Employer of Record in Uruguay

An Employer of Record (EOR) in Uruguay helps you hire employees there without setting up a local company. It acts as the legal employer for your team members. This means the EOR handles all the legal and HR tasks, like payroll, taxes, benefits, and compliance with Uruguayan labor laws. You manage your employees' day-to-day work while the EOR takes care of the administrative side. For companies looking to hire in Uruguay, Rivermate offers EOR services to simplify the process.

How an Employer of Record (EOR) Works in Uruguay

Using an EOR in Uruguay simplifies your expansion. You find the talent, and the EOR legally hires them on your behalf.

Here is how it works:

1. You Find Your Candidate: You recruit and select the person you want to hire in Uruguay.
2. The EOR Hires Them: The EOR provider, which has a legal entity in Uruguay, drafts a local employment contract. This contract complies with all Uruguayan labor regulations. The EOR then hires your chosen candidate.
3. Onboarding and HR: The EOR manages the entire onboarding process. They handle all the necessary paperwork, register the employee with the social security office (Banco de Previsión Social or BPS), and set them up for payroll.
4. Payroll and Benefits: Each month, the EOR processes payroll, deducts taxes, and makes social security contributions. They also manage employee benefits like health insurance and paid time off.
5. Ongoing Compliance: The EOR stays up-to-date with any changes in Uruguay's labor laws to ensure you remain compliant. This reduces your risk of legal issues.
6. You Manage Your Team: You maintain full control over your employee's daily tasks, projects, and performance. The EOR handles the HR administration, but the employee works for your company.

Why use an Employer of Record in Uruguay

Using an EOR in Uruguay allows you to enter the market and hire talent quickly and safely. It removes the major hurdle of establishing a legal entity, which can be a slow and expensive process. You can build a team and start operations in a fraction of the time.

Here are some key benefits:

• Enter the Market Faster: You can hire employees and begin working in Uruguay in days, not months.
• Reduce Costs: Avoid the high costs associated with setting up and maintaining a local company.
• Ensure Legal Compliance: EORs are experts in Uruguayan labor law. They make sure your employment contracts, payroll, and benefits all follow local rules. This includes navigating specific regulations from the Ministry of Labor and Social Security (Ministerio de Trabajo y Seguridad Social).
• Simplify HR and Payroll: The EOR handles all administrative tasks. This includes processing salaries, managing tax withholdings, and making social security payments.
• Offer Competitive Benefits: An EOR can provide your employees with access to comprehensive benefits packages, helping you attract and retain top talent.

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

Hiring in Uruguay is a smart move for many companies. You get access to a well-educated and skilled workforce, often at a lower cost than in other parts of a the world. The country is known for its political and economic stability, making it a reliable place to do business. Key industries include technology, agriculture, and tourism. You can hire employees by setting up your own local company or by using an Employer of Record (EOR). An EOR simplifies the process by handling legal and HR tasks for you.

Employment contracts & must-have clauses

While oral agreements are technically valid, a written employment contract is highly recommended in Uruguay. It provides clarity and helps prevent disputes. Contracts should be in Spanish and use the Uruguayan peso for salary and other financial figures.

There are two main types of contracts:

• Indefinite term: This is the standard contract for permanent positions.
• Fixed-term: You can use this for temporary projects, seasonal work, or to cover for an employee on leave. Be careful not to overuse fixed-term contracts for the same role, as they could be reclassified as indefinite.

Your employment contracts should include these essential clauses:

• Parties' information: Full legal names of the employer and employee.
• Job details: A clear description of the role and responsibilities.
• Start date: When the employment begins.
• Workplace: The primary location of the job.
• Working hours: The daily and weekly work schedule.

Probation periods

Uruguayan law doesn't have a specific, legally mandated probation period. However, it's common practice to agree to a trial period, which is usually between 30 and 90 days. If you decide to include a probation period, make sure it's clearly stated in the written employment contract. During this time, ending the employment relationship may be simpler, but you still need to follow general labor principles.

Working hours & overtime

The standard workweek in Uruguay is typically 44 to 48 hours. For most office and retail jobs, it's 44 hours, while industrial jobs are often 48 hours. The workday is usually limited to eight hours.

Here's how overtime works:

Employees cannot be forced to work overtime, and there's a weekly limit of eight extra hours.

Public & regional holidays

Uruguay has a number of public holidays that can affect work schedules. Some holidays are fixed, while others are movable to create long weekends.

Here are some of the key public holidays:

• January 1: New Year's Day
• January 6: Epiphany
• Carnival (movable dates in February or March)
• Holy Week / Tourism Week (movable dates in March or April)
• May 1: Labor Day
• May 18: Battle of Las Piedras
• June 19: Birth of José Artigas
• July 18: Constitution Day
• August 25: Independence Day
• October 12: Day of Cultural Diversity
• November 2: All Souls' Day
• December 25: Christmas Day

Hiring contractors in Uruguay

Hiring independent contractors in Uruguay can be a flexible and cost-effective way to get specialized skills for specific projects. Contractors operate under civil and tax codes, not labor law, so they aren't entitled to employee benefits like paid leave or social security.

It's crucial to classify workers correctly. If a contractor is treated like an employee, they can be misclassified, which can lead to fines and penalties. To avoid this, make sure your contractors have control over their own work schedule, use their own tools, and are free to work for other clients.

Using an Employer of Record (EOR) can help you mitigate the risk of misclassification. An EOR can help you hire contractors compliantly by managing contracts, payments, and ensuring you follow local laws. This lets you focus on your business while the EOR handles the administrative and legal complexities of hiring in Uruguay.

Understanding compensation and payroll in Uruguay is straightforward. The system is well-defined, treating foreign and local investors the same. This makes it an attractive place to hire talent. Key components include a base salary, allowances, and a mandatory 13th-month bonus.

Payroll cycles & wage structure

In Uruguay, you typically pay your employees monthly. Payments should be made by the 5th day of the following month. Some industries allow for bi-weekly payments.

A unique feature of Uruguayan payroll is the "Aguinaldo," or 13th-month salary. You pay this in two installments: one in June and the other in December.

The salary structure includes:

• Basic Salary: This is the base income of an employee, making up 30-50% of their total pay.
• Gross Salary: This is the basic salary plus any allowances, before taxes and other deductions.
• Net Salary: This is the final amount an employee receives after all deductions.

Overtime & minimums

The standard workweek in Uruguay is 44 to 48 hours, depending on the industry. Overtime is paid at 150% of the regular wage for extra hours. This increases to 200% for work on public holidays or rest days.

As of 2024, the national minimum wage is UYU 22,268 per month.

Employer taxes and contributions

You are responsible for contributing to social security and health insurance for your employees.

Employee taxes and deductions

Employees also contribute to social security and health insurance from their gross salary. Income tax is progressive.

In Uruguay, you'll find a solid framework of employee benefits and leave policies. The law provides strong protections for workers. This includes generous paid time off and social security coverage. Understanding these benefits is key to hiring in the country.

Statutory leave

Uruguayan law provides several types of paid leave.

• Annual Leave: You get 20 days of paid vacation after your first year with a company. This increases by one day for every four years of service.
• Sick Leave: If you get sick, your employer pays your full salary for the first three days. After that, social security pays 70% of your salary for up to a year.
• Maternity Leave: Mothers receive 14 weeks of paid maternity leave. This is paid by social security.
• Paternity Leave: Fathers get 13 days of paid leave.
• Marriage Leave: You can take five paid days off when you get married.
• Bereavement Leave: You get three days of paid leave for the death of a close relative.

Public holidays & regional holidays

Uruguay has several public holidays. Some are paid days off, while others are not.

Typical supplemental benefits

Companies in Uruguay offer a mix of required and extra benefits.

How an EOR can help with setting up benefits

An Employer of Record (EOR) makes it easy to offer benefits in Uruguay.

An EOR handles the complexities of local labor laws. We make sure you comply with all statutory requirements. This includes everything from paid leave to social security contributions.

We also help you offer competitive supplemental benefits. An EOR can provide access to private health insurance plans and other perks. This helps you attract and keep top talent in Uruguay. We manage the administration of these benefits, so you can focus on your business.

When you part ways with an employee in Uruguay, you need to follow a clear process. It involves specific rules for letting someone go, calculating their final pay, and handling all the paperwork. This process ensures you treat your former employee fairly and stay on the right side of the law.

Notice Periods

When you terminate an employment contract without just cause, you must provide a notice period. The length of this notice depends on how long the employee has worked for your company.

Here is a simple breakdown of the minimum notice periods required by law:

You can also choose to pay the employee instead of having them work the notice period. This payment must include the salary and benefits they would have earned during that time.

Severance Pay

In Uruguay, if you end an employment contract without a valid reason, you owe the employee severance pay. This is a key part of the termination process. The amount is calculated based on the employee's time with the company and their average monthly salary.

The standard formula for severance pay is one month's salary for each year of service. There is a maximum limit of six months' salary. This payment helps support the employee as they look for new work.

How Rivermate Handles Compliant Exits

When you work with an Employer of Record like Rivermate, we manage the entire offboarding process for you. We make sure everything is done correctly and in compliance with Uruguayan labor laws.

Here is how we help:

• Ensure Correct Procedures: We follow all legal requirements for termination, including providing the proper notice period.
• Calculate Final Pay: We handle the calculation of all final payments. This includes outstanding salary, pro-rated bonuses, and any severance pay the employee is entitled to.
• Handle Paperwork: We take care of all the necessary documentation to finalize the termination.
• Provide a Smooth Transition: Our process ensures a professional and respectful exit for your employee, protecting your company's reputation.

We make sure every step is handled correctly so you can focus on running your business.

Getting work authorization in Uruguay involves a two-step process. You will first need a work visa to enter the country. This initial visa is typically valid for 30 days. Once in Uruguay, you must apply for a residence permit to live and work in the country for a longer period.

Employment visas & sponsorship realities

An Employer of Record (EOR) can legally hire and sponsor employees on your behalf in Uruguay. This is a practical route if you don't have a local entity in the country. The EOR takes on the legal responsibilities of an employer, including visa sponsorship.

However, there can be limits. Some countries have quotas on the number of work visas that can be issued. An EOR can help you navigate these regulations and assess the feasibility of obtaining a work visa for your employee.

There are different types of visas available, depending on the length of employment:

• Temporary Work Visa: This is suitable for short-term employment, lasting up to two years.
• Permanent Work Visa: This is for long-term employment and can lead to permanent residency.

Citizens of MERCOSUR member countries, like Argentina and Brazil, may have a simpler visa process.

Business travel compliance

For short-term business visits, you may not need a visa. Citizens of many countries can enter Uruguay for up to 90 days without a visa for business purposes. This includes activities like attending meetings, conferences, or negotiating contracts.

If you do need a business visa, it's typically a multiple-entry visa valid for 90 days, and you can sometimes extend it for another 90 days. To apply, you will likely need:

• A valid passport with at least six months of validity.
• A completed application form.
• A letter from your company explaining the purpose of your visit.
• An invitation letter from a company in Uruguay.
• Proof of travel arrangements, like a roundtrip ticket.