Employer of Record in Guatemala

An Employer of Record (EOR) in Guatemala is a company that legally hires employees on your behalf. This means you can build a team in Guatemala without setting up a local entity. The EOR handles all the legal and HR responsibilities. They manage payroll, taxes, benefits, and compliance with Guatemalan labor laws. This lets you focus on your daily operations. For a simple solution, you can use an EOR provider like Rivermate (https://rivermate.com/employer-of-record).

How an Employer of Record (EOR) Works in Guatemala

Using an EOR in Guatemala simplifies your expansion. Here is how it works:

1. You Find the Talent. You recruit and select the best candidate for your team in Guatemala.
2. The EOR Hires Your Candidate. The EOR legally hires the employee through a local, compliant employment contract.
3. The EOR Manages HR. They handle all administrative tasks. This includes payroll, tax withholding, and social security contributions. They also manage benefits administration.
4. You Manage Your Employee. You direct the employee's day-to-day work and responsibilities. They are a core part of your team. The EOR simply acts as the legal employer.

Why use an Employer of Record in Guatemala

Using an EOR in Guatemala helps you enter the market quickly and compliantly. It removes the major hurdle of establishing a legal entity, which saves you time and money. An EOR gives you peace of mind by ensuring you follow all local labor laws.

Here are some key benefits:

• Enter the Market Faster. You can hire employees and start operations in days, not months.
• Ensure Compliance. EORs are experts in Guatemalan labor law. They manage all legal requirements to reduce your risk.
• Save Money. You avoid the high costs of setting up and maintaining a legal entity in Guatemala.
• Offer Competitive Benefits. EORs can provide your employees with access to comprehensive benefits packages.

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

Hiring in Guatemala requires you to understand and follow the country's specific labor laws. While there are many opportunities to find skilled workers, it's important to be aware of the legal requirements to ensure a fair and compliant hiring process. This guide will walk you through the key aspects of hiring in Guatemala.

Employment contracts & must-have clauses

Written employment contracts are required in Guatemala and must be in Spanish. You should provide three copies of the contract: one for you, one for the employee, and one for the Ministry of Labor within 15 days of the employee's start date.

Indefinite contracts are the most common type. Fixed-term contracts are also possible but are generally reserved for temporary or project-based work.

Your employment contracts must include the following:

• Parties' Information: Full names and addresses of both you and the employee.
• Job Details: A clear description of the job, including the title and responsibilities.
• Contract Duration: Whether the contract is for an indefinite or fixed term.
• Working Hours: The daily and weekly work schedule.
• Salary and Benefits: The agreed-upon salary, payment schedule, and any additional benefits.
• Start Date: The employee's first day of work.
• Signatures: Signatures of both you and the employee.

Probation periods

For indefinite contracts, the first two months are considered a probation period. During this time, either you or the employee can end the employment relationship without cause or severance pay.

Working hours & overtime

The standard workweek in Guatemala is 44 hours for a day shift, typically spread over six days.

Here's a breakdown of the different work shifts:

Any work done beyond the standard hours is considered overtime. You must pay overtime at a rate of 150% of the employee's regular hourly wage.

Public & regional holidays

Employees in Guatemala are entitled to paid time off for public holidays. The official public holidays for 2025 are:

• January 1: New Year's Day
• April 17: Maundy Thursday
• April 18: Good Friday
• April 19: Holy Saturday
• May 1: Labour Day
• June 30: Army Day
• September 15: Independence Day
• October 20: Revolution Day
• November 1: All Saints' Day
• December 24: Christmas Eve
• December 25: Christmas Day
• December 31: New Year's Eve

There is also a regional holiday for the Assumption of Mary on August 15th, which is observed only in Guatemala City.

Hiring contractors in Guatemala

You can hire independent contractors in Guatemala, which can be a flexible way to access specialized skills. However, it's crucial to classify workers correctly to avoid legal risks.

An independent contractor sets their own schedule, uses their own tools, and is paid per project. An employee, on the other hand, works under your direct supervision and receives regular wages and benefits.

Misclassifying an employee as a contractor can lead to significant penalties, including back pay for wages and benefits, and social security contributions. An Employer of Record (EOR) can help you mitigate this risk. An EOR ensures that your workers are classified correctly and that you comply with all local labor laws. This allows you to hire talent in Guatemala without the need to set up a local entity, saving you time and reducing your legal exposure.

Navigating compensation and payroll in Guatemala requires understanding a few key practices. The system is straightforward, but you need to know the specifics to stay compliant. This guide breaks down what you need to know about paying your team in Guatemala.

Payroll cycles & wage structure

You can pay employees in Guatemala on a monthly, bi-monthly, weekly, daily, or hourly basis. The choice depends on the type of work and the agreement you have with your employee.

A unique feature of Guatemalan payroll is the mandatory 13th and 14th-month salaries. These are bonuses equivalent to one month's salary. You pay the 14th-month bonus, known as "Bono 14," in July. The 13th-month bonus, or "Aguinaldo," is paid in December.

Overtime & minimums

The standard work week in Guatemala is 44 hours, typically eight hours per day. For night-time work, the maximum is 36 hours per week. Any hours worked beyond the standard 44 are overtime. You must pay overtime at a rate of 150% of the regular pay.

Minimum wage in Guatemala varies based on the industry, such as agricultural, non-agricultural, and export-related work. For 2024, the monthly rates range from GTQ 3,171.90 to GTQ 3,634.59.

Employer taxes and contributions

As an employer in Guatemala, you are responsible for contributing to social security and other funds. These contributions are a percentage of the employee's gross salary.

Employee taxes and deductions

Employees also contribute to social security from their gross salary. Their income tax is calculated on their annual taxable income.

In Guatemala, benefits and leave are a mix of mandatory entitlements and extra perks. The labor law sets the minimums you must provide. These include paid vacation, sick leave, and parental leave. You also have to pay two annual bonuses on top of regular salary. Offering more than the minimum can help you attract and keep the best talent.

Statutory leave

Guatemalan law requires you to provide several types of paid leave.

• Annual Leave: After one year of work, employees get 15 paid vacation days.
• Sick Leave: The social security system, known as IGSS, generally covers sick leave. To qualify, employees need a medical certificate. The IGSS pays two-thirds of an employee's regular salary for up to 26 weeks.
• Maternity Leave: Mothers receive 12 weeks of paid maternity leave. This is typically split into 30 days before the birth and 54 days after. Both the employer and the IGSS contribute to the employee's pay during this time.
• Paternity Leave: Fathers get two days of paid leave when their child is born.
• Bereavement Leave: Employees can take three days of paid leave for the death of a spouse, parent, or child.
• Marriage Leave: You must provide five days of paid leave for an employee's wedding.

Public holidays & regional holidays

Employees are entitled to paid time off for national public holidays. If an employee has to work on a public holiday, you must pay them double their regular rate.

Typical supplemental benefits

To stand out, many companies offer more than the legally required benefits.

How an EOR can help with setting up benefits

Setting up employee benefits in a new country can be complex. An Employer of Record (EOR) simplifies this process for you.

An EOR acts as the legal employer for your team in Guatemala. This means they handle all the administrative and legal tasks related to employment.

Here is how an EOR can help:

• Compliance: An EOR ensures you comply with all of Guatemala's labor laws. They stay up to date on regulations so you don't have to.
• Benefits Administration: The EOR manages all statutory benefits, from paid leave to social security contributions.
• Payroll: They handle payroll and ensure your employees are paid correctly and on time, including the mandatory 13th and 14th-month bonuses.
• Contracts: An EOR drafts locally compliant employment contracts in Spanish.
• Market Entry: Using an EOR allows you to hire in Guatemala without setting up a local legal entity, saving you time and money.

When you part ways with an employee in Guatemala, you need to follow a specific process. It’s not just about saying goodbye. You must handle the termination and offboarding correctly to stay compliant with local labor laws. This involves understanding notice periods, severance pay, and the proper documentation. Getting it wrong can lead to legal issues and financial penalties.

Notice periods

If you terminate an employee without a legally recognized reason, you must provide them with a written notice period. The length of this notice depends on how long the employee has worked for your company.

If you don't provide this notice, you have to pay the employee their salary for the duration of the notice period.

Severance pay

In Guatemala, severance pay is called "indemnización." An employee is entitled to this payment if you terminate their contract without just cause. You are not required to pay severance if the termination is due to serious misconduct. However, you must be able to prove the reason for the dismissal.

Severance pay is calculated as one month's salary for each year of service. For partial years, the payment is calculated proportionally. The calculation is based on the employee's average earnings over the last six months.

Regardless of the reason for termination, you must always pay the employee their final dues. This includes proportional payments for their 13th and 14th-month bonuses (known as "Aguinaldo" and "Bono 14") and any unused vacation time.

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 full compliance with Guatemalan law.

Here’s how we simplify the process for you:

• Compliance check: We ensure every termination meets the requirements of Guatemala's Labor Code, protecting you from legal risks.
• Clear communication: We handle the necessary notifications to the employee, ensuring they are delivered in writing and within the legal timeframes.
• Accurate calculations: We calculate all final payments, including severance, proportional bonuses, and vacation pay, to ensure your former employee receives everything they are entitled to.
• Documentation: We prepare all the necessary offboarding documents, like the final settlement, providing a clear record of all payments made.

With Rivermate, you can manage employee exits with confidence, knowing that every detail is taken care of.

Getting the right visas and work permits in Guatemala is essential for legal employment. The process involves both the employee and the employer. For long-term work, you will generally need a temporary residence permit before you can get a work permit. The government offers different types of visas, including options for business, tourism, and study.

Employment visas & sponsorship realities

To legally work in Guatemala as a foreign national, you need a work permit. The Guatemalan government issues two main types of work permits. One is for individuals who have a spouse or children with Guatemalan citizenship. The other is for foreign nationals who have a job offer from a company in Guatemala.

If you don't have family ties to Guatemala, your employer must file the work permit application for you. This is where an Employer of Record (EOR) can help. An EOR can legally employ workers on behalf of another company, handling payroll, benefits, and compliance with local labor laws.

Here are some of the documents typically required for a work permit application when you have a job offer:

• A written job offer from the employer.
• Police records from your country of residence.
• A copy of your temporary visa or residency visa, or proof that you have a pending application.
• A valid passport.
• A medical certificate.

The process starts with applying for a temporary residence permit, as this is a requirement for obtaining a work permit. Once the Ministry of Labor receives all the necessary documents, it typically takes 15 to 20 days to issue the work permit.

Business travel compliance

If you are traveling to Guatemala for short-term business activities, you will need a business visa. This type of visa is for activities like attending meetings, negotiations, or conferences. It is important to understand that a business visa does not permit you to earn a salary or take up employment in Guatemala. For any work-related activities that go beyond the scope of a business visa, a work permit is necessary.