods, severance pay, and final payments.

Notice periods

When you terminate an employee on an indefinite contract without a valid reason, you generally need to provide 30 days' written notice. This gives your employee time to start looking for a new job.

However, there are situations where this notice period doesn't apply:

• Just cause: If you are terminating an employee for a legally recognized reason, like serious misconduct, you are not typically required to give notice.
• Probationary period: During the first 90 days of employment, either you or the employee can end the contract without notice.
• Payment in lieu of notice: You can choose to pay an employee instead of having them work a notice period. This payment, known as "desahucio," is equal to 25% of the employee's last monthly salary for each year of service.

Severance pay

If you end an indefinite contract without just cause, you must pay severance. The amount depends on how long the employee worked for you.

Here is how severance pay is calculated:

On top of severance, you also need to pay the employee their final entitlements. These include any earned but unused vacation time and proportional payments of their 13th and 14th month salaries.

How Rivermate handles compliant exits

Navigating employee terminations in a different country can be complex. We make sure every step of the offboarding process is handled correctly and in compliance with Ecuadorian law.

Here’s how we help:

• Compliance review: We ensure that the termination reason is valid and that all legal procedures are followed.
• Calculations: We calculate the exact amount of severance pay and all final entitlements, so you don't have to worry about complex formulas.
• Paperwork: We handle all the necessary documentation to make the exit official and compliant.
• Clear communication: We help you communicate the decision and the next steps to your employee in a clear and respectful way.

With Rivermate, you can be confident that you are handling employee exits professionally and legally.

Navigating the visa and work permit process in Ecuador is a necessary step for employing foreign nationals. The system is in place to manage the presence of international workers and ensure that local and foreign employees are treated fairly. To legally work in Ecuador, you need a residency visa that allows for employment, and this usually requires sponsorship from a company in Ecuador. The process involves submitting an application and required documents to the Ecuadorian authorities, which could be a consulate in your home country or a ministry office in Ecuador. After your visa is approved, you will need to register it upon arrival and get an Ecuadorian identification card.

Employment visas & sponsorship realities

An Employer of Record (EOR) can help you navigate the complexities of hiring in Ecuador. An EOR acts as the legal employer for your team members in Ecuador, handling everything from contracts and payroll to taxes and social security. This is the most straightforward way to hire legally in Ecuador without setting up your own entity.

Here are some practical routes for employment visas:

• Temporary Work Visa: This is a common choice for employment contracts that last up to two years. To get this visa, an employer, like an EOR, needs to have a registered legal entity in the country and provide a compliant job offer.
• Professional Visa: This visa is for professionals with university degrees that are recognized in Ecuador.
• Digital Nomad Visa: Ecuador also offers a "Rentista visa" for remote workers. This visa is for individuals working for foreign companies and is valid for up to two years.

An EOR can sponsor work visas for your employees, but there may be limits due to visa quotas in the country. The EOR will guide you through the application process and ensure everything is handled correctly.

Business travel compliance

For short-term business trips, you will need to follow Ecuador's business travel rules. The country offers a Business Visa for professionals and entrepreneurs who need to attend meetings, sign contracts, or conduct other commercial activities.

Here's what you need to know about short-term visits:

• Visa de Excepción de Corta Duración: This is a short-term visa for those conducting business or technical activities in Ecuador while remaining on a foreign payroll. It is valid for up to 180 days in a year.
• Required Documents: To apply for a business visa, you will generally need:
  • A valid passport with at least six months of validity
  • A completed visa application form
  • Passport-sized photos
  • An invitation letter from a company in Ecuador
  • Proof of financial means
  • Confirmed return flight tickets and hotel bookings

It's important to note that you can't work in Ecuador on a tourist visa. Engaging in business activities requires the proper business visa to stay compliant with local laws.