Employer of Record in Uruguay

How an Employer of Record works in Uruguay

An Employer of Record (EOR) is a legal employer that hires employees on behalf of international companies through its established local entity in Uruguay. The EOR, like Rivermate, handles all aspects of onboarding, payroll and employment compliance, while the foreign company manages the employee’s daily work and evaluates their performance.

In Uruguay, Rivermate combines local HR expertise, a partner network allowing the provision of competitive benefits, and the Rivermate platform to help international companies hire quickly and compliantly. Foreign employers benefit from the model because it helps them expand into a new market without the administrative burden of navigating an unknown legal framework.

Uruguay labor market: At a glance

The hiring market
Greatest hiring activity:	Montevideo, Canelones, Maldonado (three largest regions by labor force)
Hiring timelines:	Locals: 1-2 weeks Foreign nationals: 3-6 months
In-demand sectors:	Sales, Export-import, Administrative activities, Commerce, Other services
Sectors with skills shortages:	Healthcare, Finance, Law

The salary market
Employer tax contributions:	12.625% in BPS contributions plus CCM + 0.49%-10% risk insurance + aguinaldo (13th salary) + salario vacacional
Monthly minimum wage:	UYU 25,383 nationwide, sector specific minimums apply per wage council agreements.
Average per capita income:	UYU 34,331
Personal income tax rates:	Progressive tax rates, applied on annual taxable gross income: UYU 0 - 576,576: 0% UYU 576,576 - 823,680: 10% UYU 823,680 - 1,235,520: 15% UYU 1,235,520 - 2,471,040: 24% UYU 2,471,040 - 4,118,400: 25% UYU 4,118,400 - 6,177,600: 27% UYU 6,177,600 - 9,472,320: 31% UYU 9,472,320+: 36%

Important note on Consejos de Salarios: Consejos de Salarios are a structural feature of Uruguay’s legal employment framework; these tripartite (government, employers and workers) sector-specific wage councils negotiate sector-based minimum wages and other employment conditions. Employers are assigned to an “activity group” based on their economic activity, such as commerce, hotels and restaurants, transport etc. Employment aspects negotiated by the Consejos de Salarios include minimum pay for certain job categories, wage increases, and other employment conditions and statutory benefits. Therefore, it is important for employers to know (beyond the activity group applicable on the employer level), what subgroups and job categories apply for each new hire.

What will it cost to hire in Uruguay?

Minimum wage in Uruguay: national floor and sectoral wage agreements

Minimum wages change at least once per year in Uruguay. Currently, the applicable minimum wage is UYU 25,383, applicable as of July 2026. Previously, the minimum wage was set at UYU 24,572 in the period from January 2026 and up to the end of June 2026. Among South American countries, Uruguay exhibits a relatively high minimum wage with a fast growth rate (nearly double of the minimum set for 2017).

However, beyond the national minimum wage, employers must also review the applicable sectoral wage agreement which may define a higher minimum rate for certain categories of jobs. To illustrate the complexity and importance of the concept of the wage council agreements and the laudos (minimums) they define, consider the job position of a Sales Representative in Group 13, subgroup 11 (Professional and technical services). Based on the official wage agreement, the monthly minimum salary for such an employee is UYU 40,348.97 as of January 2026. Additionally, the agreement states that commissions cannot be included in the minimum salary. Contrast this with the Group 19, subgroup 22 agreement for the IT sector and a job position for a Junior Technician for whom the minimum monthly salary is set at UYU 61,935 for a 44-hour working week.

Average income and wage trends

Uruguay’s National Institute of Statistics (INE) doesn’t publish average salary data but tracks salary growth through the continuous Household Survey and the Average Wage Index. According to its most recent reports, the average adjusted per capita household income is UYU 34,331 per month nationwide. This average is higher in Montevideo (UYU 43,344 per month) and lower in the country’s interior (UYU 28,678). The latest 12-month analysis of the average wage index showed an increase of 5.89% year-on-year.

Working hours and premiums

Uruguay has two working week standards: one for the general commerce sectors - 44 hours a week and a second one for industrial sectors where forty-eight hours are allowed per week.
Any standard overtime is paid at a double rate (100% premium) and 2.5 times (150% premium) for work performed on rest days or public holidays.

Leave allowances

Annual leave: mandatory eligibility is set at 20 days of paid annual leave for a full qualifying year of work. Before that threshold is reached, a pro-rata accrual is typically used to calculate eligibility.
Sick leave: paid from the 4th day onwards, at a rate of 70% of the nominal salary. Typically, the first three days are unpaid, though some employers may make a decision to offer a more favorable arrangement (pay partially or in full).
Maternity leave: 14 weeks (6 weeks before birth + 8 weeks after), paid by the BPS.
Paternity leave: Applicable as of 1 January 2026; 20 consecutive days from the birth, first 3 paid by the employer, following 17 covered by BPS funds.

Costs beyond the gross salary

Employer contributions

Contribution component	Employer %	Employee %	Maximum cap
Retirement fund	7.5%	15%	UYU 288,836 per month
Health fund (FONASA)	5% + the Complemento de Cuota Mutual (CCM), where applicable.	3%-8%	None for employer, variable for employee (based on dependents).
Labor reconversion fund (FRL)	0.1%	0.1%	none
Labor credit guarantee fund (FGCL)	0.025%	0%	none
TOTAL	12.625% + CCM	18.1%-23.1%	/

Employer mandatory risk insurance (BSE)

Employers in Uruguay must insure their employees through a state-owned insurance bank called BSE. Unlike in other markets where work accident and occupational disease insurance may be concluded with third parties, Uruguay maintains these insurance types as government-based.

Mandatory benefits

The main mandatory benefit in Uruguay is Aguinaldo or the 13th-month salary. It is typically paid in two parts, one each in June and December.

Another benefit employers must plan for is the salario vacacional, which is paid before the employee’s annual leave. The amount is calculated at a minimum of 100% of the net vacation pay, unless otherwise regulated by an applicable wage council agreement. This payment is separate from the annual leave pay calculated through the regular payroll and is paid additionally.

A common point of confusion is the different contributions and tax treatment of the aguinaldo and the salario vacacional. The aguinaldo is subject to tax (IRPF) and retirement contributions but not to FONASA. The salario vacacional is taxed separately from other employment-related income.

Voluntary benefits

The most common additional optional benefit in Uruguay is private health insurance.

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What hiring in Uruguay really looks like

Market condition	What an employer needs to know
Political and economic status	Politically stable; free-zone regime attractive for software and shared services.
Highest EOR hiring activity	Sales
Fastest-growing sectors (growth y-o-y)	Telecommunications (10.17%), Wood and wood products production (8.7%), Hotels and restaurants (7.03%), Business services (6.83%)
Employer cost	One of the lowest in the region through monthly payroll; complexity increases due to aguinaldo and salario vacacional
Key employer challenge	Company registration and sector-specific wage council agreements.

Hiring foreign employees in Uruguay

Based on a 2024 research paper, 5.6% of all jobs registered with the BPS were filled by foreigners. This represented a 69.1% increase over the previous 7 years. The paper also analyzed salary comparisons between locals and foreigners and found that the average monthly salary of a dependent foreign worker was UYU 60,497 which was 11.5% higher than the average salary of locals (UYU 54,259). The median salaries, however, showed the reverse, with locals scoring better than foreigners, signaling that a large proportion of the foreign workers earned below the median of the Uruguayan nationals. The paper presented a number of other interesting statistics, including the fact that the Professional, Scientific, and Technical Activities sector showed the largest wage gap in favor of foreigners (137.5%), and also pointed to the fact that nationals of Argentina and Spain showed the largest wage gaps when compared to Uruguayans. Lastly, Montevideo concentrated almost two-thirds (64.4%) of all foreigner-filled jobs.

The complexity of obtaining a work permit and residence in Uruguay depends on the applicant’s nationality. Mercosur nationals benefit from a simplified residence permit route. This route does not require sponsorship or employer involvement.

Other non-Mercosur foreigners typically must go through a process resulting in obtaining a residence permit with working rights, a procedure which is sponsored by a specific employer. The detailed process and documentation depend on the individual’s circumstances and must be aligned with our local expert team before the procedure begins; our team’s experience shows the process typically takes three to six months.

Compliance risks that employers must know about

Employment contracts and onboarding

Employment contracts in Uruguay must be concluded in Spanish. Foreign employers can initially conclude a fixed-term contract in lieu of an indefinite contract with a probationary period.
Even though onboarding and required registrations are quick and straightforward, multiple registrations are required (BPS and DGI). A probation of three months is commonly used (not a legal requirement)

Terminations and severance pay

While Uruguayan law does not stipulate at-will terminations, it also does not require disclosure of objective grounds for dismissal. This is because the cost of dismissing (effectively the severance pay) is a guaranteed right protecting the employee and due in all dismissals except those prompted by notorious misconduct.
Notice periods are not required but are customary to give (two weeks is the standard).
Severance pay in Uruguay is capped at six months of pay (except in special cases such as those involving maternity leave, sickness leave or workplace injury) - one month per year of service (or a fraction thereof). The six-month cap makes the severance easier to plan and budget for compared to some other countries in the region.
Final settlement should include - except the severance pay - the accrued but untaken leave as well as proportional aguinaldo and salario vacacional.

Benefits of hiring employees through an EOR in Uruguay

Even though the Uruguayan government created a new type of public limited company - Sociedad por Acciones Simplificada (SAS) - in an effort to simplify company registrations for new local legal entities and to reduce incorporation costs, setting up a company in Uruguay remains a complex process. It requires the appointment of a local agent, registering with the one-stop shop, drafting legal documents, submitting them to the National Registry of Commerce and then completing a tax registration. Once those steps are completed, a corporate bank account needs to be opened and any founding capital deposited.
Using an EOR eliminates the need for all those lengthy steps and lets you focus on hiring the best talent for your business while Rivermate takes care of the employment details.

Ready to hire in Uruguay?

Hiring in Uruguay involves more than finding the right candidate. From managing payroll, taxes and benefits administration to ensuring full compliance with the local Labor Law, Rivermate handles the complexities so you can hire with confidence. Talk to a Uruguay Hiring Expert today to begin scaling your business in Uruguay.

Sources:
PwC Tax Summary Uruguay
BPS: Determine and Pay Contributions
Tasas FONASA
Law 16074 (mandatory risk insurance / workplace injury and occupational disease)
Decreto N° 615/989 (Salario Vacacional)
Law 12840 (Aguinaldo)
Decreto N° 113/026 (Aguinaldo payment dates 2026)
BSE: Tarifa de Accidentes del Trabajo
INE: Boletín Técnico Actividad, Empleo y Desempleo (September 2026)
INE: Índice Medio de Salarios (August 2026)
INE: Índice Medio de Salarios (June 2026)
INE: Mercado de trabajo por área geográfica de residencia
INE: Encuesta Anual de Actividad Económica (EAAE) 2024
DIFERENCIAS SALARIALES ENTRE MIGRANTES Y NATIVOS EN PUESTOS COTIZANTES A BPS – URUGUAY (2024)
Ministry of Labor and Social Security: Salario Mínimo Nacional
Ministry of Labor and Social Security: Wage Councils